Retail in 2022: Hot Trends, Types, and StatisticsMaria Spark
The retail industry is one of the leaders in world-changing solutions. As the pandemic covered the world, retailers had to quickly adjust to the new reality, generating innovative solutions and restructuring their normal workflow. The market has been absorbing advanced technologies and bringing brand-new products to the surface. Today we`ll review the key trends of the retail development and its most popular types.
What is Retail?
This is a way of trade organization where market and stores buy goods in bulk, and then sell them at a markup in their outlets.
The key feature of retail is a wide variety of goods and services that can be purchased in one place. Often people buy more goods at one point of sale than they planned, thanks to sales promotion techniques. There are other characteristics typical for retailers:
- Favorable location. Retailers place their stores as accurately as possible. For example, jewelry stores with expensive goods are located in the city center and in areas where the wealthiest people live.
- Easy search for the necessary goods. In supermarkets, products are placed by categories, groups, and brands, which makes navigation through the outlet intuitive for customers. Online stores use similar techniques: convenient filtering and product search by word.
- Marketing techniques. Retailers effectively use promotions and discounts, as well as price tags, shelftokers, wobblers, and other POS materials to attract attention to certain products.
- Self-service. Thanks to the use of marketing techniques, customers can serve themselves independently. This speeds up the purchase process and requires less staff.
- Automation of accounting, procurement, and storage of goods. Computer programs allow you to save time and money on accounting. In this way, companies optimize their business processes and simplify logistics.
To set up your own retail startup, it`s important to distinguish between its types. Here are some of the key formats.
Cash & Carry Store
This is a self-service shop that enables customers to purchase various goods at retail. Typically, such stores are focused on small wholesale buyers who purchase goods for cash. The policy of low prices and the constant availability of wholesale allows you to maintain a high turnover in all product categories. The Cash&Carry store provides a wide range of both food and industrial goods.
The store of this format operates according to several price lists, depending on the volume of purchase. Since the main customers are wholesale and small wholesale buyers, making a purchase involves the prompt preparation of accounting documents, the provision of additional documents for the goods.
This is a retail enterprise offering a wide range of goods for mass consumption, in various product categories, known as departments. In large cities, the department store became extremely popular, and greatly changed the shopping habits of customers, as well as the concept of quality service.
Today department stores are also called supermarkets. They often include clothing, furniture, household appliances, toys, cosmetics, gardening, toiletries, sporting goods, paints, and equipment. Sometimes they offer food, books, jewelry, electronics, stationery, photographic equipment, children's goods and pet products. Some stores are part of a whole within a larger retail chain, while others are independent retailers.
This is a low-price shop with a self-service system. Unlike traditional store and supermarkets, its assortment is limited to the daily goods. As a rule, the area of such stores is about 700-1000 m2, with a simple layout and design. The goods come directly from distribution centers and are displayed in the sales hall without pre-sale preparation.
This makes it possible not to use warehouses and utility rooms and save on staff. Therefore, the margin in such stores is minimal, usually does not exceed 10-15% of the purchase price, only 2% of which goes as profit. In traditional stores, the margin on the goods can sometimes reach 50%.
This is a small–sized shop that works most often around the clock and offers everyday goods, a range of products, and mini-cafes. It is aimed at the flow of constantly passing by buyers who have decided to make an impulse purchase.
For example, Tokyo is full of convenience shops where people come in after work and buy food for dinner. There is often a coffee machine and you can buy some pastries for coffee. Such stores always sell fresh newspapers and magazines, sweets, nuts, carbonated drinks, and cigarettes.
Statistics on the Retail Market Development
In 2021, the global retail market was valued at $26 trillion which is nearly 9% more than a year before. It is projected to reach $28 trillion in 2023 and hit the mark of $30 trillion by 2024.
The resent research shows that 80% of all retailers will accept and process orders via the Internet, and the location of a physical store will be of paramount importance for the success of the business. At the same time, retailers are likely to use an omnichannel approach in organizing their business.
In addition, most retailers start to prioritize the mobile commerce and create websites of their stores that work seamlessly on mobile devices. In fact, mobile commerce sales worldwide are expected to exceed $3,5 trillion this year.
Key Retail Trends in 2022
Eco-friendliness & Sustainability
Every year, buyers are becoming more interested in the eco-friendly agenda. Now they are moving from supporting ideas in a global sense to concrete actions that are easy to integrate into everyday life.
According to Google, the number of generalized queries is decreasing worldwide. Users from the UK began to search for "vegan diets" 47% less often, while the more specific query "organic meat delivery" increased by 158%. The amount of requests for "vegan restaurant" decreased in Germany by 17%, and "vegan lunch recipe" increased by 180%.
Further popularization of the trend for conscious consumption lies in the plane of simple actions available to everyone. They will allow you to gradually form more complex habits, and FMCG market players have every chance to take advantage of this opportunity and build strong long-term relationships with their customers.
Now let`s see the way startups take advantage of this tendency to streamline their business processes and boost sales.
Since 2019, the company has been using eco-materials when opening new physical stores. With the help of recycled paper and plaster, Veja makes shelves and furniture, while recycled wood is used for flooring. In addition, the stores are fully powered by renewable energy sources provided by the French eco-brand Enercoorp.
"VEJA is aimed at eco-friendly ideas. We do not seek to make super profits, but make sure that our shoes meet quality standards. We are guided by the principles of fair trade, so we use only organic cotton, wild rubber, and natural silk in manufacturing" the co-founder Sébastien Kopp says.
Businesses are striving to bridge the gap between offline and online shopping. The latter has been gaining momentum for the last few years but some drawbacks still remain. VR solutions enable companies to overcome online challenges like the lack of fitting rooms, wrong product presentation, and unmet quality expectations.
With the help of virtual reality, users can try on clothes and shoes, put makeup on, and even drive a car without leaving home. As a result, brands can create an immaculate online shopping experience, decrease customer churn, and raise sales revenue.
The society has already taken the first steps towards a new reality and metaverse: online concerts, virtual clothing from world brands, digital influencers, and more. There are a few examples of the way retailers implement VR solutions to gain a competitive advantage.
The service enables users of online stores to try on clothes in real-time without leaving their homes. To do this, the user simply selects a photo from the gallery, and an algorithm based on computer vision analyzes and converts the photo, integrating the selected thing into the photo.
The company asserts that online fitting rooms will allow businesses to increase customer engagement in the product by 300%, raise the average receipt by 30%, and reduce logistics costs by 10%.
The startup projects help people around the world try on shoes, watches, or manicures online. Its applications use computer vision technology for AR visualization of products. Wanna Kicks lets you see what a sneaker model will look like on your foot, while Wanna Nails helps users try different colors and forms of nails.
Phygital is the fusion of "physical" and "digital". Such platforms combine the advantages of online trading and traditional retail stores to reach a better customer experience.
In the last few years, brands have been increasingly mixing the elements of the digital world with the physical one. Here is one of the brightest examples in retail.
The company brings together such technologies as machine learning, augmented reality, computer vision, LIDAR technology, and photogrammetry. All of them are aimed to improve the quality of its physical and digital stores. For instance, users can connect to the shop via Bluetooth and change the space if they like.
With the help of QR codes, companies can automatize the work of huge trading platforms, save budgets on printing receipts and price tags, and even introduce digital passports of goods.
Recently, QR codes have been used not only for anti COVID-19 measures, but also for business purposes. Here are a few of prominent retail cases.
Chinese e-commerce giant is scaling up sales of its subsidiary Hema Fresh. The supermarket chain is represented by 200 grocery stores, where there are no cash registers. Instead, people pay for their purchases only using a mobile application.
Therefore, when coming to Hema Fresh, the buyer will only need the application of the store network to which the Alipay account is linked. When buying, the customer points the camera of the mobile device at the QR code.
The company provides open information about manufactured products and their environmental friendliness. In May 2021, it announced the intention to introduce passports of goods in the format of QR codes.
Horizon became the first collection of the brand with passports. They contain information about the composition of the fabric, origin, and rules of care.