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Although I’m sure all of us would love to look inside a crystal ball to see what the year ahead has in store for us, retailers should look to use 2022 to prepare themselves for the fact that change is just as inevitable as it is unpredictable.

As the last couple of years have shown, the normal rules of planning two or three years into the future simply don’t apply anymore. What matters now is a retailer’s ability to transform business operations in a way that is capable of quickly adjusting to unpredictable market conditions.

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Martyn Cole Retail Directions
Martyn Cole, Director of Commercial Operations at Retail Directions

It’s time to stop talking about consumer trends and start focusing on consumer priorities.

More disruption ahead for retailers


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Retailers would be forgiven for thinking the bad times were over, but plenty of challenges remain, all of which need to be navigated over the next 2 months.

Supply chain issues continue to disrupt retailers and frustrate customers, as is the constant risk of labour shortages. Costs are also steadily rising with inflation, threatening to make a big dent in the profits many retailers, especially e-commerce stores, have enjoyed recently. 

Consumers have had much more disposable income during the past couple of years, but they may soon feel the crunch with the effects of inflation, the cost of living, and predicted increases in food and energy bills.

For brick-and-mortar retailers, consumer confidence remains low. There’s less willingness from consumers to make trips out, evident even around Christmas where footfall was down 32% in 2021 from 2019 levels. 

It’s becoming increasingly harder for retailers to plan ahead, the question is, what can they plan for?

Going back to basics

Retailers can’t predict the unpredictable, and they instead need to focus on new consumer habits and priorities and what they want in the short-term – being months, not years ahead.

For example, getting social distancing signage and the in-store experience focused on reducing risk can help increase consumer confidence. It may be that retailers have to go back to retailing 101, delivering against a consumer’s basic psychological and physiological needs. Only when footfall increases can they then start to add on more experiential experiences.

Retailers risk falling foul if they rely solely on long-term strategies. In the current environment, scenario-based planning holds the best value for retailers, enabling stores to rebalance their operations so that they can react to unplanned events almost instantly.

A short-term focus on consumer needs will allow retailers to see a slow, natural recovery – especially as high street stores look set to remain open in the first half of the year in the UK, which will boost consumer confidence. 

Consumer expectations will also have to be managed when it comes to delivery. It’s becoming harder and harder to account for the costs and logistics of same- and next-day delivery services, not to mention the loss of trust when items aren’t delivered when promised. 

To earn that trust back, retailers will need to focus on providing an omnipresent shopping experience – making it easier for the consumer to buy when and where suits them. Retailers that go the extra mile will realise an opportunity here, as the smooth and transparent delivery of items becomes a key differentiator between stores. 

Reverse logistics is another challenge for retailers, especially ones invested in physical and online stores. By putting Point of Sale (POS) systems in place, distribution centres and warehouses can better handle returns from stores while offering an improved e-commerce experience.

For example, when national lockdown measures hit, omnichannel retailer Cotton On Group quickly moved in-store stock back into its warehouse to help smooth online deliveries. Centralising stock in this way also helped satisfy customer demand by providing a wider range of products and avoided having stock left gathering dust in stores.

Focus on priorities, not trends

Resetting and managing consumer expectations will be key for retailers in 2022. The wide-range of international goods that we’ve become accustomed to will likely remain limited for some time, and retailers will need to work hard to reset consumers expectations as reduced ranges, higher prices, and longer delivery times becomes the norm.

But if retailers can focus on these fundamentals – striking the right balance across their channels while managing consumer expectations – 2022 may well exceed all expectations.

As Charles Darwin put it: “It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.”

 

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