Pandemic spurring retail reset: Deloitte 2022 Retail Industry Outlook

Given this scenario of high growth and reduced health concerns, the document forecast real personal consumer spending (PCE) to expand in 2022.

Deloitte expects services to lead the recovery in 2022, while durable goods should decline, given the strong growth in the category in 2020–2021.

Despite increasing bifurcation, executives are confident that consumer behaviour is moving in their favour, especially around the willingness to spend and a return to in-person experiences, the document said.

However, recent consumer data suggests that consumers are rethinking priorities, with one-third of consumers saying they are spending more on experiences than possessions compared to a year ago.

Executives appear optimistic about revenue growth and margins for 2022. Some are even taking perceived headwinds and turning them into opportunities. For example, 58 per cent saw inflation as an opportunity to take price and improve margins. Others are rethinking their old buying and discounting cadences.

With fewer products to sell, some stores even stopped offering promotions, thereby boosting profits. Others built on strategies already in the works, such as closing unprofitable locations and strengthening their positions to emerge from the pandemic, according to the document authored by Rod Sides, vice chairman, US retail, wholesale and distribution leader, Deloitte, and Lupine Skelly, research leader, US retail, wholesale & distribution, Deloitte Consumer Industry Centre, Deloitte Services.

Though with other retail headwinds like supply chain and labour shortages pushing against progress, it appears that lasting optimism might be tenuous for now, the document said.

“In evaluating where retailers plan to invest in 2022, it is apparent that some are seeking short-term stopgap measures, while others are working to ensure that today’s solutions will have more lasting effects on their businesses down the road. Many retailers will face similar challenges in 2022, so it was not surprising that at least 80 per cent of the executives surveyed plan to make moderate-to-major investments in digital and supply chain,” the document said.

Not every retailer can scale to compete with large players that are utilising their data to maximise supply chain efficiencies and offer personalised experiences. Those that are unable to scale should pursue other options like transparency, accessing underutilized assets and collaborating with new partners, the document said.

In 2022, Deloitte expects the fusion of digital and physical experiences to accelerate further. A key takeaway from the pandemic has been that consumers have reset their level of reliance on technology and digital platforms.

ALCHEMPro News Desk (DS)