Performance Indicators That Will Make or Break Retailers- RETHINK
Trends & Forecasts

Performance Indicators That Will Make or Break Retailers in 2022

In many respects, retailers helped us maintain our sanity and sense of control over the course of the pandemic. Online shopping made our lives easier and many of us found solace in app-enabled omnichannel experiences like curbside pickup and local delivery.  

Retailers like Amazon, Target, and Walmart were targeted because of their affordability, accessibility, and versatility—while others were unable to adapt to the changing landscape and forced to discontinue items, close stores, and regain lost ground. 

For many, e-commerce became the gold standard for sales as spending toward travel and entertainment funneled into categories such as electronics, athletic wear, and home improvement projects. But the pandemic isn’t over yet, and the market will continue to adapt alongside changing consumer preferences and purchasing capabilities.  

A changing marketplace means there is no one-size-fits-all strategy to survive the months to come, but there are key indicators retailers should use to better their odds in 2022.   

 

Indicators to watch out for

Retailers often fall under the consumer discretionary sector—made up of companies selling goods and services consumers may want but don’t need such as apparel, electronics, and hardware.

This sector has dealt with ample turbulence over the last 18-20 months, but a retailer’s sales, earnings, performance, e-commerce capabilities, and balance sheets say a lot about how they’ll react to consumer spending and market changes going into 2022. 

 

Sales

Retailers who thrived during the pandemic consistently expanded their revenues by boosting sales both in-store and online. 

Comparable, or same-store sales were certainly higher among brands who saw growth during the last 18 months—and for many, that meant creating robust omnichannel experiences that attracted customers who felt more comfortable shopping through one medium or another. 

Retail giants like Target and Walmart used omnichannel solutions to surpass expectations at the height of the pandemic, but Lululemon is one example of a brand that went above and beyond in order to outperform their previous year’s sales by over 60% using a direct-to-consumer business model. 

 

Earnings Growth

Not all retailers who were able to generate revenue during the pandemic remained profitable. Brands have and will continue to lose money if they keep their prices too low because of promotions or sales. 

Brands that not only survived, but grew over the last 18 months used personalized experiences, buy-now-pay-later services, nontraditional shopping channels, and a commitment to ethics and sustainability in order to encourage loyal customers who are willing to pay premium prices.   

Companies like Nike and Under Armour successfully used these strategies while exiting thousands of their wholesale doors to maximize direct-to-consumer earnings. 

 

Seasonal Performance 

Other retailers have survived pandemic-related challenges by way of seasonal shopping patterns. Strong sales during November and December can make or break brands who rely on holiday shopping, and this year’s supply chain delays pushed seasonal shopping as far back as September. 

Furthermore, seasonal shopping is expected to outperform last year’s as retailers look to capitalize on in-person sales and lucrative promotions on Black Friday and Cyber Monday. These trends are increasingly vital for brands that use seasonal shopping patterns as a metric for annual sales. 

 

E-commerce sales

Just as Nike and Under Armour exited thousands of wholesale stores, so did other retailers who wanted to capitalize on 2020’s e-commerce boom. The pandemic also isn’t over, and retailers will need to continue pushing electronics, athletic wear, and similar goods through their online channels. 

For those who did hold onto their brick-and-mortar locations over the course of the pandemic, investing in omnichannel opportunities like in-store pickup and local delivery was key to survival. Either way, 2020’s 32.4% uptick in e-commerce sales shows us how reliable the medium is for brands who want to retain and attract new customers. 

 

Balance sheets

Incoming revenue and manageable debt can sway a retailer’s balance sheet in one direction or another—and the pandemic only heightened this. Fragile portions of the industry saw big losses and sales declines when lockdowns hit last year, and that forced major retailers like JCPenney and Neiman Marcus to declare bankruptcy. When in-person shopping was impossible, traditional retailers in this sector were unable to create successful e-commerce platforms or omnichannel experiences.    

 

2022 will bring opportunities for growth

If we’ve learned anything since the start of 2020, it’s that conditions can change—and fast. Regardless of which retail sectors the pandemic has hindered or boosted, businesses must be ready to adapt to evolving consumer preferences and marketplace deviations. 

2022 will bring a new economic climate and it’s up to retailers to find solutions that encourage growth, increase sales, and foster unique consumer experiences.  

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