“Tumultuous” is one way to describe the state of the world over the past couple of years. Yet necessity is the mother of invention, and retailers have certainly been compelled to be inventive in the COVID era. Online shopping has flourished and become more advanced in many ways, while shoppers have grown more savvy about ecommerce and how to find the best deals. We have all learned to roll with the punches and adapt in this historic time, and 2022 will be no exception – we will see creativity, advancements and flexibility for the converging realm of in-store retail and ecommerce. My three predictions for the coming year are a testament to not only the resilience of the global retail industry, but how we as a people rise to meet this moment with innovative solutions to highly complex issues.
Redefining shopping ‘peaks’ in the face of supply chain issues
One interesting trend stems from the most recent holiday season, giving us a glimpse of what’s to come: shopping peaks look different in light of supply chain issues and intermittent shortages. Preliminary data and resulting news headlines showed that Black Friday in-store traffic was glum — down by 28% as compared to pre-pandemic levels, and online sales were down slightly from $9B last year to $8.9B. However, this curve is not as simple as it may seem. According to a recent Mastercard report, U.S. retail sales rose 8.5% during this year’s holiday shopping season from Nov. 1 to Dec. 24, powered by soaring ecommerce sales (up 11%). Analysts have pointed to supply chain issues leading to elongated and flatter shopping peaks resulting from anticipated delays due to global supply chain issues currently challenging retailers. During anticipated peaks, shoppers may be changing their approaches to get better control over timelines. This may be altering how brands will experience sales peaks in the future – for instance, as Valentine’s Day 2022 approaches.
I believe we’ll see brands adjust their strategies accordingly, prioritizing personalization tactics with a focus on mitigating shipping challenges and delays, whether it’s through revised shipping timelines or promoting “buy online, pick up in store” and curbside delivery options, or through product discovery strategies that provide shoppers with the ability to search by what’s in stock or products that can ship within a certain timeframe. Creative ways to address these issues, as well as creating better experiences and driving loyalty, will allow brands to meet demand as online shopping behaviors that occurred due to the pandemic continue to persist throughout 2022, and beyond.
New emerging AI models will deliver more seamless, hybrid online-offline shopping experiences in 2022
The personalization market has transformed dramatically over the past few years, and I see 2022 as being no different. AI and machine learning have become invaluable to creating better shopping journeys which are individualized for each customer and vital to determining customer intent and influence behavior in real time. This is particularly the case as we see the pandemic’s waves reverberating through the economy and requiring flexibility of both shoppers and retailers. As a result, the interplay of online/offline shopping will continue to evolve. Brands are less concerned where the transaction begins as long as it’s convenient for the customer. AI will play an important role in this balancing act and in advancing personalization and optimizing the product discovery journey overall in 2022. Whether using machine learning models to detect changing customer behaviors or to adapt to information from various data sources that can be fed, ingested, and leveraged to better understand consumers at scale, we are moving in a direction of innovation and convergence within retail and ecommerce.
The elimination of third-party cookies will force retail brands to rethink data sources
Google made major waves when it announced it would be eliminating cookies, which track users across the web, and devices, producing third-party data that is used to target consumers. In 2022, the brands that depend on third-party data, from cookies and other sources, will need to consider and prepare for the inevitable “death of the cookie.” The retailers who prioritize first-party data sources from customer journey data, CRM platforms, POS systems, retail apps, affiliate marketing programs, etc. will be well-positioned. For the brands that use a mix of first-party and third-party data, they will face a myriad of challenges as they lose access to cookie data. The bottom line: brands will realize just how important it is to “own” their customers.
Luxury brands will take on a bigger challenge compared to other retail or consumer brands, but they will adapt through localization
The typical luxury shopper expects a highly personalized experience, similar to what they find in physical stores. The high-end luxury “feel” can be tough to recreate online, but it’s feasible. Next year, we will see luxury brands focus on ecommerce through localization. Because of the pandemic and the decrease in international travel, more luxury consumers are making purchases in their local communities. With the continued unpredictable nature of travel, I expect this behavior to continue. As a result, I believe consumers will focus on smaller luxury brands in their area or global brands that have more localized e-commerce sites, speaking to the unique personality of their region.
Another interesting area within the luxury segment that we may start to see more is related to Non-Fungible Tokens (NFTs) and the expansion of the Metaverse. Several luxury brands have already dipped their toes into this new environment with digital versions of physical products, launching new seasonal collections, or giving consumers the opportunity to own products through NFTs. I expect the number of brands engaged in the Metaverse to grow as the digital world gains traction with more consumers. I am excited to see how each of these trends will accelerate throughout 2022 and change how brands speak to and interact with their clients.
Overall, retailers have already come a long way in managing the hurdles of the pandemic. In 2022, brands will continue to be flexible and inventive as they invest in making it seamless for consumers to start their purchase journey in one channel and then easily complete it in another, while discovering other products which are right for them along the way. This need for agility and real-time pivots due to fast-changing customer behavior will lead many traditional retailers to embrace AI-infused aspects to the already multi-faceted customer journey.