Retail Trends

Why 2022 Must Be a Year of Test & Learn

Dec 16, 2021

What will define 2022 for retailers? Johan Sommar, Senior Commerce Advisor at Avensia gives us his view of what we might see in modern omnichannel commerce next year.

Part of my job as commerce advisor at Avensia, is to keep an ear to the ground and pick up what’s coming next in retail. I give lectures on modern commerce and I help Avensia’s customers find the direction for the future of their business, by looking at strategy as well as technology. As the year is coming to an end, I thought I’d share some thoughts about what we might expect in modern commerce in 2022.

 

The Big Question Marks in Omnichannel Commerce 2022

100 years ago, we relied on the general store to provide us with everything we needed, from groceries to the supplies for a new roof. Today, in most urban parts of the world, we can rely on the internet to provide us with everything we need. But do we really want to? Do we want to do all of our shopping online? And can we rely on the supply chains that we once trusted, going forward?

Insecurity is the number one thing that will define 2022 for retailers.

Here are a few challenges retailers face, caused by the insecurity that the pandemic and the state of the world has brought on:

  • Omnichannel offering. To what extent will people go back to physical stores, as e-commerce is growing exponentially and becoming hyper-convenient? What type of physical stores will consumers want to visit? Do they want Disneyland or a hole in the wall? Experience-driven concept stores? Social concepts? Or just nice-looking delivery hubs to pick up their e-com purchases from?
  • Supply chain and logistics. Is it time to stop relying on week-long deliveries from Asia? Is it worth the risk? Is there in fact a business case to bring production closer to home? Will consumers reward you for local production in this era of transparency and #supportyourlocal?
  • Sustainability. It's not only a matter of reducing carbon footprint and publishing your sustainability report. It is about a massive and tangible consumer demand for total transparency and sustainable business models. How can retailers rethink business models, when they barely manage to keep up with competition using the traditional ones?
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Need is the mother of invention. And the need has never been greater to find new ways of doing business.

Winners in 2022 Will Be Those Who Fight Insecurity

So what is safe to bet on for 2022? What can retailers do, in this time of extreme insecurity? My answer is not a new one. The silver bullet is called Data. Data that you get from the people with the answers to many of the above questions. The consumers.

Need is the mother of invention. And the need has never been greater to find new ways of doing business. So I predict that 2022 will be a year of experimentation and innovation. Not only because we have to, but because we can do it smarter than ever today. We have the means to do small-scale testing that might lead to big learnings, and big business. Here is why:

  • Empty store spaces allow for experimentation
  • The tech that exists today allows for small-scale testing of new concepts, at low cost and low risk
  • Consumers are digitally mature and are more used to tech-driven retail concepts
  • The infrastructure for omnichannel and fast deliveries is growing rapidly

Retailers who take this opportunity to test and learn will beat insecurity. They will know what works and what doesn’t work, fast. They will know how to go forward. And they will be the winners in 2022.

 

What Type of Businesses Will Start Experimenting (or have already started)?

I can see a few types of businesses who will be testing out new things in 2022. One of them has already started and will only have to keep up the good work.

  • Small businesses, start-ups who have the means (Tech, Know-how and a Test & Learn mindset)
  • Big businesses who have no choice but to start trying out new things
  • Organizations with a composable business mindset

For a start-up in retail with a Test & Learn mindset, the future is bright. Chances are that they will fail at first, perhaps a few times, but that is part of their process, their way of learning and finding their recipe for success.

For big businesses, failure might not be taken so lightly within the organization. Fear of failure is actually one of the top reasons why many experimentation initiatives die. An old-fashioned organization, where mandates are in the way for innovation through iteration, is the biggest obstacle for improvement through testing.

But there is hope. Again, need is the mother of invention, and now is the time to use that card to convince the Management Team to start experimenting. Before you do, I recommend that you listen to this Modern Commerce Talk: Experimentation: Success factors and pitfalls.

Organizations with a composable business mindset have already understood the power of experimentation. They are leveraging the power of agility in both technology and organization and have been reaping the fruit for some time already. They are the ones that had no trouble adjusting quickly once the pandemic struck. This inherent agility allows them to test new things in their current offering, in a small scale, at low cost. If customers appreciate the new feature, the retailer can scale it up and put another feather in their hat for being innovative. And maybe for having started a new trend.

The innovation race has already begun

The pre-pandemic playbook for commerce is outdated. Retailers need to test new things to meet new customer expectations, and to make new, more sustainable business models work. The race to discover what these models look like has already started; There are great examples of retailers out there who have tested their way out of insecurity, from scratch, or with small, but very powerful additions to their existing tech stack. This is the recipe for an innovative 2022: Start small, scale fast.


Happy New Year!