The term “new normal” is continuously appearing in all facets of life — a trend picked up during NRF’s most recent virtual event, “State of Retail and the Consumer: 2022.” But what does that “new normal” look like?
Walmart and Vitamin Shoppe CEOs John Furner and Sharon Leite joined NRF executives and economists for a deep dive into the current state of the retail industry, sharing predictions for the months and years ahead.
During the event, Furner stated that the new normal will be slightly different than pre-pandemic days, adding that “being able to offer solutions to consumers in a flexible manner, on their terms, is going to define the people that win in the long-term versus those that don’t.”
Adaptability Is Key
Despite consistent challenges over the last two years, retailers remained adaptable, able to pivot to meet changing consumer needs and deliver product innovations that resonate with today’s customers.
“In the face of great uncertainty, massive disruption, retailers delivered safe, healthy, and essential shopping experiences precisely when their customers and communities needed them the very most,” said NRF president and CEO Matthew Shay.
Organizations now know they can do things much faster than ever done in the past, said Leite. “Our ability to pivot the business is going to be really important in the future.”
Where might that evolution lead? According to Furner, retailers should have long-term goals in mind, looking at how to best deliver products and services, whether that be digitally, in-person, or via emerging tech like drones or autonomous cars.
Execution needs to be focused on helping consumers as their needs shift, said Leite.
“How we deliver innovation will continue to evolve as the consumer goes back to their normal shopping behaviors,” she added. “It really is still about quality, making sure you are innovating when it comes to the products that you are offering to the consumer, and delivering them in the way they want to consume them.”
Shifting to Post-Pandemic: The Future of Retail
Amid the pandemic, retail saw the highest growth rate in over 20 years, with 2021 figures showing a 14% increase. For 2022, NRF expects retail sales to grow between 6% and 8% to more than $4.86 trillion — significantly higher than the 10-year, pre-pandemic growth rate of 3.7%.
NRF predicts that 2022 retail sales will total between $4.86 trillion and $4.95 trillion — excluding automobile dealers, gasoline stations and restaurants. E-commerce sales should continue to surge as well, with non-store and online sales expected to grow between 11% and 13% YoY to a range of $1.17 trillion to $1.19 trillion.
“NRF expects retail sales to increase in 2022, as consumers are ready to spend and have the resources to do so,” Shay said during the event. “We should see durable growth this year given consumer confidence to continue this expansion, notwithstanding risks related to inflation, COVID-19, and geopolitical threats.”
Furner stated the country doesn't have a demand problem right now, but it does have a supply problem, and playing catch up is what’s been most challenging.
Given the concern over inflation and ongoing supply chain constraints, is this growth sustainable? NRF stated there is “considerable uncertainty,” with its chief economist Jack Kleinhenz stating a “roller coaster ride of incoming data” in the coming months should provide some clarity.
“Most households have never experienced anything like this level of inflation, and it is expected to remain elevated well into 2023,” said Kleinhenz. “In addition to inflation, the forces impacting the economy include COVID-19 impacts, international tensions, and policy variability.”
Furner said that as we look forward, it’s important that retailers are there for customers regardless of the situation that they’re in. "Certain parts will experience different pricing levels depending on the category. Our job is to create great value for customers of all incomes and really to fight inflation."
[Related: Walmart Launches New Customer Services and a Perk for Workers]
What about shifting consumer trends? Leite stated customers have indicated they have room to purchase despite inflationary concerns, and that convenience is going to stay top of mind.
“People are going to get back out and do other things, so convenience and how you deliver that to the customer is going to be very important,” she said, adding that as consumers are increasingly getting their information digitally, technology is needed in order to better communicate.