There are a lot of people making a good living forecasting what’s going to happen in retail. Things like ecommerce will soon eclipse brick-and-mortar, retail is facing an apocalypse or delivery to home will become the norm in grocery shopping. None of these is true, but it doesn’t stop people from predicting them, and others from believing.
The fact is, when it comes to what’s ahead for retail, no one really knows. But if you’re interested in what’s driving retail growth right now, in 2022, you’ve come to the right place. There are 10 Trends unfolding before us right now, very much worth watching.
1. Shoppers are returning to stores, again. In the ChaseDesign Q1 Shopper Sentiment Survey, 85% of people said, “I plan to shop in physical stores more in 2022 than last year.” And 2021 was itself a record year for foot traffic. This drove the 18% sales growth last year in brick-and-mortar stores, while ecommerce sales grew 14%. It’s also why retailers are spending billions on new store openings, up 13% versus 2021. As Target CEO Brian Cornell said, “Our stores are at the very center of our strategy.” This seems to be working, as our latest research shows Target is ranked #1 for delivering the best overall in-store experience.
2. Expectations have changed. COVID drove shoppers online of necessity. The increased familiarity with all things digital led to an expectation that physical stores will incorporate more of the convenience that online shopping can deliver. Lowe’s brings VR-driven navigation to its app, so shoppers can find exactly where that screwdriver is. Augmented reality delivers product demos in-store for coffee makers. QR codes unlock online experiences around the product in a shopper’s hand.
3. Personalization is unlocking new opportunities in-store. Our research shows 95% of shoppers actively use a retailer’s app for things like customized offers and content, checking inventory, pricing, wayfinding and list customization while shopping. Walmart scores highest in our survey for the app shoppers love most. In fact, Walmart has designed its newest stores to be shopped while being guided by the app.
4. Checkout is moving to frictionless. About half of all checkout lanes are self-checkout and this percentage is growing weekly. “Just Walk Out” technology, first introduced by Amazon Go in 2018, is now being delivered by a variety of tech companies (Zippin, Trigo, Grabango) at retailers as diverse as Tesco, Aldi, Giant Eagle and more. The good news for shoppers? Checkout lines will be a thing of the past, as they simply walk out with the items they need. The bad news? This changes how retailers and CPGs think about sales of impulse items (candy, chips, beverages, magazines, etc.) typically sold near cash registers.
5. Online grocery is evolving. Buying groceries online peaked in March 2021, at $9.3 billion per month (Mercatus Q1 2022 Report). By March 2022, this had declined to $8.7 billion. As shoppers are increasingly headed back to stores, online purchases will settle to some lower number, likely closer to the $6.5 billion spent in March 2020, or about 10% of all grocery sales.
6. Delivery to home is in decline. Consumers are learning that the prices retailers charge for items purchased online are actually higher, and delivery to home can come at a cost of $15 to $20 all in. In these inflationary times, delivery to home has fallen steadily. And with that diminished outlook, the market valuation of companies like Instacart, DoorDash, Uber and others have all dropped precipitously in the past months.
7. BOPIS is growing. Consumers find the experience of buying online and picking up at store to be easy, convenient and a time saver. Albertsons and Kroger have both integrated Google Maps into their shopping apps; as shoppers drive to the store for pickup, their location is tracked and relayed to the store so that all is staged and ready for arrival. Target has even added a last minute “forgot this, please add” functionality to its app. The experience will continue to improve over time.
8. Retailers are joining forces. Ulta and Sephora between them have 4,000 stores, but they’re also investing substantial dollars in opening “store within a store” formats at Target and Kohl’s. Gap is now delivering branded sections within Walmart. Caspar mattresses have mini-stores in Bed Bath & Beyond. Smaller retail brands are looking to larger retailers that have the traffic and efficiencies built into their business model. In a very real way, stores like Target and Walmart are beginning to deliver something akin to the mall experience of yesterday.
9. Healthcare is changing the face of retail. Walmart is hiring more doctors now than most major hospital systems. Amazon has committed to opening 2,500 in-person healthcare clinics over the next five years. CVS will build 4,000 Health Hubs. Retailers are increasingly providing X-rays, dental care, mental health counseling and vaccines for up to 80% less cost, and 50% less time, than at traditional healthcare providers. This creates a whole new revenue stream for retailers that’s based in services, not things.
10. The metaverse is real. Two-thirds of adults play video games, and the number is much higher for young adults. As gaming has gotten more immersive and real, unique gaming worlds have taken hold, where people congregate, build things, attend virtual concerts or just throw parties. And people spend real money in these worlds. One individual spent $450,000 to buy land next to Snoop Dog’s house in Snoopverse. Why? Because all the cool concerts, parties and gatherings will be there. Location, location. This is growing, every day. To laugh at it is natural, but to ignore it is probably not wise.
The Top 10 trends driving retail growth today are not predictions; they’re real and happening right now. What makes retail marketing so interesting is the shifts and changes in these trends, and how retailers, brands and solution providers adapt their strategies to make the most of these.
Peter Cloutier is Commercial Strategy Lead at ChaseDesign, helping clients translate how and why people buy into more profitable retail experiences. He is a frequent speaker at industry evens like Groceryshop, Retail Innovation Week and the CMA, and his thought leadership is published across leading industry journals.