The Future of Retail: Trends for 2022 and Beyond

Since the rise of Amazon.com, e-commerce shops have been steadily taking market share from brick-and-mortar retailers. This trend exploded during the pandemic: In 2020 alone, e-commerce grew more than 3X in the U.S. and nearly 5X in the United Kingdom.

But in 2022, e-commerce and in-store retail are converging, not competing. The reason? The emergence of technologies like social commerce, livestream shopping, and so-called "dark stores."

Together, these new technologies will offer consumers more satisfying ways to shop, while providing greater opportunities for retailers to convert shoppers into customers.

Social Commerce is Quickly Making Friends

Traditionally, consumers have been forced to weigh the convenience of shopping online against the benefits of experiencing products in person before they spend their money. Businesses have had to compromise as well.

Online retailers have been forced to absorb return rates approaching 21 percent, with conversion rates in the low single digits. Brick-and-mortar stores have suffered sharp declines in foot traffic, as well as higher operating costs. While post-pandemic foot traffic is now again on the rise, whether that trend will continue is an open question.

Emerging technologies like social commerce and livestream shopping offer ways to bridge the gap. Platforms such as Facebook, Instagram, and TikTok provide integrated shopping carts, offering brands another channel for selling products directly to consumers. Recommendations from trusted influencers, friends and family carry more weight, which leads directly to increased sales.

Insider Intelligence/eMarketer reports that nearly half of U.S. internet users made a purchase via one of the major social networks in 2021. By 2025, eMarketer predicts U.S. social commerce sales will reach nearly $80 billion, accounting for 4 percent of all online purchases.

Livestream Shopping: The Next Best Thing to Being There

Closely related to the rise of social commerce is the emergence of livestream shopping. The ability to see products demonstrated in real time, or to obtain the assistance of knowledgeable sales people who can answer questions and offer additional choices, is erasing the lines between e-commerce and in-store sales.

Per McKinsey, 265 million people have already engaged in livestream video commerce, the vast majority of them in China.

In the U.S., livestream shopping is in its relative infancy. However, we're already seeing impressive results among our customers, especially for higher cost items such as luxury goods, which typically involve at least one in-store visit. Jewelry retailers that have implemented livestream shopping have seen their online conversion rates rise 20X. High-end furniture stores have seen average e-commerce purchases increase 250 percent.

According to Coresight Research, livestream sales in the U.S. — which includes both social commerce platforms and in-store video — will reach $11 billion this year and $25 billion in 2023.

Dark Stores Have a Bright Future

A third key trend erasing the boundaries between online and in-person commerce is the emergence of dark stores. Due to the uptick of online shopping, some retailers have shifted their focus away from the traditional brick-and mortar storefront and are instead using their leased space to manage e-commerce sales operations and/or as micro-fulfillment centers.

Deploying dark stores offer several operating advantages to retailers. It allows them to consolidate their warehouse and retail footprints, significantly reducing their overhead. It eliminates the need to secure costly real estate for generating foot traffic; the old "location location location" mantra for retail success is no longer relevant. And it better positions them to offer local home delivery or curbside pickup, negating a key advantage of online-only stores.

In turn, these financial savings can help retailers preserve retail associate jobs and invest in technology, such as the above-mentioned video tools and livestreaming.

A report by Research and Markets finds that the square footage devoted to micro-fulfillment centers will grow 20X by 2030, with a market value of some $36 billion. Technology startups that facilitate the creation and management of such facilities have already attracted some $8 billion in capital investment.

Data Wins the Day

Other retail trends we’ll continue to see in 2022 include an increase in buy online, pick up in-store (BOPIS) services, QR codes that allow shoppers to connect instantly with store associates (rather than having to hunt down available staff), mobile point-of-sale systems that enable associates to complete sales anywhere inside a store, and a range of contactless payment options.

What all of these emerging technologies have in common is an enhanced ability to collect, analyze and employ consumer data. Retailers need metrics to track purchases, predict consumer behaviors, and personalize the shopping experience.

Online or hybrid retailers can take advantage of automated systems that generate emails when shopping carts are abandoned, and use analytics to drive customer re-engagement. Data allows both online and in-store operations the ability to optimize their processes, improve supply chain management, and refine the sales lifecycle.

In short, exciting new technologies are breathing new life into both e-commerce and IRL operations. The bottom line? Whether they're shopping online or in-store, people are looking for an elevated experience. Organizations that take advantage of these technologies to provide better, more personalized service will be better able to earn — and keep — the loyalty of their customers.

André Hordagoda is the co-GM of social commerce at Emplifi, a unified CX platform built to bring marketing, care and commerce together to help businesses close the customer experience gap.