What’s in store for digital retail in 2022?

UK shoppers spent £10.4 billion online this October according to the Adobe Digital Economy Index – an increase of 5 per cent on last year’s COVID-driven gains – but a whopping 58 per cent higher than in 2019.

By November, online spending was up to £94 billion for the year, an increase of 12 per cent year-on-year and 55 per cent on the same period the year before that.

Concerns that the re-opening of bricks and mortar stores would see the drive to online slow down proved unfounded. Instead, retailers invested in their digital platforms and strategies, often incorporating new in-store experiences into their omnichannel offerings, with click-and-collect also seeing a rise in popularity among shoppers and retailers alike.

The last few weeks have seen concerns surrounding the pandemic begin to creep back in. However, many digital retailers are now well positioned to continue trading unaffected, having invested in areas that allow them to quickly pivot strategy when unforeseen circumstances arise.

But enough about 2021, what about 2022? What will next year have in store for the industry? We asked some of our partners and experts for their predictions for the year ahead.

What do you think digital retail will look like in 2022?

Jason Ford, Lead Solution Consultant at Adobe

I think we will see some of the results from the past few years. Retailers have been forced online if they weren’t before and have had to adapt quickly. Many decided not to re-open their physical stores and focus online, instead. We are also seeing a big shift in the D2C arena, where manufacturers ship straight to consumers. With all these different factors in play, I think we will see the high street change drastically forever, starting next year.

There are going to be a lot more experience-driven high street stores. Instead of going in and browsing, it will be a social or experience-driven purchase, otherwise customers would just buy it online.

I feel we will see a lot more of the higher purchase goods stores go down this route, especially – brands are still having to adapt and customers are enjoying these types of experiences.

Nicole Olbe, Managing Director of Partnerships at Barclays Payments

Data-led marketing is already being used by many retailers to personalise offers and join up the customer experience. This will continue into 2022.

The continued digitisation of loyalty can unlock more customer data, allowing loyalty schemes to be personalised with tailored offers. We’re focusing on these areas at Barclaycard when creating new products and services.

Jonty Sutton, UK CEO at SQLI

With the continued uncertainty across the world due to the pandemic, the importance of digital will become even more apparent.

However, with consumers spending so much time online, retailers must find ways of making the experience better and customer journey as quick and efficient as possible. This has been important for several years, but it’s even more crucial now.

More brands will be looking to invest in headless capabilities and embrace the true value of a cloud-based services orientated architecture to allow customers to purchase from many different touchpoints. I think we will see a lot more sales through social media, for instance.

The customer experience is also a huge differentiator. Retailers need to provide more unique in-store experiences and create differentiation in how products are shipped and delivered to make their brand stand out and encourage long-term customer loyalty.

Phil Draper, General Manager UK and EMEA at Dotdigital

I don’t think there will be one particular thing that will make us sit up and take notice next year. We are beyond that. The innovation curve has matured for digital retailers.

Whenever I have seen an industry like this maturing, it becomes more about doing all of the little things that bit better. So, when there’s nothing major to add to a platform, it becomes about doing everything at 95 per cent instead of 90 per cent. Everyone knows the game a bit better now, it’s about tightening up their digital offerings.

The major challenge is for those that haven’t made the jump into anything like “modern” digital retail. They are looking like dinosaurs now. I can’t help but think that for every high street retailer, their flagship store is now their website. It’s about making sure it’s the best it can be.

Daniel Miari, CXO at Star Republic

I think digital retail will grow even more. In Sweden, many retailers already have an e-Commerce solution but we are seeing a lot of customers change platforms having outgrown their current one. They are investing in bigger and better solutions and upping their customer experience game. 

What’s lacking for many brands – still – is a complete omnichannel offering.  They talk about it, but very few can offer in-store pick up or loyalty programmes connecting store and online, for example so there’s still some basic functioning around this that needs to addressed.  I expect a lot more investment around this area next year.

Digital brands will also focus on marketing and automation – many have only just scratched the surface with these offerings. Pure e-tailers have been quick to capitalise on this, but the legacy brands with bricks and mortar and ecommerce are a bit slower off the mark.

Have retailers embraced digital transformation or reached digital deadlock?

Vincent Loloum, Experience Business Unit Manager at SQLI

Today, retailers are struggling to find the right balance between their old model and the need to change.

Many are convinced that digital is mandatory in their business strategy. The “how to” is what needs to be defined regarding the specificity of the customer targeted.

However, I’m convinced digital won’t replace the physical touch point completely and brands have to be able to combine both digital and physical strategies to truly satisfy their customers.

Nicole Olbe, Managing Director of Partnerships at Barclays Payments

Some retailers have embraced it faster than others, but now there is a wealth of resources available to help them along the way.

The pandemic accelerated the shift to digital channels, changing what people buy, what channels they buy through and how they like to pay.

Retailers need to continue to adapt to changing customer behaviours, for example the rapid growth in ‘click-and-collect’ services and home deliveries

Phil Draper, General Manager UK and EMEA at Dotdigital

Many digital retailers have embraced digital transformation, but you’ll be amazed at how many haven’t.

The ones that have embraced it best are maybe the ones who were born into a digitally native age, and they have come out with systems and data in the right places.

The legacy retailers are the ones that are struggling now because the amount of data and processes they already have behind them has made the process of digital transformation even harder.

What do you think will be the big challenges for digital retail over the next year?

Jonty Sutton, UK CEO, SQLI

Most major digital retailers have embraced and invested in their digital operations – but the industry is constantly evolving. The challenge for brands is to make sure they stay one step ahead of the game.

What is the priority now? Getting the order these changes are implemented in right.  That means having a solid strategy in place rather than going after the next bright shiny thing is essential.

Nicole Olbe, Managing Director of Partnerships at Barclays Payments.

Most importantly, retailers will need to offer a personalised experience to all their customers. Flexibility will be key in terms of customer interaction, with further changes to government guidance looking likely as the pandemic continues to present new challenges.

They’ll also need to be prepared for the new Strong Customer Authentication measures coming into force in March 2022, to help minimise basket abandonment. Finally, retailers will need to ensure resilience, not only within their own companies, but also with partners and suppliers.

Jason Ford, Lead Solution Consultant at Adobe

I think the challenges are exactly where to focus your time in digital. There’s so much energy in the digital experience market but that also generates a lot of noise. It’s going to be important for retailers to focus on what’s working and what’s important for them, rather than trying to do everything.

Another challenge is the amount of data retailers are dealing with. There are so many points of data being collected. IBM research suggests that each person is creating roughly 1.7MB of data every second. As digital professionals, we need to be able to make this data work for us.

However, we don’t always have ways of utilising all of it to get the right outcomes.

We need to find better ways of harnessing this data to make the most of the opportunities it can provide.

Where are you seeing the biggest digital investments with your customers?

Daniel Miari, CXO at Star Republic

We are seeing a lot of investment in marketing and loyalty. So many businesses today are selling the same products at the same price.

I can see more investment in customer loyalty programmes.  It’s the old adage that still rings true today “losing a customer is far more expensive than acquiring a new one”.

Jason Ford, Lead Solution Consultant at Adobe

One of most interesting areas I’m seeing more and more investment is in headless experiences. Headless is nothing new, but businesses are incorporating headless into their point of sales systems. They are finding different ways of doing this, for example, having a chatbot that is talking to their customers on WhatsApp and even allowing them to place orders without the customer ever going to a traditional website.

A good example of this is where a baby food brand is using food pods that are shipped with a web-connected device. The device monitors how many pods they are going through and what food is being eaten and updates the parents on when it is time to order more, or it can be set to do this automatically. It’s like automating the subscription model. There’s less customer churn and waste this way and you are providing a service, as well as a product.

I think its integrating commerce into more every day scenarios in a headless way.

Nicole Olbe, Managing Director of Partnerships at Barclays Payments.

Digital channels give businesses the chance to offer personalisation at scale. For many consumers there’s less demand for one-on-one customer service, but more demand for a journey that feels personal to them.

Adapting to consumer needs is critical here. Allowing a shopper to pay the way they want to pay, online or in store, having had a joined-up, omnichannel experience, can be as powerful as the bespoke customer service of the past. The shift to e-Commerce has given businesses the push to factor it into their customer journey.

How are you supporting customers through their digital transformation?

Nicole Olbe, Managing Director of Partnerships at Barclays Payments

Barclaycard Transact is available through our Smartpay payment gateways – it helps increase payment acceptance and filter out fraud. This can help to create a frictionless payment journey and reduce the increased risk of cart abandonment.

We’ve developed Barclays Digital Receipts, which offers our merchants the ability to issue receipts automatically, giving customers greater control when managing their money.

There’s also Barclaycard Multicurrency which offers businesses a pre-determined fixed FX rate which reduces the impact of volatility to clients, as well as a new payment method with Barclays Bank Pay, our ‘open banking’ solution, which will give e-Commerce merchants the ability to collect funds directly from the customer’s bank account.

Daniel Miari, CXO at Star Republic

When we meet a new customer we want to understand their core business, audience and their goals in order to support them. It’s about getting to know the customer.

We work in strategy, and also road-mapping, UX and design, testing and development, so having an overall dialogue with a customer from end-to-end is really important.

When I started in this industry you had an agency for every area, but time to market is really crucial so having a dialogue from beginning to end and being able to test really quickly is more important now.

e-Commerce is a standard sales channel. But if you look at the full scope of digital transformation, it’s looking at processes to be more efficient in ways of working. There are lots of ways we support the customer, with different tools for instance, to help them solve their own problems to be more efficient across the board.

Phil Draper, General Manager UK and EMEA at Dotdigital

We are helping and supporting brands with ease of use. Ease of use is not new and it doesn’t necessarily mean simple. If the rewards are more easily obtained than you expected, then that is ease of use.

So, if you are trying to put in some advanced processes with great control of data and cross channel campaigns, that sounds really difficult, but you can help customers do it in half an hour, that’s ease of use.

The best way of doing this is by having a simple platform. But simple platforms don’t let you ‘do’ good marketing to today’s level of sophistication. So here, we are really obsessed with ease of use, which really turns in to time-to-value and efficiency.

Vincent Loloum, Experience Business Unit Manager at SQLI

As a digital pure player, we try to understand our customer’s main pain points and ultimately help them solve those pain points.

We have all the expertise needed to help them along their digital journey: from business model definition and execution to support and optimisation.