Introduction

What’s the Story? Coresight Research has identified inclusivity—providing equal access for people who might otherwise be excluded or marginalized—as a key trend to watch in retail and a component trend of Coresight Research’s RESET framework for change. That framework provides retailers with a model for adapting to a new world marked by consumer-centricity, in 2022 and beyond (see the appendix of this report for more details). After years of consumer advocacy, inclusive categories are gaining traction across the retail industry, accelerating in light of the racial justice movement in the US, which has helped to inspire a global conversation on diversity and representation. Inclusivity impacts corporate structures and policies, brand representation on shelves, suppliers, product categories, and the content that companies and brands are posting on social media. In this report, we discuss major inclusivity themes, highlighting developments in 2021 and offering our view of the retail impact for 2022. Why It Matters Inclusivity is influencing long-term change within the retail industry, driving billion-dollar growth in multiple product categories, including adaptive apparel, gender-free designs, extended sizes, and beauty for all ages, races and genders. Inclusive products and corporate practices are no longer a secondary consideration but a necessity for retailers and brands to be competitive. Inclusive categories are expanding, which shows that the industry is beginning to listen to the consumer. By understanding recent trends and establishing inclusive practices and strategies, brands and retailers can capitalize on momentum in the inclusivity space and improve brand reputation among consumers. We expect retailers to include more diverse brand owners in their portfolios and in the supply chain, as well as provide mentorship and accelerator programs geared toward diverse and inclusive entrepreneurs. Such initiatives will help to positively impact retail sales in inclusive categories as diverse brands gain traction in the market.

Inclusivity in Retail—Trends from 2021, Learnings for 2022: Coresight Research Analysis 

Adaptive Retail Moves Beyond Apparel and Footwear The adaptive apparel and accessories market has been slowly growing over the past few years as more retailers and brands recognize the opportunity. We believe that the potential for adaptive apparel sales is huge: In our Think Tank on the US adaptive apparel market, we estimate that spending in the market totaled approximately $1.3 billion in 2021 but that the total potential addressable market was worth $64.3 billion. With the apparel and footwear sector paving the way for adaptive products, we are beginning to see the adaptive market expand to the home, beauty and personal care, technology and packaging sectors, as more brands and retailers look for ways to serve the needs of disabled people—which represent 12.7% of the US population, according to the US Census Bureau (latest data available from 2019). We are beginning to see brands and retailers experiment and launch innovations to create more universal design concepts for products that can serve larger user groups. We highlight notable examples below. Beauty Packaging  In December 2021, Procter & Gamble prototyped an easy-open winged lid to be incorporated in the Olay beauty line. The beauty packaging also includes extra grip, Braille text and a high contrast product label. In the spirit of inclusivity and open accessibility, Procter & Gamble is sharing its design with other beauty manufacturers. [caption id="attachment_143829" align="aligncenter" width="700"] Adaptive beauty packaging
Source: Olay [/caption]   Personal Care Products  In April 2021, Unilever launched Degree Inclusive, a deodorant designed for people with visual impairment and upper-limb motor disabilities. To create a prototype, the company partnered with an inclusive team of design experts from marketing communications agency Wunderman Thompson, as well as occupational therapists, engineers, consultants and people living with disabilities across the globe. The product includes a hooked design for one-handed use, magnetic closures for the cap for individuals with limited grip or vision impairment, enhanced grip placement, a Braille label and a larger roll-on applicator. Technology  In October 2021, Microsoft Store added advanced accessibility features to the Xbox One and Xbox Series X|S to help inform game-purchasing decisions. There are 20 tags that allow users to customize their playing experience to their own preferences, covering narrated game menus, subtitle options, input remapping, full keyboard support and single-stick gameplay. Microsoft launched the tags in response to a common question from its customers and the disability community: “How do I know which games I can play?” The game-accessibility feature tags will also be available on Xbox.com, the Xbox app on PC and Xbox Game Pass apps in the coming months. Microsoft also has a free Xbox Accessibility Insiders League (XAIL), which provides feedback on the tags so it can “refine and improve the experience for all players.” At the company’s Accessibility Showcase in October 2021, Microsoft estimated that there are 400 million gamers with disabilities globally. [caption id="attachment_143830" align="aligncenter" width="700"] Source: Microsoft/YouTube[/caption]   Looking ahead: The apparel and footwear sector has paved the way for different sectors to capitalize on the adaptive opportunity and better serve a variety of consumers. We expect more companies across multiple categories to focus on improving the accessibility of their products and services moving forward—launching innovations to reach a broader consumer base. Collaborations and open designs will further support brands, retailers, manufacturers and technology companies in implementing adaptive practices. Gender-Free Merchandise Extends into More Categories In 2020 and 2021, conversations around gender-identification categories beyond men and women became more mainstream in workplaces and schools. Younger consumers expressing their gender identity have helped drive the emergence of the gender-free product category in retail. From January through June 2021, there were six gender-free launches from major brands and retailers spanning accessories, apparel, footwear, cosmetics and jewelry. There have been several major announcements since, as brands and retailers continue to embrace the gender-free category:

• In January 2022, France-based accessible luxury brand Monsieur L launched gender-free footwear.
• Apparel retailer PacSun opened a gender-free kids’ apparel store in the Mall of America, Minnesota, in November 2021.
• In August 2021, Italian luxury lingerie brand Cosabella announced that it would launch “technically fitted” underwear and sleepwear products, offering the same style across genders but taking into consideration waistband and cup sizes.
• Gilly Hicks opened a gender-free teen apparel store in Columbus, Ohio in July 2021.
• Apparel brand Tommy Hilfiger collaborated with actor Indya Moore on a gender-free capsule collection in July 2021.
• Luxury brands Altazurra,Marni and Telfar have launched gender-free apparel lines.

Legal Changes In October 2021, California became the first state to sign a bill that requires large retailers with 500 employees or more to display “a reasonable selection” of toys and childcare items in a gender-neutral way, “regardless of whether they have been traditionally marketed for either girls or for boys.” Retailers may still have separate sections for girls and boys. The bill will take effect in 2024, providing further support for the gender-free category in the retail industry. Looking ahead: We expect the gender-free category to continue its expansion across retail categories and sectors in 2022 as more brands and retailers across all sectors launch gender-free products. The category emerged in 2020, made inroads in 2021 and continued to grow in the latter half of 2021. This year, we expect that as the category gains depth, there will be a movement to develop sizing standards. We also expect to see retailers and designers collaborate across the gender-free category, offering limited-edition collections to test the category among their consumer base while working with trusted partners.

• Read our separate report for more on the gender-free market opportunity in retail.

The Plus-Size Market Is Expanding  Given the impact of the Covid-19 pandemic on consumers’ waistlines, the plus-size market is increasingly important. The Harris Poll for the American Psychological Association conducted in February 2021 found that 61% of Americans reported weight increases since the start of the pandemic. Adults in this group reported that they had gained an average of 29 pounds, with a median weight gain of 15 pounds. The NPD Group conducted a survey in conjunction with CivicScience in March 2021, in which 40% of women reported that they were a new size compared to a year ago; of these women, 25% reported that they were a size larger. According to the CDC (Centers for Disease Control and Prevention), 27.5% of women identify as overweight, and an additional 41.9% identify as obese or severely obese. There is clear opportunity for retailers: Consumers need larger sizes and will therefore need to buy new apparel. Coresight Research estimates that the US women’s plus-size market totaled $34.3 billion in 2021 and will grow by 7.6% to $36.9 billion in 2022. In 2021, we saw three major trends that signal further expansion of the plus-size market. 1. Category Launches The plus-size market further expanded into mass retail with Old Navy’s launch of BODEQUALITY in August 2021. This represents one of the first dedicated plus-size brand launches of a major mass retailer that encompasses nearly every category—including denim, dresses, tops, sweaters, pants, denim, activewear and outerwear. The brand is available in stores and online, with sizes ranging from 0 to 30. At NRF 2022: Retail’s Big Show, hosted by the National Retail Federation (NRF) in January 2022, Old Navy’s President and CEO, Nancy Green, said that the retailer always had an extended-size business, but it was small and was treated as an extension of its women’s business. The company embarked on a two-year study to explore what true inclusivity looked like, discovering that consumers want to shop extended sizes in the same areas of the store as standard sizes and want the prices to be the same (extended sizes are often sold at a higher price point). These insights informed the launch of BODEQUALITY. Green said that customer engagement has been very strong and that the company is gaining new customers. She said that BODEQUALITY customers feel “seen” by the brand and it gets a very emotional reaction. Old Navy is using these learnings for potential opportunities to expand the category for men, starting online. Parent company Gap Inc. reported on its earnings call for the third quarter of fiscal 2021 earnings call in November 2021 that the brand had more than doubled its extended-size customer file since launch. Among the customers who shopped extended size, 15% are new to the brand and more than one-third have shopped Old Navy before but are new to the category. Additionally, the company reported that it is seeing strong extended-size demand across fashion categories, representing “a clear signal that customers are craving trend choice lacking in the market.” 2. Product-Line Extensions Major brands and retailers are extending existing product lines and categories to include plus sizes. Retailers including Adidas, Athleta and Knix each expanded their size ranges in 2021. We are also seeing plus-size options be more inclusive to include more robust sizing options, catering to more consumers. Brands and retailers are extending their size ranges beyond their traditional extended sizes, while new brands are launching collections that are more size inclusive. 3. Designer Collaborations  In 2021, we saw notable designer collaborations for extended sizes emerge.

• In March 2021, Erdem x Universal Standard launched a limited-edition collection of size-inclusive apparel.
• In September 2021, Target announced its fall collaboration with four designers—Rachel Comey, Nili Lotan, Sandy Liang and Victor Glemaud. The capsule collections offered sizesranging from XXS to 4X.

Looking ahead: There are opportunities for retailers and brands to expand their women’s plus-size category offerings. We see white-space opportunities in categories beyond athleisure, activewear and intimates—the categories that have had the most plus-size launches to date. We also see opportunities in the men’s plus-size market, as this market has lagged the US women’s plus-size market.

• Read our separate report for more on the US women’s plus-size apparel market.

Brands and Suppliers Are Improving Diversity Due to consumer demand for diversity, inclusivity and organizational transparency, companies and retailers are updating their strategic goals to diversify suppliers and brands. In 2021, five major retailers—JCPenney, Macy’s, Nordstrom, Target and Ulta Beauty—invested in diverse beauty through strategic priorities, Black-owned brand growth plans and incubator programs. The retailers have added more than 95 Black-owned brands across their portfolios, with solutions spanning skincare, haircare, color cosmetics and fragrance. They have also pledged to continue their commitment to inclusive beauty beyond 2021.

• Nordstrom announced in July 2021 that it plans to grow its purchases from businesses owned or founded by Black individuals by 10X by the end of 2030.
• Target pledged in April 2021 that it will spend $2 billion on Black-owned suppliers by 2025. As part of this effort, the company plans to add products to its shelves from more than 500 Black-owned companies.

The US population is becoming more ethnically diverse, which is important for brands and retailers as the younger consumer represents the future. Among Americans under the age of 18, 53% identified as “white,” down from 65% in 2010, according to the US Census Bureau. The proportion of young people who identified as two or more races increased from 6% in 2010 to 15% in 2020. In the US overall, 61.6% of the population identified as white, down 8.6 percentage points from 2010. The multiracial category grew 276%, from 9 million Americans in 2010 to 33.8 million Americans in 2020. The Hispanic or Latino population was 62.1 million in 2020, growing 23% from 2010. Looking ahead: We expect that investments in diverse brands will help to drive growth in inclusive categories as consumers discover brands and as diverse brands gain traction. We expect inclusive beauty to grow by double digits (in year-over-year percentage terms) in 2022, driven by continued product launches and the momentum of brands launched in 2021. As retailers are expanding their entire portfolios of diverse brands (beyond beauty) to include apparel, footwear, home and accessories, we expect that more varied merchandise offerings will resonate with a larger consumer base. Investments Increasingly Focus on Diversity and Inclusion Programs  Companies and retailers are investing in entrepreneurship and mentorship programs, with an emphasis on diverse brands owners and leaders. Incubator Program for Diverse and Women-Owned Brands Macy’s announced in April 2021 that its Workshop at Macy’s vendor development program (which has been running since 2011) would be devoted to 50 diverse and women-owned brands. Management reported that its vendor relationships play an important role in its diversity and inclusion strategy; having a supplier base that reflects its diverse customers offers shoppers a more robust experience, allowing Macy’s to expand the breadth of its assortment while nurturing diverse talent in the industry. The incubator program provides emerging business leaders with the tools they need to better succeed and sustain growth through one-to-one education from Macy’s executives. Accelerate 2022 Brand Incubator Program Focused on Founders of Color Sephora is devoting its annual 2022 Accelerate incubator program to focus on 12 beauty founders of color. The program, a six-month boot camp, began five years ago. Beauty founders receive mentorship, branding, product development, merchandising support and investor connections. The program culminates in a presentation to senior executives at Sephora. After completing the Accelerate program, participants also have an opportunity to launch at Sephora. Sephora was also the first beauty brand to take the “15 Percent Pledge,” in June 2020. Companies that sign up to the 15 Percent Pledge commit to conducting an internal audit of their current spending power and contracts allocated to Black businesses, along with committing 15% shelf space to Black-owned brands. Sephora has integrated diversity into its corporate strategy across hiring, products, suppliers and social media. The retailer pledged to double the number of Black-owned brands on its shelves by the end of 2021 and provide marketing and merchandising support to those brands. Grants to Inspiring Black Beauty Recipients  Ulta Beauty announced in September 2021 that it was awarding 100 Black beauty recipients a $10,000 grant known as “The MUSE 100—Celebration of 100 Inspiring Black Voices in Beauty.” The MUSE 100 recognizes merits including vision, leadership and the ability to stimulate change, uphold values and champion inclusivity spanning beauty brand founders, makeup artists, activists and authors; the grants were awarded with the aim of furthering their impact. Looking ahead: Companies and retailers are emphasizing the importance of fostering the industry’s next generation of leaders with mentorship programs. While focusing on diverse and inclusive leaders, companies and retailers are providing development programs that offer a variety of support, including mentorship, branding, product development, merchandising support, investor and industry connections and financial grants. These programs will provide a growing pipeline of new Black-owned and diverse-owned brands and suppliers for retailers.

What We Think

The second half of 2021 was a time of building and expansion for the inclusivity movement, and we expect this to continue into 2022. Incorporating inclusivity into strategic goals is a long-term change which will help to grow the category. Implications for Brands/Retailers

• Previously, inclusivity and strategic change were often parallel initiatives. The integration led to many brands and retailers pledging to incorporate more diverse brands and suppliers into their business, not just in 2021 but into the future. This positive development will grow inclusive categories founded or supplied by Black-owned brands.
• In 2022, we expect gender-freeto be a big opportunity for brand launches and category offerings.ender-free is one of the newest and fastest growing categories; it quickly expanded to include two new retail stores while brands and retailers from mass to luxury are entering the category.
• The plus-size category is also buildingmomentum. In 2022, we expect that a men’s category will begin to heat up. Old Navy hinted at NRF 2022: Retail’s Big Show that it is planning to use its learnings from its BODEQUALITY women’s plus-size category to launch an online men’s plus-size category. We expect that this will create buzz for a category that is currently lagging women’s offerings. We also see further expansion in the women’s plus-size category as there has been recent growth in activewear, athleisure and intimates; we see more opportunities in everyday wear.
• Adaptive solutionsare one of the biggest opportunities in 2022. Adaptive apparel is one of the least penetrated categories with considerable opportunities. Retailers and brands are leveraging user insights and universal design solutions, often providing open access to their designs to other manufacturers to advance the entire industry. While the adaptive market has been the slowest moving, we see the advancements in 2021 as huge steps forward. In 2021, there were three launches in adaptive design by major companies: Procter & Gamble, Unilever and Microsoft. This is a positive indicator for adaptive packaging, design and technology solutions for 2022.

Implications for Real Estate Firms

• We expect that the emerging gender-free categorywill be a real estate opportunity as it develops physical stores, pop-ups and shop-in-shops.
• There are opportunities for real estate firms to collaborate with small business owners to help them gain access to new retail opportunities. Retailers are focusing on emerging brands and innovators, with programs to help entrepreneurs launch their brands. This will include opening physical spaces.

Implications for Technology Vendors

• In 2022,we expect to see continued technology advancements beyond gaming, which will propel the adaptive market forward to include advanced accessible websites. This will allow persons with disabilities to more easily apply for jobs and shop for products that they like. There are many opportunities for technology vendors to help companies integrate accessible features into both their websites and products.

Appendix: About Coresight Research’s RESET Framework 

Coresight Research’s RESET framework for change in retail serves as a call to action for retail companies. The framework aggregates the retail trends that our analysts identify as meaningful for 2022 and beyond, as well as our recommendations to capitalize on those trends, around five areas of evolution. To remain relevant and stand equipped for change, we urge retailers to be Responsive, Engaging, Socially responsible, Expansive and Tech-enabled. Emphasizing the need for consumer-centricity, the consumer sits at the center of this framework, with their preferences, behaviors and choices demanding those changes. RESET was ideated as a means to aggregate more than a dozen of our identified retail trends into a higher-level framework. The framework enhances accessibility, serving as an entry point into the longer list of more specific trends that we think should be front of mind for retail companies as they seek to maintain relevance. Retailers can dive into these trends as they cycle through the RESET framework. The components of RESET serve as a template for approaching adaptation in retail. Companies can consolidate processes such as the identification of opportunities, internal capability reviews, competitor analysis and implementation of new processes and competencies around these RESET segments. Through 2022, our research will assist retailers in understanding the drivers of evolution in retail and managing the resulting processes of adaptation. The RESET framework’s constituent trends will form a pillar of our research and analysis through 2022, with our analysts dedicated to exploring these trends in detail. Readers will see this explainer and the RESET framework identifier on further reports as we continue that coverage.

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Appendix Figure 1. RESET Framework [caption id="attachment_143517" align="aligncenter" width="700"] Source: Coresight Research[/caption]