Whether it’s with restructurings, supply chain bottlenecks or COVID-19, retailers are in for another year of disruption.
And stores will “return to prominence” but must treat its frontline workers better and develop creative strategies to entice consumers to shop amid rising prices, changing lifestyles and priorities.
Those are just a few of the predictions for 2022 and insights on what retailers should do this year from AlixPartners, a management consulting firm that helps businesses with anything from performance improvement to restructurings and transformations to risk mitigation.
AlixPartners has been in the spotlight lately. The firm was hired last year by Macy’s to explore possible strategies that could unlock value for shareholders, including possibly separating macys.com and the Macy’s brick-and-mortar stores into separate companies. In addition, AlixPartners assisted Saks Fifth Avenue last year on separating its dot-com and store operations into two different companies.
“Expect to see continuing buzz in mergers and acquisitions activity in the industry as retailers divest lower-priority assets to fund necessary investments in technology, data analytics and omnichannel offerings,” AlixPartners, named after the firm’s founder, Jay Alix, indicated in its report on 2022, released Tuesday.
The firm also predicts that retailers will focus on more accurate product attributes and management within their dot-com operations. “This means that even as online assortments grow, they will become easier to navigate for consumers. To lower return rates, retailers will add more realistic virtual try-on technology. They will also continue to add new payment forms, including cryptocurrency, and focus on better privacy and security of customer data,” AlixPartners indicated.
Among the other predictions by AlixPartners:
• Stores return to prominence: Retailers have been busy rebalancing their store portfolio, with more than 15,000 units closing just in the U.S. over the past two years, AlixPartners said. “Businesses will learn anew what stores offer — the ability to connect better with customers, accept returns, offer services like loyalty signups and grow brand awareness.”
• Retailers need to think of store associates as more essential than ever and treat frontline employees as an asset, not a cost.
• Post-purchase services and return policies will become a competitive differentiator for online and omnichannel businesses.
• Livestreaming and other ways to connect with consumers will expand as these offer a new revenue stream, capture additional insights and provide new ways to feature brands and brand stories.
• Retailers must focus energies, talent and investments on better understanding and improving supply chain processes. The days of putting these operations on the back burner are long gone. Retailers that better integrate with suppliers and manufacturers through mutual insights exchange and increasing transparency around goals, problems and data will benefit.
• Retailers will streamline logistics, either through acquisition or partnering with third-party delivery companies.
AlixPartners also sees retailers continuing to seek more sustainable practices in sourcing. The circular fashion economy, based on the principles of reuse, resell and rental, will continue to become more prominent and pervasive.
In addition, rising inflation means retailers must develop creative ways to reduce discounting, like focusing on more product drops, and smaller, more frequent inventory releases to drive traffic, obtain more customer insights and lower customer acquisition costs, AlixPartners said.