Retail Under Pressure: Challenges and Opportunities in Pandemic Times
The retail industry has undergone an unprecedented stress test during the past three years of pandemic disruption, according to Deloitte's newly released 2022 Retail Industry Outlook Report . The comprehensive study, based on insights from 50 retail executives, examines shifting consumer expectations, supply chain logistics, workforce dynamics, and emerging industry trends.
While traditional retail models revealed significant vulnerabilities during the crisis, the report highlights how forward-looking brands are transforming these challenges into opportunities for long-term stability and profitability.
Key Finding: Despite inflationary pressures and ongoing supply chain disruptions, retail executives remain optimistic about revenue growth and margin expansion, with more than half viewing inflation as an opportunity to raise prices and improve profitability.
Three Strategic Priorities for Retailers
The report identifies three critical focus areas for retail businesses in the coming year:
1. Talent Retention: Building an Attractive Employer Brand
The "Great Resignation" has intensified competition for skilled workers, particularly in customer-facing roles. Seventy-four percent of surveyed executives anticipate continued labor shortages in 2022, with 56% expecting gaps in supply chain, distribution, and logistics positions.
Recommended strategies include:
- Competitive compensation packages
- Improved workplace environments
- Career development opportunities
- Enhanced training programs
- Stronger focus on diversity, equity and inclusion (DEI)
2. Supply Chain Resilience: Building Flexible Networks
Sixty-eight percent of retail leaders cite supply chain disruptions as a major growth obstacle. The report emphasizes the need for:
- Supplier diversification
- Strategic inventory buffers
- Real-time supply chain visibility
- Advanced inventory management systems
- Automation and blockchain implementation
3. Digital Transformation: Investing in Future-Ready Technologies
While brick-and-mortar sales have rebounded, digital engagement remains significantly higher than pre-pandemic levels. Retailers are prioritizing investments in:
- E-commerce platforms
- Digital marketing tools
- Automated checkout systems
- Voice commerce and cashierless stores
- Augmented reality shopping experiences
Data-Driven Omnichannel Success
The report underscores that true omnichannel retail requires robust data infrastructure capable of real-time analysis across:
- Consumer purchase trends
- Inventory management
- Customer relationship systems
- Supply chain logistics
Without end-to-end transparency, retailers cannot deliver the seamless experiences that 96% of consumers now expect.
The Evolving Role of Physical Stores
While digital channels grow, physical locations remain vital as:
- Click-and-collect hubs
- Experiential showrooms
- Community engagement spaces
- Brand storytelling platforms
Security Note: The report warns that 44% of retail brands experienced ransomware attacks in 2021, making data protection essential for maintaining customer trust during digital transformation.
Differentiating Leaders from Laggards
Deloitte's analysis identifies several areas where industry leaders are pulling ahead:
- Developing alternative revenue streams
- Reimagining physical store concepts
- Expanding digital product offerings
- Strengthening ESG commitments
- Modernizing supply chain infrastructure
- Upskilling workforce capabilities
Five Actionable Insights
The report concludes with five key takeaways for retail executives:
- Omnichannel experiences are now table stakes for customer retention
- ESG considerations influence 68% of purchase decisions
- Labor shortages threaten growth for 70% of retailers
- Supply chain disruptions impact 68% of growth plans
- 80% of retailers plan significant digital and supply chain investments