The 9 Biggest Retail Innovations of 2022

Retail is growing a new (and thicker) skin. 

If 2020 was a year of businesses reacting to disruption, 2021 was one of acting and adapting. Who would have expected scanning QR codes at a restaurant? Or being able to try on beauty products without going to the store? We charted some of the biggest retail innovations of last year in our year-end post. 

2021 saw the promise and possibilities of merging retail with technology, evidenced by the rise in fintech solutions and augmented reality. In fact, funding for retail tech startups in the US reached nearly $27 billion by the end of Q3 of 2021. The year also saw significant acquisitions and partnerships between retail and tech companies.      

E-commerce players are excited about these retail innovations and want to push the limits on digital, especially in physical stores. We expect 2022 to continue blurring the lines between online and offline spaces.

Retail has proven to be resilient, mainly because of retailers’ ability to keep up with evolving consumer demands. As we enter 2022 with a better idea of what we need to strengthen, namely last-mile fulfillment and commitment to sustainability, we present our list of the 9 biggest retail innovations of 2022.

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1. Brands will invest in the supply chain.

One of the biggest challenges that retailers are facing is the supply chain disruption, which has had a negative or strongly negative impact on 75% of companies. Mass factory closures, labor shortages, and higher demand, among other factors exacerbated by the pandemic, created a perfect storm for bottlenecks in the global supply chain. In response, retailers enlisted emergency measures, like air shipping, and maintained communication with customers about delays. 

However, the pandemic demonstrated how pervasive the consequences of the weakened system can be. As Accenture states in its report, “The scale of its impact eclipses anything most supply chain leaders will have seen before.” 

Instead of being purely in survival mode, retailers should recognize the importance of rethinking and investing in the supply chain in 2022, not only in terms of reducing the cost of operation but also with regards to sustainability. With increased public and industry-wide expectations for sustainability, it is the perfect time to innovate with attention to environmental impact. 

“The difference between good and great is going to be those brands, those businesses, that really understand how to pivot their supply chain toward [the] customer and that DTC model,” says Under Armour COO Colin Browne in an interview with Retail Brew.

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2. Brands will optimize last-mile delivery with tech-fueled fulfillment.

The part of the supply chain that customers arguably care about the most is last-mile delivery, namely when their products are delivered timely to their front door. Amazon is reputable for its two-day shipping, which it upheld even during the pandemic. 

The majority of businesses might not have the same capabilities as Amazon to create their own containers and work independently from the global supply chain, but we’re seeing several retail innovations that can help optimize last-mile delivery in different ways.

Partnership Fulfillment

• DoorDash is expanding into retail delivery and has already partnered with JC Penny to deliver products to customers within the same day.      

“Smart” Boxes for Grocery Deliveries

• Walmart and HomeValet
• Bell and Howard

Same-Day Click-and-Collect

• Salesforce

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3. Brands will continue to bridge the gap between physical and digital shopping spaces with experiential retail and other engaging retail innovations.

There’s no better way to shop than by going into the store and trying out the items for yourself — except for maybe being able to do the same thing but from the comforts of your home. 

That’s what beauty businesses tried to do when the pandemic kept customers indoors. Cosmetics brands have tapped into augmented reality (AR), which places virtual objects within real-life environments, and are now offering virtual try-ons (VTO) for beauty products. Fashion and furniture brands have also incorporated AR experiences into their online stores, with other specialty goods following.  

How brands are elevating the digital experience with AR: 

• L’Oreal uses an AI-powered device that allows shoppers to create personalized lip colors. The brand also launched the first virtual mirror app called Makeup Genius, which has been downloaded over 20 million times, that allows users to try on makeup shades. Both innovations are part of L’Oreal’s technology incubator.
• Eyewear brands like MOSCOT, Warby Parker, and Bailey Nelson have integrated VTO capabilities that allow shoppers to complete a thorough evaluation of the fit. Since these AR integrations, MOSCOT reported that its overall revenue increased by 174%. Bailey Nelson has seen a 600% increase in online conversion rates since rolling out its VTO offering. 
• Furniture stores that use AR can help customers determine if the product has the correct sizing. IKEA paved the way for using AR in the industry with its IKEA Place app launch in 2017, with other furniture retailers following.

  While AR capabilities with clothing are still limited, experts are optimistic about AR’s universality. Daniel Beauchamp, principal engineer of VR/AR at Shopify, says, “Within the next five years, we’re probably going to get to the holy grail: really high-fidelity AR try-on clothing.”

Why augmented reality will become an essential in e-commerce: 

• Increases customer confidence and lowers return rates 
• Provides a more engaging way for brand storytelling
• Offers more flexibility to the customer
  

For shoppers who are nostalgic for the physical stores, they can expect elevated in-store experiences with AR-powered systems, as well as other engaging retail innovations like hands-on encounters and in-store app functionalities. 

Lastly, there are ways that brands can tap into experiential retail without the AR component. The psychology behind experiential retail’s appeal is the same: “The pandemic had led people to really value travel and experiences and has created a wave of additional demand that is here to stay,” says Kushal Negi, co-founder of Glimpse, a company powering experiential retail through short-term rentals. Read more about it in our whitepaper.       

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4.  Brands will tap into headless commerce for increased agility and response time to changing trends. 

It won’t be long until headless commerce becomes a core component of omnichannel strategy. Headless commerce, a long-time buzzword, is finding its way into the spotlight again—with business owners recognizing its potential, 2022 might just be its year.

What is headless commerce? A solution that decouples the frontend of an ecommerce platform from its backend. The frontend encompasses everything that is user-facing, such as the physical store and landing and checkout pages of a website. The backend is the database and code that enable a platform to function. 

What are the benefits of headless commerce? The independent function of each end means increased flexibility, since businesses can personalize the frontend efficiently without changing its entire backend system. Everyone knows how important personalized shopping experiences are for customer loyalty and retention, so the ability to personalize for every customer gives businesses a competitive advantage. 

Other benefits include:

• Sustainable platform speed and performance - Headless commerce allows website speeds to stay optimal, regardless of how busy the frontend is or how much traffic there is. 
• Increased team performance - Almund's newsletter said it perfectly: “Most developers aren’t designers and vice versa.” By going headless, businesses give their developers and design teams room to work their strengths independently while contributing to the success of the entire system.
• Increased agility for trying out the latest retail innovations - Businesses don’t have to miss out on the latest trends in ecommerce for fear that they might not work out. Headless architecture lowers the stakes for trying out the newest retail innovations because changes made to the frontend won’t affect backend operations. 

Consistent customer experience across all channels - The pandemic has turned many channels, namely social media platforms, into sales opportunities. Headless systems allow businesses to deliver consistent experiences across all channels, making headless an important part of omnichannel strategy.