Retail

Retail Consumer Trends to Watch in 2022

February 23, 2022

Building brand loyalty, introducing innovative products, and following consumer behavior trends are essential for retail brands to succeed. The rapid development of technology and the fast adoption of digital is affecting consumer trends, as well as the growing awareness of ethical issues such as sustainability.

Looking forward to 2022, these are a few retail and consumer trends to watch.

Shifts in demand channel

The impact of the pandemic and acceleration of digital has shifted the demand channel. The lockdown and restrictions forced retailers to move online and replace the traditional store with innovative technology. Consider that MENA’s e-commerce sector was already one of the fastest growing in the world before the pandemic. Now, 80% of young Arabs are more inclined to shop online.

The growing demand for e-commerce retailers means that traditional retail businesses are forced to provide supply in an online capacity, meeting the demand in a personalized way.

Shifting consumption habits

Around the world, people are adopting the hybrid working model, including in the UAE where many businesses have reintroduced the hybrid and work-from-home options. Not only does this change the business dynamics, but also impacts the consumption of various goods, particularly in the CPG industry.

The shift in working routine has directly impacted consumers’ consumption habits with a larger portion of the workforce eating breakfast and lunch at home every day. In turn, consumers are looking for meals that are easier to prepare at home, and there’s been a reported 35% increase in snacking.

Artificial intelligence in retail and consumer goods

In 2021, the first automated supermarket powered by AI technology in Western Asia was opened in the UAE. The store symbolized Carrefour's vision for the future and largely mimics Amazon’s unmanned grocery store that was opened in 2018. Incorporating AI into the retail and consumer goods space seems to be a trend that will develop further in the future.

AI is used in several ways, including to enhance consumer experiences, and forecast behavior. In addition, AI helps media buying and plays a role in smart products. As data becomes an increasingly valuable part of achieving success in the retail and CPG industry, we can expect larger investments in technology.

Supply chain and operational resilience

Forecasting will play a pivotal role in the efficiency of supply chains and operations. By leveraging data types and using advanced analytics, retail businesses can streamline their manufacturing and inventory, and boost innovation.

By leveraging the likes of the Internet of Things (IoT) and 5G, manufacturers can bypass delays in delivery, decrease shipping costs and keep pace with customers' growing demand.

Sustainability

Over recent years, sustainability has been guiding consumer decisions and various governments are stepping forward to shape sustainability for the future. Consider Saudi Arabia's Vision 2030 strategic framework which has sustainability as a core pillar.

In turn, large companies are prioritizing sustainability as a key element in the future success of their company. In particular, the concept of fair trade and environmental, social, and governance (ESG) issues are becoming increasingly popular.

The Journal of Applied Corporate Finance even says, “companies with a weak ESG proposition saw double-digit declines in market capitalization in the days and weeks after missteps came to light.”

Resilient IT systems

When businesses moved online, companies scrambled to fortify their online efforts. As brands have established themselves digitally, these systems are becoming stronger and more integrated.

Automation, real-time data, and improved security are all aspects that will continue to play a role in digital solutions.

Customer and employee experience

Previously, the customer was king. Now, there’s been a shift to prioritize the employee as well. A recent survey revealed that one in five Arabs report to have lost their job, or someone in their family has lost their job, during the pandemic.  As a result, the marketplace has become more competitive, and the employee experience has a renewed focus that aligns with customer experience.

Retail leaders that prioritize customer satisfaction realize that employee talent plays a critical role and will invest accordingly.

Supply chain and next-gen advertising investment

The next generation will affect the future of retail in various ways, including digitization, brand adaptation through elasticity, and multimedia experiences. The increased focus on e-commerce shopping has caused retailers to reassess their supply chain and their advertising efforts.

Data and targeted advertising at the online point-of-purchase have become increasingly important, and there’s been a shift to focus on SEO and paid placements in the search engine results.

The rise of the digital consumer

Consider that the UAE retail e-commerce market reached almost $4 billion in 2020, a 53% year-on-year increase. The digital consumer has different behavior to a shopper browsing in a mall. They are open to exclusive offers and deals and prefer targeted, personalized messaging.

The rise of the digital consumer has forced consumer goods companies to build online retail channels, develop brands and categories that work in a socially networked world and exploit technology-driven opportunities.

Increase in contactless payment

COVID-19 increased the focus on the contactless experience. The shift in behavior has proved its value and is here to stay in 2022. There is greater use of in-store self-checkouts and contactless payments.

For example, in the UAE, contactless payments now make up almost 85% of all face-to-face card payment transactions. The advantages include ease of use, safer transactions, and the flexibility of payment devices.

Voice search and personal assistant

Voice search and personal assistant devices are both AI developments that help consumers order online without having to press pause on daily happenings.

Retailers can take advantage of this trend by displaying their products on various Google platforms so that customers can shop through Google Assistant and Google Home.

Virtual and Augmented Realities (VR/AR)

The metaverse combines AR, VR, and video to provide a digital shopping experience. Retail will experience unique growth and challenges in the metaverse. As the pandemic drives changes in the retail industry, the metaverse provides a space to offer a different brand experience. We’re already seeing how the metaverse, and AR, are playing a role in customer service and this development is expected to expand into various other industries as well.

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At Ollen Group, our strategy consultancy services are up to date with consumer shifts in the Middle East, and the necessary steps needed to find success in the future - including the development of different aspects to be part of the metaverse and cope with the demand for digital progression. Ollen Group technology consultancy services and retail consultancy services offer turnkey solutions from strategy to execution, as well as design, development, and deployment.

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