About a year ago, I’d just finished my final round of cancer treatment and still had several very hard weeks to go. Getting a Stage III diagnosis shortly after your 50th birthday isn’t the present myself or anyone else wanted but, like all who fight, it has made me stronger and…changed my perspective.
Cancer treatment has progressed dramatically over the past 20 years through diligent work by very, very smart people and very sophisticated technological advancements. But my treatment experience, my customer experience, wasn’t focused on the technology. The tech was there, sure, and it produced amazing results, but it wasn’t front and center or really even discussed in too much length. The human connection though involved a lot of genuine compassion and honest conversation.
This got me to thinking about the world I want to live in, not one defined by technology but rather one where better human connection (and outcomes) can be enabled by it. So, as I dive into the world of retail for 2022 I do so with this perspective, and an awareness that last year, in response to #shipageddon, Amazon had surpassed FedEx and continues to build out what will become one of the largest fulfillment networks in the world. Mobile payments have now eclipsed 40-percent penetration and Walmart Pay now sees 22 million transactions a month via their wallet.
It’s also been revealed that Amazon has plans for a new breed of department store while Saks and Macy’s struggle and spin-off their eCommerce businesses. Social shopping and livestreaming in particular were the number one growth area for online shopping and are now integrated into most experiences. Finally, Intuit reports that 70 percent of shoppers are supporting local businesses via mass-adoption of the QR Code and platforms like Shopify.
But let’s see what 2022 has queued up…
Back to the Bricks (and Mortars)?
There are many indicators that physical retail is already back but poised for major shifts and traffic in 2022. The US Department of Commerce reported sales and traffic up for every month of 2021 and expects this year to be even greater with a 22 percent jump from 2019 levels, this is despite the ongoing pandemic and inflationary concerns.
More signs of increased traffic include the fact that 6-in-10 people still prefer physical over online and Mastercard reports that 2021 in-store holiday shopping was up from last year’s numbers, and from 2019. Not to be outdone, eCommerce sales are also expected to grow but much of that growth will be attributable to in-store visits and a new suite of tools connecting the channels.
As shoppers come back retailers will be ready, armed with new tools, store formats and strategies for growth. Surprisingly, many of those driving this return are under-30 and report lower preference for online shopping than their older counterparts, according to a study by Reflect. Finally, these in-person shoppers will come with renewed expectations around digital enablement, convenience, and service experiences.
Store Spaces: Evolve!
Forrester predicts that up to one-quarter of all retail space in the US will be dedicated to eCommerce fulfillment within the next two years. Taken alone, this will force stores to rethink their configurations and service-design to accommodate both shopping and processing of online orders. Moreover, other shifts will be needed as shoppers demand dedicated spaces for new services like buy-online-pickup-in-store, self-service, and customization.
Alongside these functional shifts in space, a welcome return to brand immersion, human interaction and sensory experiences will dominate store design. We are already seeing this in three new stores launched by Adidas in late 2021 in Shenzhen, Berlin, and their new Terrex store in Nuremberg. These stores, while technologically enhanced, focus on sustainable materials, open brand/product experience zones and on-site customization.
And while these new store designs will be more digital than ever, the focus on Human Experience, brands, and the products themselves will take centerstage once again as technology fades into the background. This human-centered design will include multi-purpose screens, AR and QR codes and other digital integrations to enhance the experience and enable store employees. In support of these shifts, Sitel Group reports that 70 percent of shoppers still desire human-interaction and the Reflect study states that 67 percent of respondents said they miss interacting with products while 83 percent believe digital screens would save time.
Disability Accessibility Becomes Reality
As digital experiences move from a supplemental part of the purchase journey to essential it will be key to make sure they are accessible to all types of customers. The CDC reports that 61 million, or about 26 percent of the US population has some sort of disability. Addressing these challenges within stores and digital experiences has long been a goal for most retailers but will see renewed focus in the coming year. Advances in natural language processing (voice) and no-touch experiences popularized during COVID are already giving companies a head-start, but there is still a tremendous amount of work ahead.
Accessibility also goes beyond traditional disabilities and becomes a strategic way to meet shopper expectations and preferences. For instance, Statista reports that only about 43 percent of cell contracts include unlimited data, so accessibility for some will require in-store WIFI or ways to access digital tools beyond the traditional app download or data-sucking web experience. In the coming year, accessibility to humans outside of the store will also be a necessity. As a response, we see services like texting with associates, 1:1 livestreaming, and video-chat being incorporated directly into retailer applications and on-site digital experiences.
Real-Time Starts to Deliver
Finally, 2022 will be when we see benefits from experience investments made in the early days of the pandemic. The innovations created all focused on meeting the onslaught of online shopping, curbside pickup and the touch-less experience. The largest step-change in this area has to be the advent of dark stores / warehouses and their complement dark kitchens for food service. These new spaces allow maximum efficiency in product preparation and predictive fulfillment in very close proximity to the final user, eliminating many traditional last-mile challenges while enabling new fulfillment opportunities. One such service is Walmart’s “To-Fridge Delivery” service, which will see employees stocking iceboxes in-homes while people are out and about their day, fulfilled from localized distribution points.
Self-service is another real-time experience that will enable shoppers to get products quickly and reduce friction from store visits. Last year, Sainsbury’s and Hudson Airport retail implemented “just walk out” technology in partnership with Amazon, expanding self-service way beyond lockers, kiosks, and vending machines. All of this is supported by 46 percent of shoppers in the Reflect study saying they prefer a more DIY shopping experience with self-service options, up more than 10 points from 2019. Shoppers are also showing preference for self-service assistance interactions, and it will be interesting to watch how this on-demand retail and real-time accessibility change the traditional retail check-out into a check-in.
The New Loyalty? Value-Exchange!
So far 2022 seems to suggest that shoppers are truly in for a great year as they return to physical retail in large numbers but also continue to push eCommerce toward what Forrester predicts will be 24 percent of all purchases by 2024. Retail sales should be up across all categories if the most recent holidays are any indicator and, finally, digital tools of all types will move from the nice-to-have category into true value generators. Now, all of this may be stifled a bit by the ongoing supply-chain issues and growing inflation, but I will leave the analysis and predictions on those to more highly qualified financial pros.
All of which strongly suggests that there’s going to be a shift back toward real value exchange between brands, retailers, and their shoppers, making me hopeful that the human aspect of retail will, again, be at the forefront and experiences that solve their problems will rise to the top. All absent the possibility of losing to a Stage III diagnosis.
Steve White is a SVP, Commerce, for WONGDOODY, A Human Experience Company. Powered by Infosys.