The retail sector spent the past 12 months dealing with the impact of Covid-19. However, 2022 looks set to be a year of fast-moving innovation.
Bricks-and-mortar retailers spent Q1 2021 in lockdown. However, the rest of the year felt decidedly more promising – and the stats back it up. In October 2021 alone, the UK’s retail spending was up by 6.3% compared to the same period in 2019.
“2021 has been a real mixed bag for retailers across the board,” says Wizz Selvey, founder of retail consultancy Wizz & Co. “There have been many new openings but a lot of closures, too. 2022 will continue to see a lot of change. Everything has accelerated, and we’ll continue to see the evolution of retailers who have taken on the challenge of the last 18 months and reacted quickly to change.”
Kate Orwin, UK leasing director at shopping centre operator Unibail-Rodamco-Westfield (URW), is also feeling optimistic. Since opening in April 2021, URW has welcomed more than 40 million visitors to Westfield London and Westfield Stratford City, she notes.
“What’s more, when people visit physical retail stores, they’re coming with a real intention to spend. Online will continue to lead the way but offline will be even more important for brands, including digitally native brands, who are looking to truly engage with consumers.”
The retail sector is heading full steam towards the future. However, elements like customer experience, brand loyalty and the need to encourage post-pandemic footfall will be as crucial as ever. Here are some of the most exciting retail trends for 2022.
The past year has seen a stream of US businesses partner up, with one retailer incorporating another into its stores for an exclusive customer opportunity. Target is a prime example. In the last year alone, it’s brought micro-shops from Disney, Apple and Ulta Beauty into many of its stores and extended existing partnerships with Lego and Levi’s.
There can be many benefits to ‘buddying up’ and playing host to another carefully chosen business, not least because you’re doubling your potential footfall by attracting a whole new customer base. In 2022, UK retailers should consider how they can tap into the trend and think about potential partners.
“This is a huge opportunity for retailers if the right partnership can be found,” says Selvey. “Both brands will be focused on creating engaging content, so a collaboration provides an opportunity to co-create and educate customers.”
Be careful who you approach. It could be a boost to sales “if the collaboration is made with a business that has similar values but sits in a non-competitive category”, Selvey notes.
This trend will be particularly important for department stores. “They’ll want to be increasing dwell time by adding exclusive services and hosting brand collaborations or pop-ups,” predicts Selvey. “These can all act as change-makers within big department stores and create reasons for shoppers to return.”
‘Digital bricks’ refers to physical stores with technology at their core. Orwin thinks this retail trend will rapidly grow in 2022, with URW research indicating that 89% of customers are interested in using more technology in-store.
“We expect to see brands that have traditionally lived offline investing more than ever in new and exciting technologies to encourage consumers to visit their spaces,” she says. “A retailer’s shop window is incredibly powerful in driving awareness and loyalty when compared to the cluttered online marketplace.”
More online brands are set to take the leap through the screen, Orwin predicts, with the likes of Netflix and TikTok both opening physical stores in URW shopping centres in 2021. Amazon’s 4-Star store opened recently at Westfield London, offering shoppers a range of products that are either best sellers, trending on the website or boast a high customer rating.
“Retailers need to think about their physical and their online presence as one, rather than as two separate entities,” says Orwin. “The line between the two is increasingly blurred in the minds of the end consumer. Retailers should also consider the power, from a marketing perspective, that a physical store can offer.”
Upgrading the customer experience
Giving careful thought to a customer’s in-store experience will be crucial in 2022. Lockdown made shoppers long to be in-store: research conducted by Mood Media found 45% of consumers admitted to missing touching and trying on products. Be sure to craft the experience they deserve.
“After going through a prolonged period where the luxury of physical contact was limited, meaningful experiences have never been more important,” says Daljit Singh, founder of design agency isinstore. “Driven by the idea of discovery and surprise and a need for a moment away from the real world, retail brands are reigniting excitement through meaningful escapism and sense-stimulating environments. Appealing to our childlike curiosity, immersive installations and sensorial displays will provide a sense of wonderment and joy.”
Retailers should also consider how they can invite shoppers to actively participate and be part of brand experiences, with the screen-savvy Gen Z influencing a new era of creative communications. According to research from digital payments firm Square, 35% of consumers are interested in seeing virtual reality incorporated into their shopping experiences, while over a quarter (26%) want live-streamed experiences.
Retailers can make their customers part of the creative process, Singh notes. “Within this, we’ll see brands exploring how live-streaming and broadcasting can be built into the physical store experience to encourage footfall and boost brand-customer connection.”
AI goes next level
For retailers, artificial intelligence (AI) offers a fantastic opportunity to understand and improve a customer’s experience. Cyrus Gilbert-Rolfe, chief revenue officer at software company EVRYTHNG, is excited about the potential. He points to the use of life-size holographic people in stores and shopping centres, an example of AI that’s been around for a while but was too expensive to deploy at scale until now. Such holograms can respond to questions or even take payments.
“Can you imagine holding your credit card inside a hologram of R2-D2 at the Disney Store? Shoppers will definitely crowd into a shop just to interact with a hologram, delivering footfall and dwell time.”
AI can also provide retailers with insights into what their customers want, with AI and machine learning (ML) used in tandem for predictive analytics.
“This will allow retailers to identify trends, clusters and patterns in data, which can improve decision-making and even automate certain decision points,” says Thomas Staven, chief product officer at Extenda Retail. “This can contribute towards retaining consumers and staff. These technologies also provide opportunities to streamline processes to make them more efficient, which will also have a positive impact on retailers’ ever-pressing margins.”
Staven anticipates that AI and ML will be used by retailers to monitor in-store behaviour and provide access to real-time insights. He also predicts that computer vision will be widely incorporated, allowing for image and video recognition.
“This will mean, for example, automated recognition of non-barcoded items to provide a seamless checkout experience.”
Smart robotics will recognise on-shelf availability, Staven adds, allowing for automated replenishment. “For grocers, analysis of product freshness will be accessible using the same technology, allowing for dynamic pricing.”
As technology becomes more sophisticated, so too do the threats. In 2022, retailers should be vigilant of ransomware, ensuring they’ve taken appropriate measures to protect themselves from cybercrime.
“Ransomware is now a business,” explains AJ Thompson, chief commercial officer at IT consultancy Northdoor. “It’s a constant threat and businesses have to accept that at some point, they will be breached.”
Criminal tactics include efforts to access staff credentials through social media or convincing spoof emails, with the end goal of accessing a company’s network. The criminal can then either resell company data or hold it to ransom. This could result in a fine from the Information Commissioner’s Office (ICO) for a GDPR failure, not to mention the damage such a security breach could cause the business itself.
So how can retailers tackle this threat in 2022? Investment and awareness are key.
“Under GDPR legislation, organisations are responsible for the cyber resilience of their supply chain,” says Thompson. This has traditionally meant sending a series of questions to a supplier and asking for feedback, he says, a manual, biannual process that’s “inaccurate, slow and painfully one-sided. It is highly unlikely that your suppliers confess to any IT security issues.”
However, some organisations are now looking to automate this process, he says, allowing them to run their own continual external assessments of their suppliers’ web domains. “This provides a more accurate assessment, which in turn improves their security.”
Thompson also points to immutable back-ups, also known as air gap back-ups, which provide an original copy of data for recovery. These are becoming increasingly essential, he says, allowing for recovery in the event of a breach. Effectively read-only, immutable back-ups can never be edited, overwritten or altered in any way, so they can’t be affected by ransomware code.
Some organisations might already be able to create immutable back-ups as part of their solution, he says. “Most, however, will need to implement a new set of technologies.”
With all eyes recently on COP26, customers will be closely watching how their favourite brands respond to environmental issues. For retailers, it’s time to make your stance clearer than ever.
“Transparency is key,” says Orwin. “Consumers don’t want pledges or targets. They want action. The more brands can show that they’re taking real, tangible steps, the better.”
Customers want to shop with brands that act with integrity and purpose. Increasingly, they feel they can make a difference by carefully choosing where they spend their money. Brands can tap into this by considering how they present their products, whether through informative window displays, detail-rich labels or online copy that makes the origin story and eco-friendly credentials of an item crystal clear.
“Brands that can demonstrate transparency within the store experience will be rewarded with greater affinity and engagement,” predicts Singh. “We’ll see more brands initiate take-back schemes, open repair stores and consider modular store formats to accompany the move towards a more regenerative future.”
For one of next year’s most exciting retail prospects, look to the stars – quite literally.
Space commerce might once have sounded like a whacky premise straight from a sci-fi movie, but it’s edging ever closer to lift-off. It involves the use of space for the benefit of business, “creating infrastructure for the production, warehousing and delivery of products and services in orbit”, explains Hugh Fletcher, global head of consultancy and innovation at Wunderman Thompson Commerce, the ecommerce agency.
With the likes of Elon Musk, Jeff Bezos and Richard Branson pushing the boundaries of what we consider ‘normal’ for space travel, the new year will be the perfect opportunity to watch how space commerce begins to develop, says Fletcher.
“Retail leaders should use 2022 to model what their businesses could look like in a future where it plays a key role,” he says, adding that the most adventurous or forward-thinking businesses should begin to engage with space agencies and commercial space explorers to see if they can become involved in testing future products and services.
“While Bezos and Musk increasingly ramp up their investment in the sector, it’s vital that governments, NGOs [non-governmental organisations] and business leaders understand what is happening in orbit, to prepare for a future where it is humankind, and not billionaires, who benefit from space.”