For many in the retail industry, 2021 has been a more difficult year than 2020. With major changes in consumer spending on a regular basis and growing fatigue in dealing with the impact of the pandemic , it’s another year that most will be happy to put up their rearview mirrors.
Looking ahead to 2022, a lot of things remain uncertain. 2021 ends with the specter of a fast-spreading variant causing disruption again.
Regardless of the uncertainty, the pandemic has continued to accelerate trends seen in the retail sector, many of which will continue to have a profound impact in 2022.
Conscious consumers and the environment
“Retailers must evolve with the consumer to maintain the relevance of their brand in 2022 and beyond … Brands must show their culture and their purpose. Sustainable development must be at the heart of their activity and throughout the supply chain. says Kyle Monk, director of Insight & Analytics at the British Retail Consortium.
Conscious consumerism, which has been reshaping consumer behavior for several years, continues to be a force to be reckoned with. From environmental concerns to the desire to see better representation in the products sold, consumers in 2022 expect the companies they buy from to do better.
“Our research shows that 90% of consumers are more concerned about sustainability than ever before,” says Chris Biggs, global retail manager for the Boston Consulting Group (BCG).
“In the UK, 41% of Brits agreed that recyclable choices and sustainable packaging influence their purchasing decisions, and 70% are willing to pay a 5% premium for sustainable products. As customers increasingly opt for more environmentally friendly products, retailers have been encouraged to make sustainability a real priority. “
In 2022, it will be up to brands and retailers not only to talk about their green credentials, but to convince the customer that their efforts are genuine. A study by the Chartered Institute of Marketing shows that 63% of customers say they would like brands to speak more about their sustainability plans, but remain skeptical about their authenticity.
A growing awareness of the finite nature of virgin materials and the important role the circular economy will play in minimizing the environmental impact of retailing has fueled the resale market. Etsy’s purchase of Depop and Farfetch’s entry into the resale market are just two examples of how established retailers are looking to capitalize on this trend.
ThredUp research suggests that the global clothing resale market will double to $ 77 billion by 2025, with growth rates expected to be 11 times higher than traditional clothing retail. With a proliferation of new platforms to take advantage of this trend, resale will undoubtedly experience huge growth in 2022 in fashion, but also in other areas such as housewares and electronics.
The client in 2022 will want to see businesses regenerate. They will expect to see thoughtful and inclusive products that meet their criteria for sustainability, backed by transparency and rigorous adherence to a code of ethics to convince them that the companies they buy from are doing more good than good. wrong.
Social commerce and live streaming
“2022 is the year we will see the social commerce model – deeply integrated commerce that meets consumers where they are and doesn’t disrupt their experience – expand to more platforms and more industries. Says Amir Kabbara, Product Manager for Shopify.
After a banner year for online shopping in 2021, social shopping, the fastest growing area of e-commerce, will determine how and where we shop in 2022. Kabbara expects “any platform with an audience ”begins to monetize this platform through“ commerce and purchasable content ”.
At the forefront of purchasable content is live streaming, the ability to instantly purchase a product featured on a live broadcast video. Shopify, which has partnered with TikTok to enable merchants to sell online, believes this trend will show huge growth over the next 12 months.
“Live streaming is already a rapidly growing market, which is expected to reach nearly $ 224 billion by 2028. From August to October 2021, we saw live selling app installs increase by 40%. compared to the previous three months, ”explains Kabbara. He cites technology not only as a sales channel, but as an “extremely useful way for brands to connect with consumers” as “the line between shopping and entertainment blurs.”
“In 2022, we should expect most shopping trips to start online, but that doesn’t mean they always have to end there. In many cases, the best and most convenient destination for an online shopping trip is a physical store on the road, ”says Nick Brackenbury, CEO and co-founder of NearSt, a retail technology company. .
For many years, retailers have gained a more sophisticated understanding of the customer buying journey and how it goes from online to offline, sometimes multiple times, before a purchase is made. This underscored the need for a truly hybrid retail business embraced by large and small retailers.
“We are seeing more and more small retailers developing ‘hybrid’ retail models, taking better advantage of the opportunity offered by the internet to complement their physical store,” says Andrew Goodacre, CEO of the British Independent Retailers Association ( BIRA).
“An omnichannel strategy can come to life through in-store shopping appointments to enhance the consumer experience, access a customer’s online sales history to offer in-store discounts, or arm salespeople with l ‘customer order history so they can share personalized recommendations. In today’s business landscape, the store has become a sales channel associated with Instagram, TikTok or the online store, ”says Kabbara.
The adoption of the hybrid model not only benefits retailers, but the customer in 2022 increasingly wants to buy this way. “Consumers are opting for hybrid purchases rather than strictly online, with 48% of people preferring hybrid purchases compared to 39% around the same time last year,” Biggs agrees, citing BCG research on purchasing habits. .
Hybrid retail simply makes sense as footfall continues to fluctuate due to restrictions and Covid concerns. Getting rid of the silo approach and the “us versus them” mentality of “online versus offline” is a huge opportunity for retailers.
However, building a fully hybrid model is not without its demands. The technology underpins hybrid retail, but in order to thrive, customers need to be “100% sure that what they want is definitely available nearby,” Brackenbury explains.
“This means bringing their in-store inventory up live on Google, Facebook, and many other social networks that we’ll see launch local commerce offerings in 2022.”
For retailers, focusing on how to deliver a seamless, integrated and stress-free experience for their customers as they move from the digital to the physical world, and back again, must be a top priority for 2022.
Loyalty as a new frontier of growth
“In an era of rapidly changing consumer behaviors, the customer experience is more important than ever, so brands will need to redouble their efforts to emotionally engage with consumers and retain consumers,” said Kyle Monk, Director of Insight to the British Retail Consortium (BRC).
With the increase in the cost of acquiring new customers, loyalty will become the new frontier of growth. Whether it’s focusing on reputation management, giving customers more flexibility in managing their finances by giving them a range of payment options such as buy now, pay later or pull. Building on a growing desire to buy locally, retailers will need to focus on retaining existing customers as 2022 approaches.
“During the pandemic, we have seen searches for local inventory powered by our technology – that is, shoppers who go online to check inventory in local physical stores – go up to more than 4 times. their pre-pandemic levels and remain there, ”Brackenbury explains, noting how important the hyper-local shopping trend has become.
Biggs agrees, citing research from BCG which has shown that “consumer loyalty to regional and local suppliers has increased dramatically during the pandemic.”
Harnessing the power of the local to build loyalty, as well as researching other ways to strengthen relationships with existing customers will be crucial as retailers look to ride waves of change over the coming year.
Consumer spending will tighten in 2022
The new year begins, with a high degree of uncertainty and challenges ahead. Top of the list? Rising costs, coupled with consumer caution. Retailers “must anticipate and plan for rising prices with clear communications with customers to instill confidence in people,” said the BRC.
“Concerns about inflation and consumer spending have increased over the past twelve months. And while we have to be careful, we know there is a series of factors that drive prices up in the short term, ”Biggs confirms.
“While we can remain cautiously optimistic about the return of consumer confidence and buying appetite, the retail industry still faces a significant challenge.
At the end of the day, individual retailers still have to give consumers a good reason to buy, and this will be especially true as they compete with the return of restaurants, entertainment, and travel.