After rebounding from COVID-19 lockdowns with a promising holiday season, brick-and-mortar retail started 2022 with a strong Q1. With increased foot traffic came increased sales virtually across the board, giving retailers plenty of reason to be optimistic as we enter Q2, and even for the rest of the year.

But, as these things often go, some obstacles have appeared along the way. Inflation is being felt by consumers across the U.S., and global events have caused a record-breaking surge in gas prices — both of which contributed to a slowdown in March.

Armed with the latest data and insights, let's examine what these factors meant for retailers in Q1, and what takeaways they can use to maximize profitability at the end of Q2 and throughout the year.

Consumers weren't shy about spending during Q1. Despite a slight downturn in March, total retail sales — when adjusted to remove gasoline purchases — were up 8.4% over Q1 2021, according to the U.S. Census Bureau. The leading category was sales at food and drink establishments, with a 25% year-over-year (YoY) increase, followed by miscellaneous goods (21.3%), and clothing (13.6%). The only category to dip YoY was electronics and appliances (-4.4%), perhaps driven by supply chain shortages and, potentially, because as more workers return to the office, they need fewer electronics to facilitate working remotely.

But even amid these positive numbers, both sales and foot traffic showed uncommon volatility in Q1. Traffic rose by 14.8% in February, while sales rose by 17%. In March, traffic was down by 3.6%, even though sales rose by 4.5%. In April, both metrics were up again, with traffic growing by 2.4% and sales growing by 6.4%.

This unevenness, however, was largely due to a confluence of outside factors. Consider, for example, that February 2021 was impacted by Tropical Storm Uri, which caused the largest blackout in the U.S. since 2003 and caused severe cold and several tornados across many states — not ideal conditions for shopping. Meanwhile, the IRS issued its third stimulus check to consumers in March of 2021. The first of these factors kept many shoppers out of stores, while the second sent many to them. As a result, February 2022's performance appears stronger YoY than it would’ve been absent the previous year’s storm, while March of 2022 appears weaker than it would’ve been had no checks been issued the year prior.

Nevertheless, the good news for retailers is that sales performance across the board was strong and should stay strong throughout the rest of 2022 — barring, of course, any unforeseen events.

The U.S. inflation rate is hovering around unprecedented levels. April's annual inflation rate was an eye-watering 8.3%, which is actually down from March's 8.5%. Meanwhile, food costs are up by 9.4%. These are figures that haven't been seen in the U.S. since the early 80s, and it's no surprise that consumers are tightening their belts as a result.

If you haven't topped off your tank in a while, get ready for a shock: The average gas price in the U.S. currently sits at an all-time high of $4.56, and gas in every state is above $4.00. That's a 50% YoY increase. To put it another way, filling a small car's tank cost $36.48 this time last year. Today, it would cost almost $55.

As a result of this one-two punch, 45% of consumers told a recent Numerator survey they were driving less, while 31% said they were making fewer trips to the store and stocking up on each trip. Twenty-nine percent said they were eating out less, and 28% said they're staying closer to home to minimize fuel costs.

Spending is up, even amid skyrocketing gas prices and inflation. What do these factors mean for retailers as we close out Q2?

Here are four key takeaways for retailers to consider as we move into the second half of 2022.

As consumers restrict the number of shopping trips, each trip they do make is more important and more intentional. That means when consumers are in your stores, they're not there to browse, but with intent to purchase.

To capitalize on that intent, retailers will need to understand their foot traffic patterns and be prepared to staff accordingly. This will be become especially important as we move past the weeks of graduation and Memorial Day, and later into Father's Day. Having the right staffing levels ensures customers receive proper service and attention, and a swift and easy checkout — both of which are crucial to ensuring excellent customer experiences. After all, as consumers scale back the number of shopping trips, each trip becomes more important, meaning retailers have fewer opportunities to make good impressions and build consumer loyalty.

Consider the rural consumer who has to drive 30, 40, or even 60 minutes to reach your store. If they make that trip because your website says a particular item is in stock — only to discover that's not actually the case — they'll not only walk away, but they’ll also walk away embittered at having wasted time and costly gasoline. This may be doubly true for customers who intend to pick up via BOPIS or BOPAC, only to learn the item they already purchased isn't actually available.

To avoid this scenario, retailers will need to carefully consider using inventory intelligence solutions that provide item-level accuracy from warehouse to storefront and which integrate seamlessly with omnichannel platforms.

Surging gas prices aren't just keeping consumers close to home, they're keeping them at home, as well. But this hasn't stopped them from shopping — it just means they're doing more of their shopping online and having those purchases shipped to their homes. But don't just take it from me. Simply compare sales from non-store retailers — think Amazon — from March to April: March sales were up 2.6% YoY and jumped to 11.3% in April.

Why? The answer's a simple one: They're happy to let retailers and delivery services spend money on fuel so they don't have to. After all, spending, say, $5 on a delivery fee is far cheaper than burning several gallons of gasoline to get to and from a store. So, if your locations currently ship to home as an option, be prepared for consumers to exercise this option in greater numbers — if they aren't already.

If you're in the apparel game, we've got good news: plan for sales to stay strong throughout the summer. After years of pandemic lockdowns followed by extreme caution on the part of many consumers, many workers are returning to the office and rates of travel are once again on the upswing. Both factors mean people want to look their best, and that often means buying new clothes. So it's not surprising to see apparel sales are up 13.6% YoY for Q1.

For retailers, this means replenishment will be crucial. As we move into vacation season, retailers that have spent the last two years and change seeing sluggish apparel sales may want to consider more aggressive replenishment plans, especially around key shopping periods like graduation, Memorial Day, Father's Day, and Back to School.

While there may some clouds in the sky, the outlook for Q2 — and indeed the rest of 2022 — is quite sunny indeed. Consumers may be tightening their belts in some areas, but a desire to travel, return to work, and enjoy the summer sun is spurring them to spend. Retailers that can adapt and optimize for how and where they're spending, along with those that leverage the right technologies, have every reason to expect a prosperous 2022.