Retail Trends to Keep an Eye on in 2022

This week, our Retail Influencer Network Insights call focused on the retail outlook for 2022 and on identifying and dissecting the trends that will be key moving into the new year. Participants were largely upbeat about strong demand for beauty as well as health and wellness, a category that’s morphing to include mental health, sexual health, fitness and sleep as consumers deal with the stress of the prolonged pandemic. Shifts in consumer adoption of e-commerce will continue and newer retail media such as livestreaming will drive higher sales at higher margins.

For all the blue sky predictions, though, there are some lingering clouds, including supply chain pressure, which will continue, possibly through the spring; the ongoing labor shortage, which is ravaging hospitality and brick-and-mortar retail; and consumer price inflation. So far, retailers have been able to pass the costs onto consumers, which bodes well for fewer promotions and higher margins. Retailers that have invested in their supply chain will clearly be the winners, along with those who figure out how to do more with less inventory. The holiday outlook is bullish. As Steve Sadove, who moderated the discussion, said, “Consumers have been shopping early and, as history will tell you, when they go in early, they come in late in the season as well.”

The talk featured Deborah Weinswig, CEO of Coresight Research; John Harper, Interim CEO of Splitit; Alex Broeker, CEO of Union; Andy Ruben, CEO of Trove; Benjamin Jones, CEO of Ohi; and Patrick Bousquet-Chavanne, President and CEO of ESW Americas.

Holiday Trends and What to Watch for in 2022

• “Be our guest…but please be patient:” The hospitality industry has been devastated by the labor shortage, which has severely curtailed the sector’s ability to rebound. The “Great Resignation” among restaurant and bar employees has forced managers to close whole sections of their venues due to staff shortages and the situation is not expected to ease in 2022. Ongoing supply chain challenges are also making it hard for restaurateurs to get equipment like kitchen printers and credit card swipers.
• QR codes to the rescue: Restaurants have accelerated adoption of QR codes by about six years, and now many consumers are used to clicking them to peruse menus, place orders and make payments. Traditional POS systems are becoming obsolete as more consumers use their smartphones to order and pay. As UNION CEO Alex Broeker says, “Why will you need a POS system with someone standing behind a register when consumers know what to do with QR codes?”
• Experience matters: Consumers have been responding to experiences for some time and now that the pandemic is waning a bit in areas, variants notwithstanding, shoppers want to feel something as much as they want to own something. Foot traffic has trended up over the last year at many shopping centers, where diversions range from a leafy green outdoor common area populated with interactive art (at Aventura) to an indoor water park and ski slope (at American Dream). Open air malls report that dwell time is increasing in outdoor areas, driven by events and activities. Food and beverage volumes are way up, too, indicating that dining as an experience is back, despite staff shortages.
• All abroad!: Cross-border e-commerce shot up during the pandemic as international tourism ground to a halt, which benefited luxury categories and DTC brands. While domestic travel has rebounded, international travel has not, hindered by new COVID-19 variants. The trend is supporting global consumption of US brands. With foot traffic in downtown retail districts still 20% lower than it was pre-pandemic, brands would do well to look for international growth through cross-border e-commerce.
• Analyze this: The wellness category, which now encompasses mental health, sexual health, nutrition, fitness and sleep, continues to grow exponentially. At Saks Fifth Avenue, roller skates and Bala Bangles, weights that can be worn on the wrists or ankles, are flying off shelves, and the retailer has a big play on wellness planned for January. Essential retailers CVS, Walmart and Walgreens are also all doubling down on health, a $3.6 trillion market expected to balloon to $6 trillion by 2027. Pets are also trending, with 30% of households adding a second dog during the pandemic and younger consumers particularly likely to associate their mental health with their pets.
• Instant commerce is going to get you: Pre-pandemic, two-day delivery was acceptable. Now, same-day or next-day delivery is table stakes and brands that offer it are reaping the benefits in terms of conversion and repeat sales. Consumers who choose ultrafast delivery options have a lifetime value that’s 1.5 times higher than other consumers and 120% higher than shoppers who choose UPS second-day delivery.

Heading into the last shopping rush before the holidays, retailers are seeing pent-up demand for apparel and hard goods, and jewelry and watch sales are on an upward trajectory going into 2022. Shoppers seem to be flush, spending at a faster clip and buying higher price points than in previous years and vaccinated consumers are expected to continue to shop with a vengeance. Retailers may be selling fewer units due to the supply chain crunch, but they’re ultimately selling them at much higher price points, which can only be a good thing for the industry.