Welcome to spring 2022. The luxury bag may be out. Backpacks, however, are in.
Reports indicate that some retail spending will decline in 2022 as Americans re-evaluate their priorities. One survey, by Principal Financial Services, reports that 38% of consumers resolve to spend less in 2022.
Left unclear is if those respondents really intend to spend less on everything, or just on certain discretionary items. The National Retail Federation now projects retail sales to rise by 6% to 8% in 2022, compared with 14% in 2021. Which categories will see the spending? Food and detergent or leather belts and video games?
Inflation is presenting challenging times for everyone, but particularly for low earners. In 2021, the lowest-earning households made $500 more than the previous year, but their expenses rose by nearly $2,000. Many high-income households, meanwhile, saw earnings outpace inflationary expenses significantly. Nevertheless, it is still difficult not to be affected by rising prices in stores, which sets up an interesting dynamic for retailers targeting both groups.
One factor will influence decisions across all income segments: Many shoppers are eager to “take back” time lost during the pandemic.
What Will Shoppers Buy In 2022? Lifetime Experiences.
Some studies suggest that consumers will spend more on experiences in the next decade, including travel, restaurants, entertainment and even museums. All retailers must do is follow those dollars to their destinations to determine which products to promote in-store and online.
Here are six ways retailers can hitch on to the 2022 experience wagon.
1) Build “go-to-there” microsites. Any retailer, whether it’s a department store or a drug store, can build a web page around the supplies of an exciting event. Think of those photo spreads in magazines, where celebrity’s favorite things are marketed. Retailers can build similar, dedicated microsites that feature items for that “special night” (cosmetics, the coordinated outfit, cologne, jewelry) and the dream vacation (sunglasses, passport holder, day bag, walking shoes). The specialty toy store Camp’s website showcases an Easter-themed page where visitors can “Build Your Basket” from a curated collection of toys, books and art supplies. The Easter page also offers links to Easter activities, including candy recipes and ways to upcycle egg cartons.
2) Do the same in the store, with digital help. Why limit seasonal events to seasonal goods? Retailers can conjure their own in-store event displays that promote year-round products and complement the store’s various categories. A mass merchant’s housewares section, for example, can duplicate the ideal dinner party or sleepover. (Ikea, which employs visual merchandisers, comes to mind.) A home improvement store can build a setting that is a visual checklist of goods that will protect the house while its owners are vacationing. Even a small-format shop can design phonebooth-sized “weekend getaway” collections on a table, promoting scarfs, sunscreen and travel umbrellas.
3) Take to the runways. In 2020, during the pandemic, U.S. airport shops and restaurants lost $3.4 billion in revenue. Many shuttered their stores, and some won’t reopen. In their places popped maxed-out vending machines offering anything from diaper bags (Baby Vend) to 10-inch pizzas (Basil Street). Merchants can take advantage of the vacancies and test small-format “display” rooms in high-destiny airports, where travelers can order destination-specific goods and have them shipped home. (Picture signage along the lines of, “As seen in our New York flagship store.”) Or retailers can station their own vending machines or digital kiosks near where travelers stop, such as the “arrival/departure” monitors.
4) Put your own books on that nightstand. Hotels and retailers have partnered before, adding branded shops in lobbies and Peloton bikes in gyms. Technology makes such collaborations even more “native” and less space-intensive. Retailers can pursue opportunities directly with large hotel chains or with third-party brokers like Minoan Experience, which places for-purchase items (via QR codes) in the rooms of participating hotels and short-term rentals. The products can be electric coffee pots, cocktail tables or the books on the cocktail tables. They all have one thing in common: These goods, as part of an idealized getaway setting, become tokens of the guests’ happy experiences and, by extension, the brand experience.
5) Commit to loyalty; join the program. Lots of people stopped traveling during the pandemic, but their airline-linked credit cards still accumulated points. Now airlines are promoting redemption trips to help offload those accumulated miles from their balance sheets. Retail-airline reward partnerships are not new, but they can be further explored. Merchants can align with airlines to encourage members to spend and replenish their miles once a trip is redeemed (“Earn bonus miles for shopping Nordstrom while you’re in Seattle!”). And they can offer redemption sweeteners outside of travel (“Use your miles on orders of travel gear and get 10% off.”). Another (well-travelled) route: Partner with fuel chains or convenient stores to offset the pain of high fuel prices.
6) Get into a hobby, or two, or 100. In June, The New York Times reported that the pandemic caused many people to not just pick up a hobby, but to make money from it. Of 1,000 people surveyed by LendingTree, 600 started a hobby, and of them, half turned the new activity into a sales venture. These hobbies present a range of fresh supply opportunities for retailers: clothing dye for tie-dyed sweatpants, painting supplies for portraits of NBA players, essential oils for bar soaps and even house-bred crickets. One hobbyist invested in a 3D printer to accelerate her fledgling doll house furniture venture.
Make Experiential Categories Your Spring Resolution
The upside of catering to shoppers’ experiential aspirations is it just takes promoting goods that are already in stock, so it’s a low-risk investment. As for those items shoppers plan not to buy in 2022? Create a reason to want them. An office bag can become a day-trip satchel. A good watch (especially if it’s vintage) can be an investment.
Shoppers might spend differently to “take back” the time they lost during the pandemic. Retailers can help, by merchandising in ways that take shoppers back to happy times.
Bryan Pearson is a Featured Contributor to The Wise Marketer and currently serves as a director and strategic advisor to a number of loyalty-related organizations. He is the former CEO of LoyaltyOne.