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By Phillip Jackson, Chief Commerce Officer, Rightpoint
As the world continues to reel from the upheavals of the past two years, one thing is clear: there are no quick fixes. Our most pressing challenge is a workforce that is no longer willing to accept low-paying, back-busting jobs, and that fundamentally changes the way our import-loving, cheap consumer goods economy operates. Can we adapt to our new reality? Obviously, we can, but we’ll need to focus on funding and building solutions that address our people’s challenges head-on. Fortunately, the shift in focus has already begun, and 2022 is poised to be a highly transformative year. Here are my four predictions for the next 12 to 18 months.
#1: Better builders and sustainable businesses
First, let me start by calling the top of the startup market. There’s too much froth and it’s unsustainable. The valuations are nothing short of bonkers, and the darlings we had such high hopes for (we’re looking at you Allbirds and Warby Parker) give us no reason to continue with the fantasy of the DTC brand that generates $1 billion in sales. Allbirds and Warby Parker are masterful marketers to be sure, but their S-1 filings clearly show they’re not getting the great masses of customers as promised.
On top of that, we see more accusations of fraud on the part of startups like Headspin, and lawsuits like the one that claimed LulaRoe is a Ponzi scheme. These are the kinds of stories that will give investors pause in 2022. (I find it quite interesting that LulaRoe had a larger cult following than Allbirds and Warby Parker.)
The upshot: The door is wide open for better builders. As the hype cycle ends, the real company builders will come in and build businesses that are actually sustainable. Capital will be harder to come by, which means we’ll see fewer entrants. The next crop of entrepreneurs will be asked to play by a different set of rules, and a great marketing story alone won’t get them a billion-dollar valuation. I see this as a positive development, a reason to be hopeful.
#2: A great reset in domestic manufacturing
If you thought we were done reckoning with China, then prepare yourself: we’re not. For decades, companies focused on optimizing their supply chains and deploying just-in-time delivery, but the past two years taught us a globally interdependent supply chain is not so ideal. A global crisis will easily interrupt it, and it takes us years to recover.
In 2022, we’ll see more manufacturing come back to the U.S., or at least North America. I can’t say exactly how we’re going to get there in 2022; onshore manufacturing of high-tech, particularly silicon chip manufacturing, will be a tough challenge. But we must master it if we are to become supply chain independent.
Therefore, I predict that nearshore and onshore domestic manufacturing will be a big theme of 2022. Of course, sourcing raw materials will forever be a challenge, but that’s a whole other story.
#3: Hiring challenges will prompt further investments in robotics
Right now, companies are having a difficult time filling positions in historically low-pay and middle-income jobs in the service industry. No one wants to be a long-haul trucker or a longshoreman anymore. As a result, logistic problems are compounding our supply chain woes.
The Great Resignation is real, and it has affected the logistics industry more than anyone realizes. People don’t want low-paying and difficult jobs when there’s a global marketplace where they can find better work.
Automation will be seen as a way to address this, and in 2022, we will see a lot of tech VC investment in automation and robotics. Some say SpaceX and Virgin can deliver cargo via orbit, but I think that’s ridiculous. What we need, (and what I think will be funded in 2022, are more electric and autonomous vehicles like eVTOL, a company that is innovating the “air mobility” market.
According to eVTOL’s website, the U.S. Department of Defense has awarded $6 million to the City of Springfield, Ohio, for a National Advanced Air Mobility Center of Excellence. That’s just a start. In 2022, we’ll see a lot of capital flow into these technologies because this is precisely the kind of automation that will allow us to solve our people’s challenges.
#4: Last-mile logistics robots are coming to the grocery industry
This past September I went to Groceryshop 2021 in Las Vegas, which is one of the biggest trade shows for the grocery industry, and from what I could see, one out of every three vendors on the trade show floor was a robotics company. Granted, most of them were for pick, pack, and ship and fulfillment of in-store delivery, but not all of them were. Some are pointing to the future of grocery, and it’s pretty fascinating.
What’s in store for 2022? Grocery is shifting to digital for pickup in-store and for home delivery. Kroger has announced plans to launch in markets where the company has no physical retail footprint (Kroger has a Center of Innovation in Boca Raton, even though the company has no retail outlet in all of Florida). So why did the grocer lease 35,000 feet in the center? Because it plans to launch locker pickup and delivery to home as a 100% virtual brand in Florida.
It’s not exactly a risky move. Many brands tested the virtual-only concept via Ghost Kitchens during the pandemic. Applebee’s launched an online-only chicken wings brand which it sold through Ghost Kitchens (no one will buy Applebee’s for home delivery, but they might try Buffalo Wings from a brand they haven’t heard of before as long as it’s delivered to their doorsteps). Chuck E. Cheese did a similar thing with Pasqually’s Pizza.
In 2022 transformations, grocery will cease to be an in-store retail experience only, and the sector will be as virtual and digitally-driven as the best of them. Things get interesting when we combine locker pickup, virtual grocery, and automated last-mile delivery using autonomous vehicles that can deliver within a mile of the warehouse or store. Imagine a world in which CVS, Walgreens, and all grocery chains have roving stores on wheels that come by your house two to three times per day.
I have no doubt that capital will follow this direct-to-consumer and last-mile delivery. Instacart and DoorDash proved to the market that people are willing to pay a higher price for products as long as they’re delivered directly to their door. Soon, grocery will go direct — literally — by owning that last mile without needing to own a workforce.
Owning the last mile can’t be done with a just-in-time workforce in every region of the country. Grocery stores are marketplaces, and managing fleets of delivery drivers aren’t in their wheelhouse (pun intended). Delivery drivers today operate on a multitude of apps, moonlighting with as many as three or four services simultaneously to stay busy. Last-mile will become automated in the 2022 transformations.
The consumer has been trained to accept digital, automation, and even robots, so none of this will feel particularly “out there” to them. In fact, they’ll take to these new business models as readily as they took to Instacart and DoorDash. Perhaps one day it may even seem strange to see people doing the jobs that were relegated to robots in 2022. And make no mistake, relegated they will be for the simple reason that we can’t stop the economy in order to address our people shortage. The long-term answer lies in automation and robotics, and 2022 will be the start of the Great Transformation.
As chief commerce officer at Rightpoint, Phillip acts as head of Commerce strategy, partnerships, and evangelism. With over 15 years of experience creating unique online customer experiences, he has both built and managed ecommerce for some of the world’s most recognizable brands.
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