Resilience was the theme of the year for retail in 2021. While this past year was not as dramatically tumultuous as 2020, disruptions stemming directly or indirectly from the pandemic continued to affect both consumer behavior and operations. Retail had to confront the continued effects of new variants of the coronavirus, rising costs of labor and shipping, supply chain bottlenecks, and inflationary pressures, among others. Forced to innovate by circumstances, retailers made buying easier by adding new forms of shopping, more convenient product delivery and pickup, and leaning into direct-to-consumer options. And as retailers kept delivering, consumers kept buying.

This year, retailers will have to continue to deal with disruption in whatever form it arrives, but one thing will lead them to the right answer every time: their customer. Listening to the all-powerful me-centric consumer will give retailers the tools and insights to understand where to focus investment, resources, and energies. Here are our predictions for the industry for 2022:

Consumers become the center of the universe, for real this time: Customer understanding and insights will become a core capability impacting decisions throughout the organization. Many have talked about the concept for years. But this year retailers will wake up to the consumer revolution and change business processes to prioritize consumer needs. They will understand that the reliable and static demographic clusters marketers are used to targeting are no longer relevant. Instead, consumers are now constantly regrouping and changing according to social trends, identity politics, personal whims, and even time of day. Zero-party data, collected directly and voluntarily from consumers, will fuel personalization to make interactions, products, and offers more relevant.

Retailers reprioritize investments: Retailers will restructure business and leadership teams to prioritize investments that improve core business and customer experience. Expect to see continuing buzz in mergers and acquisitions activity in the industry as retailers divest lower-priority assets to fund necessary investments in technology, data analytics, and omnichannel offerings.

The online experience improves: Ecommerce excellence will become a differentiator. To enable product discovery and personalization, retailers will focus on more accurate product attributes and management. This means that even as online assortments grow, they will become easier to navigate for consumers. To lower return rates, retailers will add more realistic virtual try-on technology. They will also continue to add new payment forms, including cryptocurrency, and focus on better privacy and security of customer data. As third-party data restrictions increase, collecting zero party data will become a priority to provide a personalized experience. Post-purchase services and return policies will become a competitive differentiator for online and omnichannel businesses.

Stores return to prominence: Retailers have been busy rebalancing their store portfolio, with more than 15,000 locations closing just in the U.S. over the past two years. Stores are not going away, however. Businesses will learn anew what stores offer – the ability to connect better with customers, accept returns, offer services like loyalty signups, grow brand awareness – and this will lead to a reinvigoration of brick and mortar. To understand the true omni economic value of a store, retailers must account for all direct and indirect costs and benefits. And stores must be viewed as a part of a consumer ecosystem, delivering the kind of relationship consumers want to have with the company, not vice versa. This also means that retailers will need to think of store associates as more essential than ever and treat frontline employees as an asset, not a cost.

Consumers engage with new platforms and products: Consumers will actively interact with retailers in new ways and across new channels, including shopping on social media like Instagram and TikTok, disintermediating the traditional brand-retailer connection. Livestreams and other ways to connect with consumers will expand as these offer a new revenue stream, capture additional insights, and provide new ways to feature brands and brand stories. Physical and virtual clothing will continue to merge as more and more brands try to fulfill the growing customer demand for digital assets and NFTs.

Supply chain and logistics become a priority: The high cost of keeping shelves stocked at the back end of last year is proof that retailers must focus energies, talent, and investments on better understanding and improving supply chain processes. The days of putting these operations on the backburner are long gone. Retailers that better integrate with suppliers and manufacturers through mutual insights exchange and increasing transparency around goals, problems, and data will benefit.

Sustainability makes its presence felt: Driven largely by consumer demand, retailers will continue to seek more sustainable practices in sourcing and up and down the entire value chain. Circular fashion economy, based on the principles of reuse, resell, and rental, will continue to become more prominent and pervasive.

Product drops become more important than price drops: Rising inflation is adding pressure on retailers to come up with creative ways to reduce discounting. To drive purchase frequency, brands will look to move away from discounting strategies to smaller, more frequent inventory releases. This will lower new customer acquisition costs and drive organic traffic. And when consumer insights flow into these product decisions, it will help retailers respond with agility to changing consumer priorities. Retailers will also leverage giving early or exclusive product access to help drive loyalty.

Working capital efficiency comes back into vogue: Retailers were forced by supply chain constraints to chase inventory at any cost at the back end of 2021, but going forward, the focus will be on inventory productivity and turn. With the inflationary environment persisting, retailers will strategically choose levers that can absorb increasing costs, including slower shipping, reducing back-office costs, and potentially increasing product prices.

Partnerships grow across the entire value chain: To increase customer acquisition and share of wallet, brands and retailers will join hands to either offer shared services or an additional platform to buy products. Retailers will also focus on streamlining logistics, either through acquisition or partnering with third party delivery companies. While this supplements offerings and operations to better serve consumers, some partnerships, of course, will never be seen by the customer.

The recent enthusiastic consumer spending in several markets has been a boon for many companies strapped for cash during the pandemic and has given others a much-needed growth runway. Retailers should use this year as an opportunity to make lasting improvements. It’s up to the companies to meet the Me-centric consumers where they are, not the other way around. Otherwise, consumers will take their dollars elsewhere.