19 May 2024, 08:41
By Dave Huntoon Mar 07, 2022

Predictable pandemic performance?

Businesses are adapting to the pandemic’s vagaries, and, for the first time in three years, retailers will be able to predict with some assurance what their comparable sales growth will be – says Intalytics’ MD Dave Huntoon, who offers six predictions for 2022 …

Since the beginning of the pandemic, and due to the associated closures, consumer behaviour changed – making forecasting exceptionally challenging. 

However, although there will be ongoing outbreaks and mutations from Covid-19, which will have an impact on consumer shopping habits and demand, these will now be anticipated by retailers, and will be relatively predictable.  

Steady ecommerce sales gains

Online shopping skyrocketed during the pandemic due to a combination of store and restaurant closures. As a result, online sales saw a significant spike, with the ecommerce market growing at an exponential rate (in the US, non-store sales skyrocketed by more than +25% in Q3 2020 alone, according to a Digital Commerce 360 analysis of US Department of Commerce figures).

However, online purchasing as a proportion of total retail sales has now returned to historical levels. In the US (again referencing Digital Commerce 360’s findings), online retail sales jumped from 12.4% of total retail sales in Q3 2019 to 15% in Q3 2020, and settled back to a more historically consistent 14% in Q3 2021. Looking forward, as the market settles, retailers can expect a slow but steady rise regarding online orders. Therefore, an omnichannel strategy will be key, with a mix of brick-and-mortar stores and an online presence needed for retailers.  

To generate profits, these businesses must be guided by their customer demographic when deciding their offering, making sure they’re leveraging all the data available – the average customer spending and customer profiles (age, gender, etc) – which will enable the forecasting of behavioural patterns. From here, businesses can devise a steadfast omnichannel strategy that puts the customer first and does not solely rely on website algorithms – instead, this approach will consider location intelligence.   

Inflation (an excuse to raise prices, at last)  

Retailers have been constrained in their ability to raise prices for the past 10 years. However, rising labour costs and issues with supply chains have resulted in higher price points for consumers. Expect price increases, or corresponding reduction in value, to persist throughout 2022, bringing little clarity for businesses regarding long-term inflation trends. 

Private equity rollups  

The private equity world will continue to target selected industries with significant numbers of independent operators, looking to realise value through increased buying power, operational efficiencies and best practices.

The growth of the customer-centric perspective  

Retail expansion has historically focused on the projected financial returns afforded by one-off store deployment decisions, or by investments in ecommerce and logistics. Successful operators have adopted a customer-centric approach – what combination of physical stores, ecommerce, shop-in-shops, channel partnerships and new prototypes will best serve existing and potential new customers? 

How to cater to audiences and provide the most profitable returns will be an ongoing and ever-changing conversation this year.  

Asset reprioritisation

As an adjunct to the customer-centric theme, tenants across various industries will increasingly look to reassess their existing brick-and-mortar deployments and close or relocate stores where appropriate. This is most significant for regional shopping centre tenants, who need to reposition soon if they want to stay relevant.

Dave Huntoon is the MD of Intalytics, a Kalibrate company.

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