Despite empty shelves, limited store hours and record high inflation, the future of retail is bright.
Retail industry leaders are preparing for a great “retail reset” in 2022, which will change how companies meet the needs of consumers and employees, according to Deloitte’s 2022 Retail Industry Outlook that was released on Friday.
“Retailers face significant challenges that will likely last beyond the pandemic, but there are also unexpected opportunities that can help them prepare for future disruptions,” said Rod Sides, vice chair and U.S. retail leader at Deloitte, in the report. “Retailers must figure out how to reset — as employers, at meeting consumer needs, and by being better corporate citizens — to compete in the next era of retail.”
The report, based on 50 interviews with senior retail executives from companies with at least $1 billion in annual revenue, examines how companies will change their businesses to be in stronger position in 2022. The report centered on three main areas: talent retention, supply chain advancements and digital investments.
When it comes to talent retention, 83% of retailers say they must heavily invest in recruiting and retention, especially given the high quit rates across the industry. 4.5 million Americans quit their jobs in November, with around 686,000 people quitting in retail. 70% of executives expect labor shortages, especially among hourly workers, to be the biggest roadblock to growth in 2022.
To combat the labor shortage, many retail executives said they plan to lean on automation and other technological advancements to stand in for fewer staff members in stores.
Leaders are also re-evaluating how they manage their supply chain capabilities. 2021 proved that a heavy reliance on one region overseas can prove disastrous in the event of factory closures and shipping delays. In the event of a crisis, leaders now know they need the correct technology to be able to track and manage their merchandise.
While supply chain automation and data tools will likely be top of mind for retailers in 2022, 57% of executives said they do not yet have plans to invest in robotics and automated products to handle their materials.
In line with the general focus on technology, Deloitte data suggests that retailers will continue to try and marry their digital and physical experiences. 70% of retailers are planning to invest in digital marketing, with 67% mainly focusing on e-commerce and online shopping. Only 25% plan to invest in digital security.
Notably, 64% of leaders expect retailers to focus on the space for digital goods in the next five years. Many companies such as Nike, Authentic Brands Group and Adidas have already made the leap into the metaverse and the realm of virtual goods. This is likely to be an area of focus for the industry moving forward.