2021 was a whirlwind of a year not just for the global population, but for businesses too. Retail businesses strove to bounce back after an unprecedented 2020 taken hostage by the COVID-19 pandemic, and while many succeeded, the ones who weren’t quick enough to pivot to a digital-first approach, went bankrupt. According to Statista, global eCommerce sales amounted to $4.28 trillion dollars and e-retail revenues are projected to grow to a whopping $5.4 trillion in 2022. From these figures, it is safe to say that the eCommerce wave is here to stay and the future of retail is going to be more digital than we previously anticipated.
A changing retail landscape means retailers and brands must step up their game if they want to thrive in 2022. The year 2021 cemented the belief that eCommerce and omnichannel are the future and 2022 would be all about being flexible, consumer-centric, and fortifying retail-tech capabilities to thrive in the digital driven retail economy now and in the future. The post-pandemic shoppers have a new set of expectations and retailers must carefully consider every move they make so they can strategize accordingly. At the heart of retail is the understanding of the ever-evolving consumer behavior. The most effective way to do it is through the smart implementation of analytics and technology. In this blog post, we bring you the top 8 consumer buying trends, retail investments and retail trends for 2022 and beyond.
Retail Trends for 2022
The following are the 8 key consumer buying behavior trends and retail tech insights that retailers need to watch out for:
1. Social Commerce will Take the Front Seat
As consumer behavior continues to evolve, the next step after becoming comfortable with eCommerce would naturally be social commerce – especially considering the amount of time mobile users spend browsing social media platforms like Instagram and Facebook. In fact, social commerce is already on the rise due to its convenience and non-invasive advertising. In 2021, 52% of socially-engaged shoppers made a purchase through a social platform. Further, 35% of non-socially-engaged consumers purchased via social commerce.
2. Personalized Experiences Will Go a Long Way
According to a recent BCG survey, “When the shopping experience was highly personalized, customers were 110% more likely to add additional items to their baskets and were 40% more likely to spend an additional amount than initially planned.”
Retailers understand the need for personalized experiences to maintain a competitive edge in the highly saturated retail space. Some of the leading retailers and brands are already investing in curating highly personalized experiences across critical touch points while many others are still lagging behind and just starting to understand and explore ways to personalize experiences. According to the same BCG survey, “Retailers plan to increase their investment in personalization by an average of 18% over the next three years. But best-in-class retailers expect to boost their investment by 30%, which will give them an investment advantage and improve their performance.”
3. Reviews and Ratings will Gain Importance
In a LinkedIn poll carried out by Intelligence Node, 41% of respondents specified that they found consumer reviews and ratings the most important factor while making a purchase online, while, in comparison, low prices were deemed the most important only by 20% of the same group of respondents.
Furthermore, to rank on the digital shelf, one of the key factors is reviews and ratings. A large number of bad reviews or the lack of consumer reviews can negatively impact your digital shelf rankings and can hinder your chances of appearing on the first page of search results.
Hence, optimizing your websites for consumer reviews and incorporating consumer reviews and sentiment into your product and marketing strategy will be crucial to improving brand integrity and conversions in 2022.
4. Circular Economy will Gain Momentum
Stemming from today’s woke and socially conscious customer psyche comes the newly popular circular economy. What has always been a linear economy in retail, where raw materials are transformed into products and once used are disposed of, is a large cause for wastage and carbon emissions. In a circular economy, products and raw materials are reused, recycled, and upcycled, and are ethically and locally sourced to make the entire business model sustainable – leading to reduced wastage and carbon footprint.
Today’s consumers are all for the circular economy and the consumer spending on second-hand or upcycled goods has been on the rise. According to Statista, “Consumer spending on second-hand home furnishings in the US grew by more than two billion U.S. dollars in 2020, the equivalent of over 15%.”
5. Brands will Invest More in Influencer Marketing
Influencer marketing is becoming one of the more sought after marketing channels for eCommerce brands and retailers due to the rapid return on investment, strategic targeting of the right online audiences and positive advertising. Customers often view influencer marketing as positive word of mouth and are influenced to try out brands endorsed by influencers they follow. Many new brands launched themselves using this strategy and even bigger brands like Starbucks, Adidas, and Dunkin’ Donuts use it extensively to market to their online audiences. Influencer marketing has become essential especially for brands targeted at Millenials and Gen Z audiences who have higher online presence and social media usage.
6. Direct-to-Consumer (DTC) Businesses will Flourish
As customer expectations are at an all time high, it’s no surprise that their preference to buy from direct-to-consumer brands has increased as well. A DTC brand owns the entire relationship with a consumer; from sales, distribution, and marketing. This allows DTC brands to forge better, more personalized relationships with shoppers and use their data to offer customized and meaningful experiences, which today’s consumers hold in high regard.
DTC channels are becoming more popular with brands too as they help them increase their profits by cutting distributor and middle-men expenditure (11% of DTC companies are doing more than $100M in annual sales currently), have complete ownership of consumer data, and develop long-term relationships with customers. It also eliminates the problems of MAP (minimum advertised price) violations, counterfeit product sales, and distorted brand image, as brands have complete control on production, distribution, pricing, and marketing of their products.
7. Private Label Brands will Continue to Grow
In recent years, private label brands have increased substantially in number to cater to the increasing demand from customers. While previously private label products were looked down upon as substandard or cheaper alternatives, that is no longer the case. Private label brands today have the potential to be on-trend, affordable, and competitive and are fast being adopted across major retailers. In 2020, mass merchant stores were the most profitable channels for private label products with $77.8 billion in sales followed by supermarkets at $73.1 billion sales.
Shoppers too are more open to private label brands and often prefer these over established brands for more than one reason. While 45% of respondents said price was the primary reason for switching to private labels, 58% are now of the opinion that private labels are a fine alternative to national brands, and 70% feel they provide similar or even better quality.
8. The Adoption of Analytics and AI-driven Retail Tech Will Increase
Today’s customers are spoiled for choice and have thousands of brands and retailers to choose from for any product. This in turn has heightened their expectations from retailers and offering a good product alone is no longer enough to convert these evolved shoppers or make them your loyal customers. From seamless checkouts, price matching, highly engaging content to timely delivery and returns, and personalized experiences – customers expect seamless, hasslefree, and customized experiences across every channel.
To offer these elevated experiences is no easy feat. Retailers need to monitor customer data, analyze market and shopper trends, optimize prices based on competitor price movements, rank high on digital shelves, streamline delivery and fulfillment, and manage a host of other factors to reel in customers and retain them – and this is where AI and automation comes into the picture.
How Retailers Can Be Ready For 2022
Without technology and innovation, retailers won’t last long in 2022. Technology is the backbone of the new retail landscape and the pandemic has proved it. The following are some areas of retail where brands and retailers can harness next-gen technology and innovative best practices to win in 2022 and beyond:
Implement A Competitive Pricing Strategy
Price is one of the primary factors a shopper considers before making the purchase decision. You don’t want to lose out on your hyper-aware shoppers. Instead, you can make smart pricing decisions using AI-automated pricing solutions that give you real-time feedback into market movements and competitor prices so you can price your product competitively without compromising on your margins. As the pandemic has deterred some people from spending as freely as before, intelligent pricing is key to converting price sensitive shoppers into loyal customers.
Invest in Robust Supply Chain Management
As seen by our survey results, more customers care about free shipping and delivery than ever before. To meet this demand of customers, retailers need to re-think their supply chain management. You need to automate your supply chain management and partner with only those delivery fulfillment vendors who can handle increasing volume of orders. As eCommerce is booming, more people will turn to ordering online which means timely delivery and fulfillment will be critical to any retailer’s success. Without this, you will be losing your customers to your competition in this highly competitive era.
Revisit your MAP Monitoring Policy
As counterfeiting products are seeping into the market from everywhere, and unauthorized sellers are selling gray-market goods unchecked, a robust MAP monitoring solution has become the need of the hour. it is becoming impossible to know who is selling your products and how. But you can be on top of the game by opting for a MAP monitoring solution. With this solution you can protect your business so that no reseller can violate the MAP terms you have agreed upon. An AI-driven MAP monitoring solution that can monitor your products is essential.
Offer a Seamless Omni-Channel Experience
The pandemic might have put a full stop on many brick-and-mortar businesses but not for those who were flexible and pivoted to an omni-channel approach during these trying times. With an omni-channel approach, retailers can use their in-store space to fulfill online orders and provide a unified, seamless customer experience across all touchpoints. From BOPIS, curb-side pick-up to ordering online and offering free delivery, an omni-channel approach can help you reach out to a wider customer base and cater to them wherever they are.
Create Winning In-store and Online Assortments
Today’s customers have access to multiple channels, websites, search engines, and a host of data to choose from. To convert this informed shopper takes more than just low prices or discounts. You need diverse product assortments for consumers to choose from and need to keep evaluating your merchandise based on consumer preferences, competitor offerings and shopping trends. Instead of keeping the same assortments online as well as in-store, study your consumer demographics and patterns and curate your assortments to meet the consumer demand across each channel.
The 2022 shopping trends and predictions show how much consumer behavior is evolving rapidly. Innovation, flexibility, and a close attention to shopper expectations is the only way for retailers to sustain and thrive in 2022 after an arduous 2020-21. This is possible with the help of smart, intuitive AI and retail-tech solutions and a consumer-centric, digital-first retail strategy that aligns with your goals while future-proofing your business.
For more retail insights into the shopping patterns, consumer expectations, and key retail strategies for 2022 and beyond, check out our comprehensive eBook, “What’s Hot 2022: A Guide to Consumer Buying Trends & Retail Tech Predictions”