In 2022, in-demand retailers and consumer packaged goods (CPG) brands will invest in stores while others will pare down their physical presence. Let’s examine the factors fueling stores’ simultaneous expansion and contraction to see where global retail leaders will invest resources and why.

Stores are still very much alive

Consumers still love to see what’s in store. A whopping 80.4% of total retail sales still take place in physical stores, as brick and mortar offers:1 Young, Jessica. A decade in review: Ecommerce sales vs. total retail sales 2011-2020. Digital Commerce 360. February 19, 2021.

  • Multisensory experiences
  • Immediate access to products
  • Opportunities to test product quality and fit
  • Human touch that builds relationships and trust
  • Showrooms that drive product discovery
  • Easy returns
  • An escape from our pandemic cocoons.

Some stores seem pandemic-proof. Walmart’s buy online pick up in-store (BOPIS) service earns one in four dollars spent on click and collect.2 Repko, Melissa. Walmart drew one in four dollars spent on click and collect — with room to grow in 2022. CNBC. December 30, 2021. Target keeps investing in its stores, including shop-in-shop partnerships.3 Wilson, Marianne. Target commits $4B on store openings, remodels. Drug Store News. March 3, 2021. Lululemon enthusiasts motivated the retailer to open dozens of new stores last year.4 Dowd, Jessie. Lululemon to Open up to 50 Stores in 2021, Expand MIRROR In-Store Shops. Retail Touchpoints. April 5, 2021.

As inflation fuels value shopping, retailers that target price-conscious consumers are betting big on brick and mortar.  Dollar General plans to open 1,100 new locations and remodel 1,750 stores this year.5 Garcia, Tonya. Dollar General reports profit decline, plans for more than 1,100 new stores in 2022. MarketWatch. December 2, 2021. ,6 Shoulberg, Warren. Dollar Stores, Big Lots, Off-Pricers Will Open Thousands Of Stores In 2022. Forbes. January 16, 2022. Off-price retailers TJX and Ross plan to open more stores, as does German grocery discounter Aldi.7 Shoulberg, Warren. Dollar Stores, Big Lots, Off-Pricers Will Open Thousands Of Stores In 2022. Forbes. January 16, 2022. ,8 Shoulberg, Warren. Dollar Stores, Big Lots, Off-Pricers Will Open Thousands Of Stores In 2022. Forbes. January 16, 2022.

Demographics matter, as rural Americans are more likely to shop in stores due to lower levels of technology ownership and broadband adoption than urban and suburban consumers, widening the digital divide.9 Vogels, Emily A. Some digital divides persist between rural, urban and suburban America. Pew Center Research. August 19, 2021. While 87% of Boomers prefer to shop in physical stores, consumers aged 65 and up are the fastest-growing group of online shoppers, spending 49% more year-over-year online in 2020.10 The Pandemic Has Driven Boomers to Increase Their Digital Shopping. eMarketer. August 5, 2020. ,11 Dailey, Natasha. Baby boomers flocked to online shopping like never before during the pandemic, new data shows. Business Insider. January 22, 2021.

Shifting habits eroded store counts

Underperforming retailers and tech laggards have been at risk for years, as this timeline of U.S. store closures shows.12 Miranda, Letitia. More than 9,300 stores closed this year, up 63 percent from 2018. Fortune. December 31, 2019. , 13 Wahba, Phil. A record 12,200 U.S. stores closed in 2020 as the e-commerce, pandemic changed retail forever. Fortune. January 7, 2021.

U.S. Store Closures

In recent years, the comparative convenience of e-commerce made stores seem quaint. In 2020, e-commerce accounted for 19.6% of total U.S. retail sales, nearly double the 2015 figure of 10.7%.14 Young, Jessica. A decade in review: Ecommerce sales vs. total retail sales 2011-2020. Digital Commerce 360. February 19, 2021. The mall is now digital, and consumers discover new products and brands on retailers’ websites, online marketplaces (Amazon, Etsy, and Shopify), and social media (Instagram, Facebook, and TikTok).

Innovations keep shaking up CPG. Gorillas, Gopuff, and JOKR deliver products in as few as 10 minutes, making it more enticing to skip the store.15 Repko, Melissa. Ultrafast grocery delivery has exploded in New York City. Your town could be next. CNBC. October 21, 2021. Retailers like Sephora and Ulta give online shoppers greater certainty about what they’re buying with personalized virtual try-ons, as does Amazon Fashion with its Made For You service for customized clothing.16 Perez, Sarah. Pintrest launches an AR-powered try-on experience for eyeshadow. TechCrunch. January 22, 2021. ,17 Perez, Sarah. Amazon Fashion launches a custom clothing service, Made For You. TechCrunch. December 15, 2020.

In response, 67% of Millennials and 56% of Gen Xers prefer to shop online.18 Osman, Maddy. Ecommerce Statistics for 2022 – Chatbots, Voice, Omni-Channel Marketing. Kinsta. June 10, 2021. Even after vaccinations, Baby Boomers are the least likely to go in-store more often than other generations at 54%, compared to Gen X (39%), Millennials (44%) and Gen Z (40%).

As consumption shifts, retailers like Bed Bath & Beyond, CVS Health, and Macy’s will close some stores this year as they adjust their strategies.19 Shoulberg, Warren. Dollar Stores, Big Lots, Off-Pricers Will Open Thousands Of Stores In 2022. Forbes. January 16, 2022. ,20 Khandekar, Amruta. CVS to close 900 drugstores in three years to beef up health services. Reuters. November 18, 2021.

Global retail’s future is omnichannel

Since increasingly tech-savvy consumers still love stores, retailers are racing to implement robust omnichannel strategies. Omnichannel shoppers spend more: 4% more every time they visit a store and 10% more online, on average, compared to single-channel shoppers.21 Sopadjieva, Emma, Utpal M. Dholakia and Beth Benjamin. A Study of 46,000 Shoppers Shows That Omnichannel Retailing Works. Harvard Business Review. January 3, 2017.

Stores keep evolving to support e-commerce with BOPIS and curbside pickup. Also, in-store tech boosts convenience such as: 

  • Amazon’s Just Walk Out technology serves Amazon Go, Amazon Fresh, Whole Foods, and Starbucks, plus Sainsbury’s stores in the U.K.22 Redman, Russell. It’s a ‘Go’ for Amazon’s Just Walk Out at Whole Foods. Supermarket News. September 8, 2021. ,23 Moon, Mariella. Starbucks is using Amazon’s Just Walk Out tech in a New York concept store. TechCrunch. November 18, 2021. ,24 Redman, Russell. Sainsbury’s c-store adopts Amazon cashierless tech. Supermarket News. November 29, 2021.
  • Tesco, Aldi, and Carrefour announced checkout-free stores in London, Paris, and Dubai25 Gray, Sarra. Tesco launches new store concept to change how customers shop – including no checkouts. Express. June 19, 2021. ,26 Aldi opens its first till-free supermarket.BBC News. January 18, 2022. ,27 Carrefour opens ‘next-generation’ concept store in Paris. Retail Insight Network. November 26, 2021. ,28 Majid Al Futtaim opens first checkout-free store in UAE. Retail Insight Network. September 8, 2021.
  • Żabka Group, a Polish convenience giant, opened checkout-free stores in Europe.29 Rozario, Kevin. Poland’s Biggest Convenience Chain Overtakes Amazon In European Race For Autonomous Stores. Forbes. January 18, 2022.

Meanwhile, e-commerce players are getting physical:

  • Amazon plans to open Amazon Style clothing stores, department stores and Amazon Fresh, plus Amazon 4-Star, Amazon Salon, and Amazon Fresh in the U.K.30 Meyersohn, Nathaniel. Amazon is opening a clothing store next to Nordstrom and JC Penney. CNN Business. January 20, 2022. ,31 Lucas, Amelia. Amazon is reportedly planning to open department stores, its latest experiment in physical retail. CNBC. August 19, 2021. ,32 Redman, Russell. Report: Amazon has 28 more Amazon Fresh stores in the works. Supermarket News. March 11, 2021. ,33 Partridge, Joanna. Amazon opens first UK bricks-and-mortar non-food store. The Guardian. October 6, 2021. ,34 Vincent, James. Amazon is opening a hair salon in London to trial new technology. The Verge. April 20, 2021. ,35 Bourke, Joanna. Amazon continues roll-out of grocery store concept in London with three new sites. Evening Standard. December 15, 2021.
  • Warby Parker and Allbirds expanded their physical presence during the pandemic.36 Holman, Jordyn. Warby Parker Glasses Bought in Stores is How the Brand Intends to Grow … Bloomberg. July 9, 2021. ,37 Anderson, George. Will High-Flying Allbirds Be Weighed Down By Physical Stores? Forbes. February 9, 2021.
  • Online razor brand Billie will sell its products through Walmart stores.38 Monteros, Maria. Billie to enter physical stores for the first time via Walmart. Retail Dive. January 11, 2022.
  • Shopify also hints at brick-and-mortar ambitions, filing a patent for sensors that measure in-store traffic.39 Iddenden, George. How Shopify is moving closer to bricks-and-mortar retail. Charged. January 5, 2022.

Stores are staying – if they’re agile

Monitoring consumers’ omnichannel habits and competitors’ moves can guide retail companies’ physical and digital efforts in 2022. Maximizing omnichannel options keeps companies visible wherever shoppers spend their time, plus offering an agile and unified experience promotes a seamless service to grow sales and market share.

Whether you want your brand on store shelves or online, RangeMe provides a way for more than 15,000 buyers to seamlessly discover products from over 200,000 active suppliers. Log in to your profile or join RangeMe here.

Hi there 👋
Want the inside scoop on all things CPG?

Get the latest CPG and retail insights, trends, and business best practices sent directly to your inbox, every week.