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Retail Category Analysis – Looking back at 2021

by 
Ethan Chernofsky
 on 
December 21, 2021
Retail Category Analysis – Looking back at 2021

Every retailer has a unique set of strengths and weaknesses that drive their ultimate success - or lack thereof. And while diving into the specificities of each brand is critical, there is also value to be gained from pulling back and looking at retail segments as a whole.

So how has the wider retail space stacked up in recent weeks, and overall in 2021? And what might this mean for the trajectory of the various retail categories in the coming year? We dove into the data to find out.

Context

The obvious starting point is to look at the wider retail category as a whole. And the story for brick and mortar retail jumps out quite quickly. Though visits were heavily limited early in the year, the sector has seen a significant and fairly consistent recovery. Visits rose back to ‘normalcy’ throughout the spring before driving an exceptionally strong Back to School season in the summer. Visits then tailed off in September from the combined effect of rising COVID cases and the lack of a retail holiday as a catalyst for continued visits. 

But by early October, visits were back on the rise again as retailers pushed to create an extended holiday season that would account for supply chain concerns and potential labor shortages. For many, this drove a significant peak far earlier in the holiday season, but it also clearly limited the power of the traditional center of the holiday season – Black Friday. Visits were back to growth again by early December, though the comparison to an especially strong holiday season in 2019 and rising COVID cases have limited the peaks. Nonetheless, looking at the wider recovery and the unique heights is a further testament to brick and mortar’s powerful rebound in 2021.

Grocery Continues to Thrive

While the wider retail sector has seen a significant recovery, few segments have seen the same level of strength as grocery. The supermarket space went from seeing visits just below 2019 levels to enjoying a significant and ongoing visit surge through the spring, summer, fall and winter. This seemingly endless period of strength has been especially impressive considering many expected returning visits to dining and other segments to constrain grocery’s continued growth. 

However, it does appear that certain behaviors that privileged grocery – from a great shift to at-home cooking to an appreciation for the value orientation of home cooked meals – have significant staying power. 

Does this mean that the sector should expect such high growth numbers deep into 2022? No. Does it show the effectiveness leading grocers had in turning a short term advantage into long term strength? Absolutely. And while the same heights are unlikely to continue into 2022, it is still very possible that the overall sector continues to see growth on the back of other concepts and the return of pre-pandemic grocery shopping patterns.

Fitness Rising at the Just the Right Time

Few sectors saw the same level of limitations imposed by COVID as the fitness space. A sector that relies on people being in close proximity and being physically present in a space was fundamentally disrupted by the early closures. In addition, many were concerned that growth from connected health companies like Peloton would impact the long term health of the sector.

Yet, not only has the sector been able to recover, but visits are actually above 2019 levels heading into a critical Q1. The fitness sector sees the bulk of its visits come in the first quarter of the year as New Year’s resolutions drive health conscious behaviors. So the timing here is exceptional. Not only are visits trending in the right direction, but they are doing so ahead of an especially important time for the sector. The shift should provide even more optimism for a brick and mortar fitness segment that has consistently proven capable of overcoming significant obstacles, and has demonstrated the unique pull it has for key audiences.

Superstores Show Impressive Relative Performance

Another area that has impressed is the superstore segment, which is made up of retail giants like Walmart, Target, and Dollar General and wholesale club leaders like Costco and Sam’s Club. The unique power of this fairly diverse group is the wide range products, which establishes a powerful positioning for the segment. While many retailer segments rise and fall with the specific seasonality of their sector, superstores are essentially immune to the calendar. Whether it be presents for the holidays, home improvement in the spring, or grocery visits ahead of Thanksgiving, this segment’s wide reach enables it to thrive from almost every significant retail push.

The result has been strong performances across the sector that drove visits above 2019 levels throughout the second half of the year. And even though Black Friday visits were down, the pre and post-holiday periods have shown such strength that the overall season should still end up providing a significant boost. But what makes this segment all the more impressive is the adaptability of its giants. Whether it be rapid upgrades to curbside or Buy Online Pick Up In Store (BOPIS), an ability to merchandise in a more targeted way, or the capacity to shift strategies based on the season’s demands, this segment has proven capable of thriving – no matter the circumstances. 

A huge piece of this centers around the investments superstore leaders consistently make in future-proofing their business by focusing on enabling new technologies and capabilities. In addition, they test new concepts and take a long term view that places the customer at the center, even at the expense of short term profits. The result is a segment that seems essentially immune to the wider circumstances and can succeed regardless of what happens around them. The prognosis for 2022? Even greater strength, as their ability to think long term positions them even further ahead of the pack.

Apparel Stronger Than Expected, Still Limited

The apparel category has had a very difficult run of late. The segment had already been facing challenges pre-pandemic, and the rise and fall of cases has consistently limited the magnitude of recovery. Yet, even amid a holiday season where COVID cases and a push to extend the season has limited the traffic heights, apparel retail has pushed forward.

Led by off-price retail, athleisure, a renaissance for owned retail, and a surprisingly resurgent department store space, the wider apparel sector is still showing its strength. While the sector is fairly desperate for a period where supply chain concerns and COVID shifts don’t fundamentally undermine key shopping seasons, the resiliency of the wider segment speaks to the potential for a very successful 2022.

Which segments will thrive in 2022? Visit Placer.ai to find out.

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