2022 will be the ‘Great Retail Reset’
Deloitte report cites challenges for retailers
After two pandemic years, 2022 could usher in the “Great Retail Reset,” Deloitte consulting predicts.
“A lot of our retailers have had antiquated systems, older supply chains,” said Kate Ferrara, the Bostonbased national retail, wholesale and distribution sector leader for Deloitte & Touche LLP’s Risk & Financial Advisory practice.
“The pandemic has accelerated the need for some people to really go, ‘Alright, we don’t have a choice anymore,’” she said. “We have to fix our supply chain. We have to figure out our workforce management and our talent, and our pricing and our systems and our inventory management. This isn’t a nice-to-have anymore.”
Deloitte issued a report — “The Great Retail Reset” — sharing findings after surveying 50 executives of large retailers, who predicted a host of challenges for large retailers, which could trickle down to independent shops as well.
Of course, one of the biggest challenges is hiring, both on the floor and in the warehouse. Of the retail leaders surveyed, 83% said they have to invest more heavily in recruitment and retention activities, and 70% said that labor shortages, especially in hourly wage jobs, will hamper retail growth this year. Warehouse jobs will be tough to fill, too, with 56% of retailers expecting shortfalls in these areas.
Ferrara added that many in the younger generation of the workforce hope to work for a company that aligns with their moral values, and pointed to environmental initiatives as a motivating factor for young workers to want to join a company.
“Some of the younger generation who might be apt to work in a retail environment, they’re less concerned (with pay), and certainly in Massachusetts, we’ve increased our minimum wage,” she said. “So if people have choices, they also want to work for an organization that’s going to focus on purpose.”
IT workers may also be difficult to come by, which will be particularly important for the more digitally savvy consumers the pandemic has created. As customers come to expect online amenities like online ordering or in-store pickup, “being able to get those systems integrated … is creating a big need for IT resources,” Ferrara said, adding that data science is another major area of need.
Ferrara noted that New England shoppers tend to be more sophisticated and tech-savvy than average, and tend to rely more heavily on social media to influence their shopping decisions.
Despite these challenges, the report remains optimistic about retail this year, thanks to time and experience with the pandemic, as well as COVID vaccines. It projects a 3.5% GDP growth this year.
“There is a lot of optimism in the system around retail,” Ferrara said. “Those retailers who can get it right, who can figure out the talent, the supply chain, the digital, they’ll have a great year.”