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Retail Trends for 2022

Shira Petrack
December 14, 2021
Retail Trends for 2022

The pandemic has infused new life into brick and mortar retail. But retail’s potential will not actualize itself – retailers need to actively adapt their strategies and seize the opportunities presented by this unique moment in time. Our latest white paper examines eight key trends that emerged from the pandemic and that will continue to have a major impact on the retail sector going into 2022. This blog presents a taste of our findings. For the full analysis, you can read the white paper here

Comprehensive Approach to Omnichannel is a Must 

More and more retailers understand the business advantages of having an omnichannel strategy that blends brick and mortar stores with digital channels to create a more harmonized and holistic approach to retail. Rather than framing online and physical sales as battling in a zero-sum contest, the two channels need to be leveraged together to provide a better overall experience for the customer. 

The key for retailers is to focus on the unique benefits that online and offline channels provide and to build experiences around these strengths. For example, brick and mortar is still more effective at enabling real product discovery and allows customers the ability to touch and feel the items they are interested in and to try on products. Even if the ultimate purchase takes place through a digital channel, it is still fundamentally enabled and improved by the physical store experience. There is also the added ability to provide a truly authentic brand experience in a location. The result is a deeper relationship with the customer and the capacity to leverage experiential strategies.

Retailers like Target and Best Buy have led the way with their omnichannel capabilities, and the success they have had is directly related to these efforts. Going into 2022, expect more brands to drive a heavy focus on offering customers a cross-channel experience that allows them to pick their ideal route to buying specific products. 

Digitally Native’s Brick and Mortar Future

Digitally native brands (DNBs) have a unique perspective on the potential of omnichannel shopping. While most traditional retailers used stores as a starting point and then moved online, the online-only approach that these brands pioneered provided the key, and often only, path to early growth. Yet, many are now turning to physical locations to help expand the potential success – and this shift is incredibly important. The push for physical expansion and the exceptional growth it has provided for DNBs like Warby Parker, Allbirds, Everlane, and even Amazon, is critical not just because of the early success, but also for the wider implications.

For many, the shift of DNBs offline presents one of the most powerful testaments to the importance of brick-and-mortar locations. These brands are proving that wider omnichannel approaches are critical to driving growth, and when considered comprehensively, enable them to maximize the impact of each location. The fact that these brands are renowned for their data-driven approach to growth and deep understanding of customers only reinforces the impact. 

Should the trend continue to hold, the impact on the retail real estate ecosystem could be even more significant. The entry of more chains into the mix creates a greater level of brand diversity and offers a wide, new pool of potential tenants. The result is more optionality, more diversity and an infusion of fresh retail perspectives into the mix. For the shopping centers, downtown areas, and malls that can attract these rising chains, the effect could be significant. As a result, expect attracting top-tier DNBs to be among the key trends in the coming year.

Small-Format Stores – The Next Big Thing? 

During the summer, Target began the process of opening dozens of Ulta shops-in-shop. At the same time, the initial batch of 200 Sephora stores opened within Kohl’s locations. But it wasn’t just top retail giants launching new concepts. Though in a different format, department stores also adopted the small-concept store trend this year. Macy’s launched three “off-mall” store formats of Market by Macy’s, while Bloomingdale's opened its first small Bloomie’s store in Fairfax, Virginia. These small-concept department stores focus mainly on the customer’s experience, offering a curated assortment of products, which rotate frequently. Bloomies offers alterations, a drop box for returns and appointments with stylists. The stores also support the retailers’ fulfillment capabilities, especially when it comes to buy online, pick up in-store (BOPIS).

A comparison of Bloomie’s in Fairfax, Virginia, and adjacent Bloomingdale's in Tysons Corner Center from the past three months showed some fascinating differences. First, Bloomie’s attracted visitors from a much closer radius than Bloomingdale's did. While around only 40% of Bloomindale’s visitors came from a 10 mile radius, Bloomie’s saw nearly 70% of its visitors arrive from that distance. At the same time, Bloomie's witnessed a significantly higher median length of stay than Bloomingdale's did – 44 minutes median stay for Bloomie’s compared to 31 minutes for the nearby Bloomingdale’s.

These differences point to a critical factor that defines these newer formats - they are complementary to the existing strength the department store brands have already shown. Whereas Bloomingdale’s gains strength from the mall format it generally calls home, Bloomie’s smaller footprint enables locations in different types of areas, which offers the ability to better target certain segments and to align merchandising accordingly.

Yet, the bigger takeaway may be the willingness that more retailers are showing to testing new concepts in new markets as a means to better optimize their overall ability to reach customers. Expect these tests to drive wider adoption and interest in pushing new boundaries – especially for more established retailers looking to diversify their mix.

The Impact of COVID

Following the extended period of time during which shopping took place primarily online, consumers and retailers alike are now more aware than ever of brick and mortar’s unique value propositions. Consumers have a new appreciation of the social experience of in-person shopping, the possibilities for product discovery, and the customer service guidance and support that is difficult to replicate online. Retailers understand the brand-building capabilities, customer acquisitions potential, and logistical support that only physical stores provide. 

A major window of opportunity for retail is now open – and at the same time, the retail landscape is consolidating. Brands that fail to adapt their approach may lose ground and fall by the wayside. In order to gain a competitive edge, brands need to understand the shifts in both consumer expectations and in leading retailers’ strategies. We presented here three trends shaping retail today that highlight the changes that have taken place over the past two years. 

The full analysis can be found in our free white paper

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