Think the retail world has experienced a series of radical changes in recent years? Well, as the saying goes, you ain’t seen nothing yet.
That’s the conclusion of a new report by management consultant Bain & Co. titled “The Future of Retail: Six Disruptions That Could Shape the Next Decade.”
“Retailers are inundated with operational challenges today,” the report’s introduction notes. “But as they manage tariff turbulence and other immediate concerns, they can’t afford to lose sight of the long-term evolution of the strategic landscape.
“The tectonic movements gradually reshaping the industry haven’t weakened during this period of economic and geopolitical flux. If anything, they’ve gotten more powerful.”
Here are brief descriptions of the half-dozen such shifts the next decade could bring:
- You might not need as many stores as you think: The role of stores must evolve to reflect the changes in consumer behavior. Executives must remain open to alternative uses for space, such as franchising or leasing to third-party traders.
- Algorithms and robots will run your business: Core retail functions such as pricing, promotions, and merchandising will increasingly be automated, commoditizing retail capabilities that have traditionally offered a competitive edge. Retailers that don’t let algorithms and robots run key parts of their business might give away a few vital percentage points of profit margin.
- Customers will “cheat” on you with AI shopping agents: As shoppers hand decision-making to brand-agnostic AI tools, loyalty models and digital marketing strategies will face pressure. Executive teams need to start planning today for the likely impact of AI shopping agents becoming widespread.
- Value will become more personal and contextual: Success will depend on meeting customer needs in the moment, not just on price. The retailers that excel at this will have data that can paint the full picture of a consumer’s behavior as well as the data strategy and capabilities to harness it.
- Grocers will become fast-moving consumer goods (FMCG) businesses: Private-label growth – with nearly half of grocery shoppers in the U.S. and Europe now seeking out such items – could blur the lines between retailer and supplier. Done well, private label will offer retailers powerful differentiation in the form of must-have, exclusive products.
- The hunt for scale will cross borders: Local scale isn’t enough to keep up with consumer’s expectations and competitive pressures. Cross-border M&A and virtual alliances will be key to funding tech investment and staying competitive.
The report concludes: “Retail is on the cusp of a profound reinvention that requires bold choices from executive teams over the next decade. Retailers need to embrace AI while retaining human judgment, personalize relevant value at scale, redefine the role of stores and networks, and build for scale beyond borders.
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“The prize will be big for those that act early and reinvest strategically even as they mitigate today’s margin pressure. They won’t just weather the coming change; they’ll help shape a new era of retail excellence.”
Click here for more from the Bain study.
