The Top 15 Retail Trends for 2022
The wonderful world of retail.
As 2021’s holiday shopping statistics proved, pandemic or not, consumers are willing to spend. (My credit card statement will also attest to this fact).
And while the year ahead may hold some challenges – try not to flinch too hard at the word “inflation” – it’s also full of opportunities.
The Retail Trends Shaping How We Shop in 2022
From a digitally-transformed shopping experience to global supply chain disruptions and a pandemic that refuses to quit, there’s one thing retailers can count on: People are always going to shop.
Love it or hate it, daily necessities need to be purchased.
And some – including yours truly – have always found shopping to be a joyous activity. Part art, part sport, I find Marilyn Monroe put it best: “Happiness is not in money but in shopping.”
Whichever reasons fuel the motivations of your target market, here are the top trends shaping how they’ll buy – and how you can stay front of mind and ahead of the competition.
1. Digital Commerce Matters More Than Ever
Ah, the joy of shopping. From my couch. In my pajamas. With my dog. Most weekends, I find there is no better way to spend a Sunday afternoon. (I live in Chicago. It’s cold.)
And as it turns out, I’m not alone.
The pandemic made online shopping a necessity. Two years later, stores have reopened, but digital commerce is projected to maintain its upward trend.
When looking at global online sales, Salesforce reports 57% digital growth in 2020, and 16% growth in 2021, with eMarketer data predicting a continued increase through 2025.
Data source: eMarketer
eCommerce Purchases and “The New Normal” Retail Categories
What exactly are people shopping for online?
Trust Google to have the answer.
Using Google Trends data, Google has identified the retail categories which are now “The New Normal.” Searches for these products increased during the pandemic, but have not returned to “normal” pre-pandemic levels.
From pet supplies – who doesn’t want a furry remote work friend – to outdoor activities, some initial pandemic shopping trends aren’t going away any time soon. (I’ll let you come to your own conclusions on the tequila…).
Google’s findings align with McKinsey data (and, for what it’s worth, my browsing history), demonstrating apparel, cosmetics, household items, and pets as categories consumers intend to splurge.
As we look at digital commerce, it’s important to note the continued transformation. From mobile commerce to social selling, and even the metaverse, consumers have their choice when it comes to shopping from the comfort of their couch.
Who isn’t connected to their phone 24/7? I know I am. (Aside from the occasional time I misplace it when running out the door…)
Because our phones are with us anywhere and at all times, mobile commerce, or MCommerce, has become the primary retail purchase method.
According to Snapchat, 67% of retail sales came from mobile in 2021.
And, the memes that come up on my Instagram feed concur:
And you guessed it – that “reward” often comes in the form of retail sales, straight from the palm of my hand.
Whether it’s something psychological (is it just me, or does pulling out the laptop feel like “work”?) or the ability to order groceries while waiting at the doctor’s office, MCommerce sales are expected to exceed 400 billion US dollars in 2024.
2. Social Selling
With more time spent on our phones, it’s no surprise many of those minutes are allocated towards social media.
I know I’m not alone when I say the addictive algorithms make it near-impossible to stop scrolling: The average time spent on social media is a whopping two hours and twenty seven minutes per day.
With over 10% of our days spent on social (and hopefully a blissful one-third of it spent sleeping), what better channel to grow brand awareness and product discovery?
Not only does social selling provide targeting to reach your target market, it increases the likelihood of purchase: 55% of consumers who participate in m-commerce made a purchase after seeing a product on social media.
And, according to Gartner’s State of Digital Commerce Survey, not only did 62% of organizations use social commerce to set up an online store, social commerce is a tactic used by B2B and B2C sellers alike.
As the number of content creators, influencers, and platforms to consume media continues to rise, retailers that want to make an emotional connection are turning to storytelling – and livestreaming – to increase sales.
Bryan Moore, co-founder and CEO of live commerce platform TalkShopLive, explains, “A lot of retailers are creating live programming, and publishers are developing content that connects consumers with corporate brands through powerful storytelling. They’re not just driving promotion for these brands, but they’re also driving a sale.”
It’s a trend that has already seen success in China, where McKinsey & Co estimates that live commerce sales will reach $423 billion next year.
The metaverse. It sounds like the name of a big, bold, Hollywood blockbuster, doesn’t it?
Whether or not you know what the metaverse means (we’ll save that article for another day), it is a rising retail trend.
Fashion and gaming might not seem synonymous at first glance, but Nike, Ralph Lauren, Louis Vuitton, and Forever 21 are just a few of the apparel brands getting in the game (pun intended) of gaming and metaverse platforms.
Cassandra Napoli, Senior Strategist at WGSN Insights, speaks to the competitive advantage of a virtual world, sharing, “While the metaverse will take decades to reach its full potential, there are lots of entrance points that brands should be thinking about now, from gaming platforms like Fortnite and Roblox to AR and NFTs. Brands must begin to wrap their heads around these immersive virtual spaces and plan their corporate metaverse strategy or run the risk of falling behind.”
3. In-Store Shopping is Here to Stay
Despite many believing the pandemic would be the end of brick-and-mortar as we know it, two years into the pandemic, retailers are still expanding their physical presence.
Take Burlington, for example. As part of its Burlington 2.0 Initiative, the company plans to focus on marketing message, boosting merchandising and assortment capabilities, and expanding the number of stores with the smaller 2.0 format.
As cited in Placer Lab’s Report on the Top 10 Retail Brands to Watch in 2022, these smaller stores (down to 32,000 sq. ft. in 2021, compared to 42,000 sq. ft. in 2019) are expected to produce over $300 per square foot on a gross square foot basis.
And based on Placer Lab’s data, the investment looks promising, with monthly 2021 monthly in-store visits up across the board in comparison to 2019:
Image source: Placer.ai
The omnichannel shopping experience (more on that in a moment…) has also proven the need for physical stores, with Salesforce reporting that six in 10 digital orders are influenced by in-store experience.
Turning Brick-and-Mortar Stores into a Competitive Advantage
You know the saying about feeling “like a kid and a candy store”?
There’s a reason that phrase will never transform to “as happy as a kid staring at candy online.”
In-store shopping has advantages that are impossible for ecommerce.
For example, there’s the joy of instant gratification (and the glorious feel of a glossy Sephora shopping bag) as well as the support of store associates. Shoppers are also less likely to have the hassle of returns, thanks to the ability to see, test, and try-on products before purchasing them.
The Rise of Experiential Retail and Flagship Stores
Beyond the practical reasons to purchase in-store, there’s another reason bricks-and-mortar still matters:
Shopping is an experience. It engages all of the senses.
I may not be a kid anymore, but I do still love going to a candy store.
There are bright colors and playful displays to explore. The sweet smell of chocolate. The sound of jelly beans being scooped up to weigh. And the taste – who doesn’t love a free fudge sample?
Shopping may not be everyone’s favorite pastime, but for those who love it, there’s nothing like the in-store experience.
You can see my personal love of in-store shopping in this video, but, when executing this retail trend, keep in mind this top shopper pain point to avoid — particularly when it comes to maximizing profits.
Digital commerce leaders recognize this need, with 41% investing in new customer experiences to support the execution of their digital strategies.
And let’s not forget: When living through a pandemic, many of us are still eager for experiences. (And okay, yes, I admit it – Instagrammable moments are also appreciated).
Recognizing this fact, retailers are taking that in-store experience to the next level, opening flagship stores and amplifying their brand with experiential retail.
M&Ms, for example, opened a new 24,000 square foot experiential store in the Mall of America, with experiences including “M&M’s Sweet Moves,” where people can “express their personality through color, sound, and movement.” (Road trip, anyone?)
Image source: Bring Me the News
Safety and Self-Service when Shopping In-Store
True to Maslow’s hierarchy of needs, the joy of shopping only comes after the basic needs for safety are met. In addition, it’s just good business practice to keep customers safe. (And bad publicity if you don’t).
In response to consumer needs surrounding the pandemic, Harvard Business Review reports 46% of retailers published health and safety standards for physical locations, and 39% made changes to their physical facilities.
Self-checkout and contactless payment are additional ways stores have improved safety measures amidst Covid-19 while also empowering shoppiners.
As shared by Deloitte, “Self-serve kiosks, mobile checkout and contactless payment, enhanced in-store Wi-Fi, and incremental mobile app features (such as shopper maps, augmented reality, etc.) can put the consumer in the driver’s seat of their shopping experiences and reduce some of the pain points typically experienced in-store.”
4. Omnichannel Retail: The Future is Phygital
With both digital and physical shopping important retail trends for 2022, a seamless omnichannel experience sits at the heart of retail transactions.
Retailers have come a long way since the Omnichannel Retail Index was launched in 2015; in 2021, the adoption of best practices is 62% for all retailers and brands in the Index – almost a 15% increase from the 2019 average of 54%.
With Index categories including eight categories (such as the online experience, marketing, in-store and fulfillment), no one said omnichannel was easy, but it’s becoming a necessity.
According to McKinsey, 60-70% of consumers are now shopping in an omnichannel way.
The importance of mixing physical and digital matters so much we’re adding new words to the English language: phygital retail. Nancy Trent shares the meaning and importance of phygital:
Depending on your disposition, ‘phygital retail’ can sound like a disorder or a wellness cure. In reality, it’s the best of both physical and digital shopping experiences rolled into one. When done or at least started properly, the two fuel each other and enhance the retail experience and increase sales.”
– Nancy Trent, Trent & Company Inc.
5. Curbside Pick-up and BOPIS
Pre-pandemic, buy online pick-up in store (BOPIS) opportunities existed for consumers, but, when push came to shove (and speaking from experience), many retailers had plenty of room for improvement in their execution of BOPIS.
The pandemic amplified the need to not only offer omnichannel fulfillment services, but do it well. Retailers rose to the challenge, and are continuing to utilize both curbside pickup and BOPIS to improve sales and customer satisfaction.
Companies who offered these policies are seeing the rewards in revenue: In 2021, United States stores offering buy online pick-up in-store (BOPIS) saw 50% more year-on-year Black Friday growth.
And, in the last two weeks of the 2021 holiday shopping season, store fulfillment drove sales two times higher for companies offering BOPIS.
6. Rapid Delivery and Quick Commerce
Riding the pandemic wave alongside in-store fulfillment are customer expectations for rapid delivery.
While we all love our Amazon Prime subscriptions and two-day delivery, fast fulfillment has driven share-of-market for years.
Once upon a time, I lived in a magical land Down Under, where, in my wonderful city of Sydney, I could order from The Iconic and get same day delivery within three to five hours of my purchase. That’s all I needed to become a (very regular) customer of the brand.
Whether it’s groceries or birthday gifts, the ability to get purchases at speed still provides a competitive advantage, and it’s one retailers are investing in.
Retailers such as Target, who launched the ability for consumers to get same day delivery with Shipt, may also see an increase in purchase frequency should consumers invest in a subscription.
7. Supply Chain Challenges Continue
From shortages to price increases and the impact on margins, supply chain issues remain a challenge – and a costly one.
An analysis by Kearney predicts that supply chain challenges could result in lost EBITDA ranging from $9 to $17 billion for apparel and footwear brands.
The following image represents the supply and demand shocks that could lead to those losses:
Image source: Kearney
As demonstrated by Kearney’s graphic, accurate forecasting is one way to minimize losses: Retailers can make better plans – and find potential savings – with optimal capacity and transportation planning.
Retailers found other ways to overcome 2021’s supply challenges, and continue to control what they can in 2022.
According to First Insight and the Baker Retailing Center, some of the top ways to address and overcome the supply chain challenges include working with logistics companies, improving forecasting, streamlining assortments, and investing in new technologies.
8. Investments in Technology and Automation
With ecommerce and omnichannel shopping leading the way in 2022’s retail trends, the importance of technology will come as no surprise.
A study by the Baker Retailing Center and First Insights identified the technologies retailers are investing in, including QR codes, digital product testing, and predictive analytics that leverage the power of data to uncover revenue opportunities.
Data source: First Insights
Looking at the technology needed to reach operational excellence, Garter’s Top Trends for Digital Transformation in Retail identifies fulfillment execution, algorithmic merchandising optimization, collaborative ecosystems, and cost optimization and priorities.
When considering new technology investments, it’s easy for decision makers to look at the initial spend without stepping back to assess opportunities at a macro level. In the face of supply chain uncertainties and increasing customer demand, retail technology is more important than ever.
As McKinsey points out, retailers who fail to keep up with the competition face long term risks: “Having a competitive supply chain and operations function for e-commerce will require something different than serving existing retail customers (B2B2C)…Typically, these cross-functional dynamics and levels of investment required weaken the ambition to create a world-class customer experience on the D2C platform, and may hamper growth over time.”
It’s also important to assess the ROI of retail technology. Automation increases efficiency – and helps retailers get to the right decision faster – while demand forecasting and allocation software provides the improved accuracy planning teams need to maximize profits.
9. Attracting Talent and Overcoming Labor Shortages
So, aside from this supply chain crisis, I’m guessing you may have heard mention of labor shortages?
Based on this graph from CB insights, illustrating the number of news mentions with “labor shortage” and “retail” from 2016 – Q2 of 2021, I’m going to assume the answer is yes:
Image source: CB Insights
With 683,000 workers leaving their retail jobs in October of 2021 (a quit rate of 4.4%), retailers are doing all they can to attract talent, offering perks such as signing bonuses, higher pay, and tuition assistance.
As wonderful as these perks are, overcoming labor shortages – and retaining talent – requires benefits that are hard to find in an employee handbook.
LinkedIn’s Global Talent Trends report speaks to this need, with workers reporting their top priorities as work-life balance (63%), compensation and benefits (60%), and colleagues and culture (40%).
Technological investments also support employees motivated by career growth.
Instead of tedious and manual tasks, employees increase their productivity – also important when you don’t have enough staff – and uncover more efficiencies, enabling them to focus on more strategic activities.
10. The Marketing Strategies That Matter
So many marketing tactics, so little time.
While there are plenty of strategies to choose from, four of the top retail marketing trends for 2022 center on personalization, customer retention, demand shaping through promotions, and planning for a world without cookies.
We live in a world driven by data, giving retailers more opportunities than ever to personalize experiences.
Marketing automation tools are just one way to deliver a personalized experience while engaging customers.
For a truly personalized approach that keeps customers coming back, don’t forget that the root of “personalized” starts with a person – aka, a human being. We all want to feel special.
When it comes to brands that stand out in my book, I can think of no better example than Chewy, which sends an actual birthday card to my sweet little sidekick pup, even handwriting her name on the envelope.
These are the personalized experiences that build not only loyalty, but also word-of-mouth marketing referrals.
Speaking of loyalty: Supply chain shortages mean customer retention is more important than ever.
In the three months leading up to October 2021, 60% of consumers faced out-of-stock items. Of those, only 13% waited for the item to come back in stock, with over 70% switching retailers or brands. (Ouch).
Brands who can build true loyalty – through communities, customer service, communications, or other marketing tactics – put themselves in a position to keep customers in the long term.
With 80% of shoppers abandoning a retailer after three bad experiences, communication is key to manage customer expectations in the face of inventory challenges. Building authenticity and transparency into your marketing will also build trust and maximize customer lifetime value.
Using Promotions to Shape Demand
2021’s holiday shopping demonstrated that retailers can use promotions to shape demand and keep customers coming back. (Who doesn’t love the serotonin rush of a sale?)
With sales extended throughout the month, retailers were able to keep customers happy and sales high despite inventory challenges.
To maximize revenue opportunities, promotion management software works in partnership with demand planning, ensuring collaboration between planning and marketing teams.
Craving Cookies in a Cookie-less World
In January 2020, Google announced that, by 2022, it would eliminate third-party cookies from Chrome. While the timing has been pushed back, it’s still a monumental change for marketers and retailers alike.
Marketers planning ahead to prepare for a world without cookies. (The digital kind. The ones with chocolate chips aren’t going anywhere).
Some of the top trends include an increased focus on social media and email marketing: According to Salesforce and Retail Touchpoints, 2021 saw a 30% increase in social referrals and an 18% increase in email sends.
11. Pricing and Inflation
The International Monetary Fund (IMF) raised its inflation forecast in the beginning of 2022, predicting inflation to average 3.9% in advanced economies and 5.9% in emerging markets and developing countries.
Holiday shopping saw customers who were willing to spend higher prices, but a variety of factors – such as the ability to see friends and family after a very lonely 2020 – could have contributed to this.
Inflation could lead to consumers buying fewer items, making inventory optimization and demand planning more important than ever.
Operating costs, cash flow, and other financial factors resulting from inflation may also affect retailer strategies this year.
12. Buy Now Pay Later (BNPL)
Even if the price goes up, I assure you, my desire for that designer handbag does not go down. For many consumers, high prices actually increase the aspirational appeal.
Instead of increasing their credit card debt (and interest fees), customers are turning to Buy Now Pay Later services. Never known for our patience, this trend is particularly true of millennial and Gen-Z buyers looking to keep up with our peers.
Holiday shopping proved this point, with 8% of orders processed using Buy Now Pay Later.
In addition, an MIT Sloan Management Review article shares that Buy Now Pay Later is projected to grow at a combined annual growth rate of over 13% across the next five years.
Subject lines about sustainability continue to flood your inbox, but there is a surprising paradox between consumers and retail executives.
According to First Insights and the Baker Retailing Center, two-thirds of consumers are willing to pay more for sustainable products. This goes in direct opposition to retailer executives, two-thirds of whom believe that consumers are not willing to pay more for sustainable brands.
The study shows an opportunity for companies who invest in sustainability, particularly those targeting younger generations.
However, retailers who incorporate environmental promises into their brand can’t ignore the need for authenticity and transparency.
Customers seeking sustainability want brands they can trust. Losing that trust due to “partial truths” comes at a cost – one which will be paid in both negative publicity and profitability.
Recommerce is on the rise. In addition to saving some cash, it is one of the top ways consumers are forming sustainable shopping habits.
Inflation could further propel this trend, and it is an opportunity often overlooked by retailers: 46% of consumers report they prefer to buy and sell second hand products through brand or retail operated platforms, but only 22% of retail executives report they believe customers have this sentiment.
15. The Rise of Returns…and Customer-Centric Return Policies
With the rise of ecommerce comes the natural rise in returns.
According to a survey by the National Retail Federation and Appriss Retail, retailers expect 16.6% of all merchandise purchased in 2021 will be returned; up from 10.6% in 2020.
While returns do come with their challenges – and costs – they can also provide a competitive advantage.
When consumers are considering new brands, return policies are one of the best ways to reduce purchase risk – particularly around apparel. (Size charts may be standardized, as a woman, I assure you my body is not).
And, as MIT Sloan shares, retailers can leverage the entire ecosystem to support an improved return experience:
Consumers are offered multiple ways to receive products but often have limited options for returns. Working with partners, there is an opportunity to offer more options and create new service expectations in the marketplace. Many last-mile partners are already in the neighborhood, so home pickup of returns, even for a modest fee, may be a way to offset some last-mile costs.”
– Rodney R. Sides and Lupine Skelly
Forecasting Customer Demand for Success in 2022
From investments in automation to the explosion of commerce across digital channels, technology is a common thread weaving its way through 2022’s retail trends.
Customer demands remain high (despite those challenges around the supply chain, labor shortages, and inflation), making the need for accurate forecasting more important than ever to build both revenue and customer satisfaction.