Top three retail industry trends of 2022 & 2023

The retail industry is in a period of uncertainty and hope. Countries across the globe are trying to recover from the pandemic and return to normal. But what does this normal look like when so many customers have been pushed to adopt mobile technology and remote services like never before?

Early in the COVID pandemic, McKinsey predicted that the retail industry stood at the top of the list in terms of digital adoption by consumers. The online purchase of goods such as apparel grew by 40% while groceries shot up 100%. To put it bluntly, the virtual genie is out of the bottle and retail companies have begun investing in novel technologies and automation systems to stay relevant and in competition.

Before making any sort of investment, it is imperative for retailers to be aware of the industry trends of 2022 and 2023. Let’s take a look at three of the biggest retail industry trends today.  

New workforce challenges

Even a year ago, the labor problems prevailing in the retail industry today would have looked unlikely, given where the economy was headed and how common workforce lay-offs were. With the horror and uncertainty brought on by the pandemic, many predicted that no one would quit a job voluntarily without having another opportunity at hand.  

But many retailers have found the realities of today's workforce to present surprising challenges. In fact, 83 percent of retailers are investing heavily in recruiting and retaining employees. Because it is quite evident that labor issues are among the key industry challenges, retailers should reset their thought processes regarding their employees to be able to prosper in the near future. While salaries might be one of the major reasons for the “great resignation,” the issues are far more profound. Frankly speaking, employee priorities have changed, especially around work culture, flexibility, and DEI (diversity, equity, and inclusion).  

Around 70 percent of retailers state that labor shortages, especially hourly-wage jobs, will be a roadblock to retail growth in 2022. Having said that, the biggest pain point for retailers stands at the store level, where 74 percent anticipate shortages in customer-facing jobs. Furthermore, 56 percent of retailers expect shortfalls in the hourly supply chain, distribution, and logistics positions in the warehouses. 

What should retailers do to address these risks?

• Retailers should invest in a workforce focusing on automation and technology instead of relying only on physical labor. At present, it might sound a little strange, but more than half of retail giants believe that staff-free stores will be a common thing over the next five years.

• Adopting the latest technology to compete with far more tech-savvy industries is a must for retailers. Retailers must establish why they are more attractive and lucrative than Big Tech for high-demand workers.

• The current retail workforce structures clash with evolving employment expectations. Retailers must look beyond pay for ways to enhance the day-to-day workforce experience. They must find ways to infuse flexibility, culture, and purpose to employ and retain employees.

• What’s more, evolving priorities mean retailers need to address how they are representing themselves in the marketplace - from a diversity of suppliers to career progression for historically marginalized groups. It can help make vendors, employees, and customers feel included and connected with the retail brand.

Overcoming challenges related to manufacturing, inventory management, and movement of goods

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