ALEXANDRIA, Va.—Consulting firm Deloitte surveyed 50 senior retail executives to take their pulse on what’s ahead for retailers this year and into the future, and although worries about labor shortages, inflation and supply chain issues persist, the executives are optimistic that the current challenges will create more opportunities for long-term growth.
The pandemic has opened the door to a long-overdue “great retail reset” that will propel retailers into a more stable, and more profitable, position than ever before, according to Deloitte’s 2022 Retail Industry Outlook.
In the survey, 70% of executives said that labor shortages will hamper retail growth in 2020. That said, Deloitte projects a 3.5% GDP growth in 2020 and plenty of growth opportunities for retailers “who can get it right, who can figure out the talent, the supply chain, the digital,” said Kate Ferrara, Deloitte U.S. retail, wholesale and distribution leader.
Deloitte says 2022 offers the chance to “restructure outmoded supply chains, right size inventory management, review pricing, recalibrate promotional cadences and reinvent the physical store for the digital age.” This will likely require entirely new ways of thinking and long-term commitments from retailers, but these efforts could forever shift the way retailers conduct business. That future begins today, by addressing near-term retail challenges with an eye to the future.
The report is based on 50 interviews with senior retail executives, all of whom come from firms with at least $1 billion in annual revenue. More than half have $10 billion or more in annual revenue. Deloitte combined survey data with insights from the consultancy’s subject-matter specialists, client work and prior research, to develop a snapshot of strategies and investment plans that help inform the future of the industry.
Deloitte says key highlights from the report include:
- The workforce reimagined: After “the great resignation,” 83% of retailers say they are having to invest most heavily in recruiting new employees and retaining them. As retailers look to the future, they should invest in technology and automation to compete with more tech-savvy industries while also offering culture, flexibility, and purpose to attract talent.
- A shifting supply chain: Current supply-chain capabilities are changing as organizations desire more credible information and technology updates to develop a more agile system that can fit the modern-day shopper. Automation, transparency and new partnerships are key priorities among retailers.
- Physical and digital intertwined: The fusion of digital and physical experiences is set to accelerate, with 70% of retailers planning for moderate to major investments in digital marketing, and 67% citing e-commerce and online shopping as top investment areas. However, data security is a major concern, with only 25% of executives planning to make major investments in this space.
The 2022 Retail Industry Outlook is available for download here.
Convenience retailers are also optimistic about the future, despite the current pandemic-related operational challenges. A recent NACS Research “Pulse” survey of retailer members found that 3 in 4 believe their sales in the c-store channel will increase in 2022, and 71% say they will invest more in the channel this year; only 3% will invest less. Industry suppliers say several trends that emerged in 2021 will continue, including the growth of healthy options in stores, the expansion of delivery options and greater usage of mobile apps for ordering.
This marks the second strong year of investment in the c-store channel: A year ago, 63% of supplier members said they would boost their investment in the channel, NACS Research found.
In 2020, in-store sales reached a record $255.6 billion, according to the NACS State of the Industry Report of 2020 Data. Complete 2021 industry data will be announced during the NACS State of the Industry Summit, which will take place April 12-14 in Chicago. Join NACS for insights on the changing convenience shopper, the industry outlook for 2022 and beyond, winning trips in the digital space, category deep dives and more. Registration is open.
NACS Research conducts quarterly custom research with retailer members to identify key priorities and opportunities across the convenience and fuel retail landscape. Explore more NACS Research insights and data.