Kalibrate makes six top location intelligence predictions for 2022


By Dave Huntoon, managing director at Intalytics, a Kalibrate company

  1. Predictable Covid-19 era performance in retail  

For the first time in three years, retailers and restaurants will be able to predict with some assurance what their comparable sales growth will be. Since the beginning of the pandemic, and due to the associated closures, consumer behaviour changed; making forecasting exceptionally challenging.  

However, although there will be ongoing outbreaks and mutations from Covid-19, which will have an impact on consumer shopping habits and demand, these will now be anticipated by retailers and will be relatively predictable.  

  1. Steady e-commerce sales gains

Online shopping skyrocketed during the pandemic due to a combination of store and restaurant closures. As a result, online sales saw a significant spike, with the eCommerce market growing at an exponential rate; in the US, nonstore sales skyrocketed by more than 25% in Q3 2020. 

However, online purchasing as a proportion of total retail sales has now reached back to historical levels. Online retail sales jumped from 12.4% of total retail sales in Q3 2019 to 15.0% in Q3 2020, and have now settled back to a more historically consistent 14.0% in Q3 2021. Looking forward, as the market settles, retailers can expect a slow, but steady rise regarding online orders. Therefore, an omnichannel strategy will be key, with a mix of brick-and-mortar stores and an online presence being needed for retailers and restaurants.  

To generate profits, these businesses must be guided by their customer demographic when deciding their offering, making sure they’re leveraging all the data available – the average customer spending and customer profiles (e.g. age, gender, etc) – which will enable the forecasting of behavioural patterns. From here, businesses can devise a steadfast omnichannel strategy that puts the customer first and does not solely rely on website algorithms – instead, this approach will consider location intelligence.   

  1. Inflation – at last an excuse to raise prices  

Retailers and restaurants have been constrained in their ability to raise prices for the past 10 years. However, with labour costs rising and issues with supply chains, it has resulted in higher price points for consumers. Expect price increases, or corresponding reduction in value, to persist throughout 2022; causing little clarity for businesses regarding long-term inflation trends. 

  1. Private equity rollups  

The private equity world will continue to target selected industries with significant numbers of independent operators, looking to realise value through increased buying power, operational efficiencies, and best practices. Some of the industries that will experience the greatest impact include the veterinary, dental, and car wash sectors. Apparently, “Workin’ at the Car Wash, Yeah!”, which just celebrated its 45th birthday, is back in vogue. 

  1. The growth of the “customer-centric” perspective  

Retail expansion has historically focused on the projected financial returns afforded by one-off store deployment decisions, or by investments in eCommerce and logistics. Successful operators have adopted a customer-centric approach – what combination of physical stores, eCommerce, shop-in-shops, channel partnerships, new prototypes will best serve existing and potential new customers? How to cater to audiences and provide the most profitable returns will all be an ongoing and ever-changing conversation in 2022.  

  1. Asset reprioritisation  

As an adjunct to the customer-centric theme, tenants across various industries will increasingly look to re-assess their existing brick and mortar deployments and close or relocate stores where appropriate. This is most significant for regional shopping centre tenants, who need to reposition soon if they want to stay relevant. 

Similarly, many food chains will begin to reconsider their locations, as a result of the increasing demand for fast food takeaways. For example, food chains will look at demand and analyse how close they are to their customers, limiting the reliance on third-party providers when completing deliveries. Removing this third-party dependency will improve their customer service, as direct employees of the food chains have an invested interest in the business. In other words, the closer they get to the customer, the better.