Supply Chain Impacting Labor Shortage and Sales, Other Retail Predictions

The retail industry has seen no shortage of changes over the past year, and that’s showing no sign of slowing down as we enter 2022. With U.S. online sales reaching $8.9 billion on Black Friday this year, slightly below 2020 levels, retailers are still struggling to reach pre-pandemic levels, according to Adobe Analytics.

As we look ahead to 2022, we can expect increased labor shortages and continued supply chain disturbances, which will prompt changes in the in-store experience, an uptick in resale and rental models, and a renewed focus on leveraging first-party data to offer more personalized customer experiences.

Decreased Human Interaction

We anticipate labor shortages and sales declines due to continued workforce and supply chain challenges. As a result, retailers will be forced to find new ways to serve their customers with minimal human interaction, a trend propelled by the pandemic but will now be accelerated.

In order for retailers to handle the changed climate, they should prioritize tactics that increase brick-and-mortar efficiency and drive contactless interactions with customers. These include the following:

• an increased rollout of self-checkout stations and contactless payment options;
• an increased usage of QR codes to access product details, inventory, and ratings and reviews, allowing the consumer to browse stores and evaluate purchase decisions with as many considerations as they can online;
• an increased rollout of "text to buy" as retailers continue to try to shrink the purchase funnel and remove friction; and
• for the super-savvy retailers, utilize Internet of Things (such as voice-activated devices) to allow consumers to ask questions regarding order status, purchase items, speak to customer care, etc., and augmented reality to facilitate a “try on before you buy” experience.

Consumption Behaviors Shift

As consumers continue to evaluate their spending and consumption habits, resale and rental business models will flourish. This creates an element of "sustainable living" as the reuse of clothing prevents it from filling landfills and, ultimately, results in fewer items needed in production.

Other brands will start to follow in the footsteps of major players such as Rent the Runway. As consumers start to return to attending functions or occasions, we expect strong growth in rental models. Additionally, these types of services for retailers’ own merchandise can help to capitalize on the trend and also prevent consumers from buying, tucking tags and then returning, which is extremely costly for the retailer.

Lastly, many resale retailers, such as The RealReal, Fashionphile, or thredUP, will continue to thrive as consumers continue to clean out their closets to eliminate clutter and earn some extra cash. Many retailers, including Coach and Madewell x thredUP’s partnership, have also begun buying back their own merchandise and reselling it to avoid third parties being the sole beneficiaries.

Rise of First-Party Data

As retailers revamp their communications following Apple Mail’s recent privacy changes, they’ll turn their focus to first-party data collection to offer better, more personalized communications and cross-channel experiences, especially as they prepare for the cookie-less future.

With first-party data, marketers can capitalize on customers’ mobile app behaviors or website activity to ​​showcase personalized content. If a customer recently purchased a pair of shoes, for example, subsequent promotional sends can include “You may also like” product grids that tap into a recommendations API or Complete the Look API.

Whether retailers are looking to further personalize their content for consumers or adjusting for how consumer spending behaviors are shifting, the retail industry will continue to make great strides forward in 2022.

Rachel Cowlishaw is the associate director of strategy, retail at Movable Ink, a company that activates data into personalized content in any customer engagement and is a powerful extension to the technologies that marketers use today.