Five key factors set to drive the retail sector this year

2022 retail Forecast 3

With the annual January sales melee almost over what does the rest of 2022 hold in store for the retail sector?

It’s a sector that’s weathered the global pandemic, huge changes in consumer attitudes and a spike in technology, not the least of which is the buzzword of the moment – metaverse.

So we asked Tom Harwood, Data and Insight Manager at retail field marketing and customer experience experts, Gekko, for his take on what trends are likely to impact retail in 2022…

Tom Hardwood gekko
Tom Harwood, Insight Manager, Gekko

Having adapted to the hurdles they have faced so well over the past 18 months, it’s clear that this year retailers must keep innovating in this changing market to ensure their omni-channel and consumer experiences are exceptional, while also embracing the interests and topics on the mind of today’s shopper. 

Here are five key factors impacting retail that businesses should take note of to thrive in 2022.

Supply and demand

The well documented supply chain issues that have impacted retailers and other sectors across the country have been a tough hurdle to overcome and it is likely that into 2022 we will still be feeling the knock on effects in some quarters. 

It has, however, highlighted a positive for the industry in that it is clear there is consumer demand and the appetite to shop has returned with consumers in the market to purchase back to pre pandemic levels, and in many cases more than. 

Even while most restrictions have been lifted in the UK, there is still an element of pent up seasonal excitement across the sector, particularly as those same issues have limited certain stocks, leading to increased hype within certain product categories.

The importance of forecasting for your peaks in 2022 and planning inventory accordingly is critical and effective early planning will make sure that you are ahead of the competition at the most important times.

Retail stores and customer experiences

It is well known that the e-commerce share of the retail market was greatly accelerated by the pandemic. 

However it consistently fell after physical stores reopened in April 2021 and is now hovering at the 27% mark as of October according to the ONS. 

For this year, the return of bricks and mortar retail does not mean it can afford to rest on its laurels when it comes to innovating to reflect the new normal and fully embracing the omni-channel concept.

retail - mind the knowledge gap gekko
Time to shop: Retail sector has opportunities and issues to address in the year ahead.

In-store experiences can be re-imagined in a multitude of ways. 

In our recent consumer research, we found that 85% of shoppers are now doing research on a product or brand before heading into store, so ensuring the online and offline integration is faultless has never been more important. 

Even if a customer has decided to buy online, the physical store can still act as a collection or returns hub, importantly still drawing more footfall and further positive brand interactions.

We are now at a stage where the store itself can serve as a portal to e-commerce, as well as a place where customers can interact with a brand’s products. 

With 58% of shoppers saying that it is important to them to be able to see and touch a product before a purchase, the significance of the store shall not diminish. 

It is just that the spaces themselves will evolve into more experiential experiences for consumers.

This experience is not only about how the store presents itself, but also the staff within it. 

Our survey found that 45% of Gen Z customers will seek out great advice in-store, bearing in mind that this is a knowledgeable generation, particularly when it comes to tech products, and the importance of having knowledgeable staff on hand to engage with this valuable demographic is clear. 

2022 retail Forecast 4

In fact, 37% across all ages were willing to spend more on an electrical product if they experienced excellent service in store.

In 2022, stores can be more than just what the customer needs it to be. They can offer truly memorable, loyalty-gaining experiences that drive engagement and, most importantly, are fun to visit.

Sustainability and retail

We move onto the wider issue of sustainability, and this year it will continue to hold an increasingly prominent place in the mind of the consumer. 

The fact is that meeting this criteria with shoppers is not quite as simple as it was before, so for success in this field for 2022, there are certain areas that should be addressed. 

Along with climate related goals, consumers also continue to look for purchases that have the power to give back to their local communities or charities. 

According to NielsenIQ, “Do I need this?” will be one of the pivotal questions among shoppers for 2022, with gifts that offer positive experiences or donations on the up. 

Retailers would do well to keep their eye out for local initiatives they can partner with their customers in order to show support and solidarity.

Actions are positive, but communication also needs to be on point, as sustainability is such a broad topic there are often more questions than answers, but brands that are clear with their objectives and true to their core principles will resonate best with consumers.

Returns

While not the most exciting aspect of the shopping experience by any means, it is predicted that returns will increasingly be one of the key differentiating factors between retailers this year. 

Retailers that want to be at the forefront of this will need to invest in the processes that make this a positive experience for consumers.

For example, according to research by Forrester, three in five consumers prefer retailers that offer free return shipping. 

This quality of life offering encourages people to purchase safely in the knowledge that there will be a stress-free experience in case the product isn’t quite what they were anticipating.

If a return does happen, it is important that the process collects relevant information at all stages, the data from which can help reduce the overall issue in the long run.

The metaverse and in-store technology

Facebook’s recent announcement that it is moving to a “metaverse” focus has pushed the term into the public eye and comes as part of a wider conversation about technology within retail.

metaverse Image by Pete Linforth of Pixabay
Open for business: How will the metaverse change retailing?

We have already seen an increasing amount of collaborations between brands or celebrities with gaming platforms, for example Travis Scott’s virtual concerts within the Fortnite gaming world caught the imagination of many and opened up his music to a huge audience. 

It is likely that this year we see further iterations of retail services within metaverse spaces, no doubt with the world’s largest brands vying to assert the most influence from the beginning.

New technology will also help those on the shop floor. 

As we have seen, 37% of customers are specifically looking for knowledgeable assistance in stores, and with access to the right technology, staff will be able to assist in the customer journey across all channels and have the data at hand to make it a personalised journey.

Having been successfully reactive during the pandemic, it is time for businesses to look forward and find the opportunities to exceed consumers’ continually evolving needs. 

The brands that manage to do this seamlessly across all channels, while embracing fresh insights and new technologies, will be on the front foot this year and beyond.