The prolonged pandemic continues to shape how retailers and brands strategize and execute to grow their business. 2022 will be a year of investment and new partnerships as retailers position their business model, strategy, marketing, stores, and operations to flourish in a post-pandemic world. Specifically, in 2022, we predict that for retailers and brands:
- The circular economy will become a must-have — and fuel intense investment. Patagonia and REI run buyback programs, and H&M and IKEA design products with reuse in mind. Storied department stores Galeries Lafayette (RE)STORE) and Printemps 7ème Ciel (or Seventh Heaven) unveiled their “circular fashion spaces” in 2021. Consumers like buying secondhand products because they’re unique and less expensive — and for the fun of finding a bargain or special item. For retailers and brands, it makes good sense for both the planet and the business: Sixty percent of online adults in France, 49% in the UK, and 41% in the US prefer to buy environmentally sustainable products. On the heels of Kering investing in Vestiaire Collective and Groupe Artemis in GOAT Group, among others, we predict that investment in companies that facilitate this logistically challenging offering in 2022 will push into the single-digit billions of US dollars.
- Returns will become the next retail competitive service differentiator. Originally seen as part of “boring but necessary” operations, returns will become a hot differentiator for retailers in 2022. Returns directly influence consumer choices: About three out of five French, UK, and US online adults prefer retailers that offer free return shipping; about two out of five prefer retailers that provide refunds via the original form of payment. More fundamentally, online consumers have told us that fear of returns has outright discouraged them from buying online. Customer-obsessed retailers and brands will invest to upgrade returns (locations, streamlined processes, refund issuance, internal returns processing) and, like Wayfair, will work to share data internally and upgrade how they present products to avoid returns in the first place.
- Partnerships — of all kinds — will be the key to growth in the midst of market tumult. The turbulent 2020s started with a (pandemic) bang — and savvy retailers and brands are wisely partnering to up their business agility, continually reinvent themselves, and appeal to existing and new customers. Think established retailers partnering with direct-to-consumer brands that are eager to establish and expand their physical footprint — minus the store operations learning curve and cost of going it alone. Think also of retailers investing further in burgeoning retail media networks to reap eye-popping revenues (we think to the tune of $50 billion globally by the end of 2022). And regulatory changes in China around both market regulation and — significantly — personal information protection mean that Western brands will spend 2022 vetting and courting new partners beyond Alibaba and JD.com, including niche marketplaces and mini programs via companies such as Douyin, Little Red Book, and WeChat.