Due to the COVID-19 pandemic, 2021 proved to be another atypical year for retailers. As we look into the coming year, don’t expect things to go back to normal just yet. 2022 will bring its own set of opportunities and challenges that will keep retailers on their toes as they try to balance customer demand against supply chain issues.

Here are ten trends we expect to continue or gain momentum in the next 12 months:

1. Supply Chain Disruptions. Problems in the supply chain have persisted since the pandemic started, causing logistical nightmares and product shortages. The issue impacts all industries and makes it especially difficult for retailers to stock inventory. Much of the problem revolves around shipping containers. Asian manufacturers are having trouble getting containers to ship their goods because many containers are stuck in ports worldwide. Large retailers such as Walmart, Target, and Home Depot are even chartering their freightliners to bypass supply chain issues. Disruptions are expected to continue throughout the year, so retailers should be planning inventory 12 months out. This will also affect IT decisions because component availability and logistics issues are causing implementation delays.

2. Labor shortage. If supply chain disruptions weren’t enough, retailers are also contending with labor shortages around the world. U.S. Labor Department in August reported 10.4 million job openings. The shortage is forcing retailers to offer higher compensation and hiring bonuses and, when even that doesn’t work, reduce their hours of operation. Retailers also are investing in various technologies to soften the impact of the labor shortage.

3. Rising Costs. Retailers also are facing rising costs. Production and raw material costs are up, pushing up the cost of inventory. Add that to higher labor costs, and it’s easy to see that price increases in retail are inevitable.

4. Hardware Sales Technology investments help retailers deal with the labor shortage and meet customer expectations for an omnichannel experience. Some investments require hardware upgrades, which explains why POS and other retail-related hardware sales are up after a pandemic-driven slowdown. One area of focus is mobile POS; IHL predicts that POS tablet shipments will grow at 23% to 1.1 million in 2025, up from 892,000 in 2020.

5. BOPIS and Curbside Pickup Omnichannel strategies got a boost from the pandemic, particularly in the areas of BOPIS (buy online, pick up in-store) and curbside pickup. Expect this to continue; shoppers want the look, feel, and convenience of online shopping to be replicated in-store. That means deploying kiosks, mobile POS, and digital signage to enhance the customer experience at brick-and-mortar stores.

6. Brick and Mortar. Expect to see continued investment by online retailers in brick and mortar. Others will follow the lead of Amazon, eyeglass seller Warby Parker and mattress store Casper.com.

Physical stores make returns simpler and increase the potential for further sales as shoppers walk through the aisles. Physical stores serve as an extension of the brand and can become mini-warehouses supporting the omnichannel.

7. Online Subscriptions. While some online retailers invest in brick in mortar, others are relying on subscription-based shopping. Shoppers can place recurring orders for a myriad of items, including pet food, coffee, perfume, and shaving kits. This brings convenience and consistency to the shopping experience and recurring revenue for retailers. As consumers look to automate purchases, retailers can lean in with technology and business models to support this preference.

8. Unattended and Self-checkout. One visible effect of the pandemic at retail stores is self-checkout, which virus-wary consumers view as a safer way to pay for purchases. It was first deployed in grocery and big box stores over a decade ago to mixed results. Still, the technology is getting better and showing up even at smaller locations and quick-serve restaurants. Consumers are also accustomed to purchasing food or movie tickets through unattended kiosks.

9. Cash Resilience. Despite self-checkouts and other trends that reduce cash use, cash in circulation has actually gone up. Consumers still want to use cash in many situations, such as purchases of $10 or less, farmers’ markets, and pop-up stores. Despite pressure by cashless advocates to make all payments electronic or card-based, there is a bill in Congress that would make it illegal to ban cash. Supporters of the bill say a cashless society would hurt the unbanked and underbanked.

10. Values-based Shopping. Some shoppers base decisions on where to spend their money on values such as eco-friendly practices, social consciousness, and fair labor policies. For retailers, this means taking a position on important issues to some shoppers and creating the risk of alienating some groups. Sustainable businesses continue to be important to younger generations and key decision-makers.

The new year promises to be an interesting one for retailers as supply chain and labor shortage issues continue. But with the right investments in technology, processes, and people, you have a real chance to make it a successful year.  We hope 2022 is productive and profitable for all of you. 

To see our 2020 predictions and what came to fruition, click here.

Happy Holidays!

Paul Griffiths
President and CEO
APG Cash Drawer, LLC