A jumble of predictions for the coming year is already beginning to circulate. Prognosticators are weighing in on whether meta will be mega, if 2022 will be a breakout year for NFTs or if this will be the year shopping malls make a comeback.
NRF has been publishing predictions annually for nearly two decades. With a practical view steeped in collective knowledge, some might say we have an edge. Still, there will almost always be trends that defy long-range forecasting: Hello, COVID-19.
Before we speculate about the trends most likely to shape 2022, we wanted to look back and see just how often our predictions truly materialize. Five years ago, we made seven predictions for 2017. What did we presage would be forthcoming?
Let’s start by setting the stage, recalling what happened in 2016 and what occurred in the world of retail in 2017. Among the biggest headlines of 2016: Amazon introduced the Dash replenishment program and, later in the year, unveiled the first checkout-free grocery store. And Walmart bought Jet.com in August 2016.
Leading the news ticker in 2017: Target invested $7 billion in stores and technology, Macy’s steadfast CEO Terry Lundgren retired and Amazon bought Whole Foods Market for $13.7 billion. How many retail seers saw that coming?
But back to NRF’s predictions: Were we even remotely accurate? It turns out we did OK — reasonably on target with most, though off the rails on a couple.
Machine learning will revolutionize retail
Machine learning continues to revolutionize retail in 2021, and it’s fair to suggest its impact will be transformative for years to come. The stakes are high for retailers: Those leveraging machine learning and its sibling, artificial intelligence, can deliver better customer experiences and are gaining ground on the laggards. With ML and AI in tow, personalized product discovery, relevant product recommendations and optimized fulfillment and delivery are attainable.
While it’s been five years since we called it out, companies are still wrestling with the capabilities of ML and AI. Recent Gartner reports found that 85 percent of artificial intelligence and machine learning projects fail to deliver on objectives; only 53 percent make it from prototype to production. That said, the appetite for ML and AI investments remains hardy and it is imperative for retailers to build trust in data-driven decisions. Bottom line: ML and AI are not plug and play; these technologies require comprehensive corporate buy-in.
No silos, boundaries or channels
Crumbling silos and blending business channels might have seemed ambitious but retailers were up for the challenge. While this, too, remains a work in progress, the list of retailers that have developed a fully integrated approach to commerce that provides shoppers a unified, cohesive experience across digital and physical stores is ever-growing and led by brands such as Disney, REI, Starbucks, Nike and Sephora.
The biggest challenge is ensuring a consistent experience. As shoppers emerge from nearly two years of drinking from a fire hose of digital commerce interactions, they are looking for retailers to deliver somewhat different experiences in their physical stores. And consumers still won’t tolerate excuses about disparate systems that don’t sync and a lack of inventory transparency — much as we said five years ago.
Bet on bots and conversational commerce
Attempting to read the tea leaves with precision, we prophesied, “Ignore the buzz around chatbots and conversational commerce at your own peril … it’s a tool retail businesses can use to boost customer service and have more meaningful conversations.”
That was a bold statement for 2017. But as it turns out, we nailed it: Conversational commerce technology has enjoyed meteoric 400 percent growth since 2017, according to Digital Information World. In addition, the percentage of customers who have daily interactions with chatbots has risen by almost 40 percent between 2018 and 2020 in the United States alone. By 2025, the chatbot market share (worth $17.7 billion in 2019) is expected to hit $102 billion.
Ask shoppers about chatbots and you might get mixed reviews; a majority have interacted with a chatbot and most say the exchange went well — to a point. If the issue was “off-script,” the customer experience rating feels the pinch.
We accurately gauged that non-traditional partnerships and collaborations would represent new opportunities for retailers. That year Walmart and Buzzfeed announced a collaboration around the website’s Tasty app, and in 2018 J.Crew partnered with WeWork — ill-fated, yes, but well-intentioned for sure. One of the most hyped collaborations of 2019 featured furniture giant Ikea and designer Virgil Abloh teaming up on a home furnishings collection intended to appeal to millennial homeowners.
2020 opened the door to a plethora of unlikely collaborations no one could have foreseen: Albertsons partnered with 17 companies to offer part-time employment to otherwise furloughed staff and DSW partnered with Hy-Vee to offer footwear on the supermarket’s website and provide buy online, pick up in store services for shoppers in need.
Further demonstrating this trend’s continued validity, news broke just a few weeks ago of a new store concept collaboration between Amazon and Starbucks.
Time to tune in to TV shopping
It’s fair to say we shot ourselves in the foot when we predicted that it was time to tune into TV shopping. At the time we were watching QVC debut a new standalone channel called Beauty iQ, and Wayfair and A&E had just announced a new TV series. But these dips into alternative methods of selling didn’t even begin to scratch the surface compared with the real-time online selling phenomenon dubbed “livestreaming” or “live commerce.”
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Live shopping on Facebook and Instagram is gaining steam as retailers and direct-to-consumer brands look to connect with shoppers. Macy’s, Ulta Beauty and Vuori have all announced livestream sessions during the holiday season. And Walmart will host more than 30 livestreaming events before the end of the year, including one with musician Jason Derulo that kicked off Cyber Week. Walmart’s Chief Marketing Officer William White believes these livestreaming events help “shorten the distance between inspiration and purchase.”
Social commerce will gain attention and investment
We also missed the mark on our outlook for social commerce. Five years ago, we were writing about shoppable-photo strategies and the ability to add a “tap to view” icon to images on social media. We even gave a nod to some industry observers suggesting that shoppers’ appetite for social commerce paled in comparison with online and physical mediums. The one redeeming observation we made was that social media was quickly becoming “indispensable” and would thus make social commerce more lucrative over time.
Just last month, Inc. Magazine reported that social commerce generated approximately $474.8 billion in revenue in 2020, representing an almost 40 percent surge in sales. Businesses of all sizes are finding that social commerce is not a competitor to ecommerce — it’s an extension. The ability it provides to tell meaningful brand and product stories and to connect with target consumers is powerful and goes a long way toward building loyalty.
One-click payment nearly ready for prime time
The final prediction we submitted about 2017 was that one-click payment was nearly ready for prime time. The key word here was “nearly.” Amazon owned one-click checkout but its rights to the exclusive use of the patent expired in 2017, which opened the possibility of offering the feature to merchants everywhere.
Take a deeper dive into the latest retail tech innovations among the retail industry.
Still, it did not happen overnight.
Payment networks including American Express, Visa, Mastercard and Discover didn’t roll out click-to-pay until the end of 2019. Shop Pay, the app from Shopify that allows shoppers to check out fast and track orders post-purchase, came on the scene in a big way around the same time.
Momentum continues: A recently announced deal between Adobe and relative newcomer Bolt allows Adobe’s customers to integrate Bolt’s one-click feature into their checkout screens. Given that Bolt has a network of about 10 million shoppers, that is significant.
We didn’t foresee buy now, pay later installment plans bubbling up; these services provided by the likes of Afterpay, Klarna, Affirm and Zip are enjoying a meteoric rise in popularity.
Ultimately, our ability to predict what was in the cards for retail in 2017 was equivalent to a full house in poker — not four-of-a-kind and certainly not a straight flush. Yet, if one wagered a bet, they’d have done reasonably well.
Stay tuned next month for NRF’s newest batch of predictions for 2022. You don’t want to miss it.