5 retail trends to look for as 2022 brings more change to the sector than 2020 and 2021 combined
Many retail executives have described 2020 as a ‘slap in the face’. 2021 started out as a year in which things began to creep back toward normalcy, only to be upended by the Omicron variant. Talk about ‘whiplash.’ So, it’s only natural that many in retail and e-commerce circles are curious about what’s in store for 2022 – but they may not like the answer: It will be more of the same … and then some.
And by same, I am referring to the following: continued upheaval, sustained unpredictability, and lightning-fast transformational business change.
The Harvard Business Review has dubbed the current era which business leaders are confronting as one of “three-dimensional change,” a catch-all term that speaks to a new playing field marked by three core factors:
- Perpetuality – change is occurring all the time and in an ongoing way;
- Pervasiveness – change unfolding in multiple and intersected areas of life at once;
- Exponentiality – change that is accelerating at an increasingly rapid rate.
And all of these vectors will be in full display and in full force as the year unfolds; indeed, 2022 will likely mark the quintessence of what the Greek philosopher Heraclitus of Ephesus summed up as Panta Rhei, or ‘life in flux.’ Now, with all that in mind, let’s take a look at five trends (plus one dark horse change factor) that will embody the “three-dimensional change” poised to sweep over the retail sector in 2022:
- Retailers become media companies as brand building becomes sine qua non.
Like it or not, retail media is evolving from conversion performance to brand-building. In a competitive landscape in which DTC (direct-to-consumer) has become the new norm, look for Big Retail to finally embrace its role as superior product curators with unmatched pricing and bespoke customer experience – something not even the biggest brands will be able to offer en masse. As they make this transition, retailers will be challenged to establish enhanced communication methods for engaging customers, which will necessitate employing next-generation AI (artificial intelligence) that can instantly iterate at scale, adjust in real-time, and deliver bespoke messaging, language, and visuals cues for their customer base. The goal of retail media in 2022 will be less about product conversion than about getting people in the door (or on the site), creating intelligent bespoke experiences, and creating brand fealty that cannot be rivaled by any DTC outfit.
- BNPL will move in store as Gen Z drives new ways to pay
‘Buy Now Pay Later’ payment solutions that offer interest-free installment payment options to consumers will become ubiquitous in physical retail locations. As it has been the case for ecommerce, this trend will continue to be driven by Gen Z shoppers who are weary of credit cards and traditional banking institutions that make money by charging high interest rates.
- The emergence of personalized AI retail copywriting
For decades, the language of retail relied on expert copywriters to find just the right ‘hook’ to lure in the random passerby on the street into a store with a product promotion that just can’t be ignored, but finding a human-driven solution for today’s highly fragmented, elusive, and time-starved online customer base has proven a lot more challenging. 2022 will be the year that natural language AI takes over the cadence of retail marketing, making traditional A/B testing seem almost Jurassic by comparison. Retailers will begin to harness the power of intelligent natural language algorithms that will generate bespoke content that activates a unique and highly personalized customer experience.
- Livestreaming commerce will finally take hold in the US
In Asia, live commerce is e-commerce; it now accounts for an estimated 44 per cent of the $109 billion Asian e-commerce market. By blending entertainment with interactivity and instant purchasing, live commerce offers retailers, brands, influencers, digital platforms, and dynamic new payment solutions like BNPL a new sales channel with enormous scope for creating value. Why it hasn’t caught on already in a big way in the US is largely a feature of social media companies that have been reticent of cannibalizing valuable ad revenue from brands and retailers. But all that will begin to change in 2022 as companies like Walmart have already begun to experiment in the livestreaming commerce space.
- Pandemic to drive new era of physical in-store redesign
Brick and mortar retail stores will begin the biggest store redesign in history, as the industry adjusts to the permanence of the pandemic. Look for new layouts that enable contactless shopping as well as contact-free checkout and payment experiences. In these new store models – some of which already came online in 2021 – shoppers will find in-store (and Covid-immune) interactive media powered by AI (artificial intelligence) playing an increasingly upfront role in the in-store sales process. Drive-thru will no longer be the province of fast-food. This new way of retailing will require far fewer employees, in line with the tight labor markets for entry level positions.
2022 Dark Horse Change Factor: The rise of VI (virtual influencers)
The US has been slow to embrace the use of virtual (i.e. non-human) influencers, but overseas, it’s a trend that is growing quickly. And 2022 could be the year the craze finally catches on stateside. Magazine Luiza – the largest retailer in Brazil – is leading the way with their iconic ‘Lu’ who already has over 25 million followers on social media. In an era where real humans are not only expensive but prone to extra-curricular scandals, non-human influencers offer a powerful alternative. Strap in everyone, 2022 is going to be one heck of a ride.