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Start your AI journey today and let us help you understand your business better. Send us an email or book a meeting with one click!
24th September 2025
Leo
Retail has always been an industry shaped by change, but the pace today feels faster than ever. Costs are rising, customer expectations keep climbing, and new technology is changing how decisions are made. According to Forbes, the coming year will be defined by accelerated tech adoption, increasingly empowered consumers and ongoing supply chain disruption. These shifts will bring both risks and opportunities for businesses that are ready to adapt.
The significant challenge most retailers are facing is the cost, margins are under pressure in almost every market. Inflation, higher energy bills and labour shortages are forcing retailers to rethink how they operate. StartUs Insights highlights cost pressure and operational inefficiencies as two of the biggest challenges facing retail in 2026.
The retailers that succeed will be those who can improve efficiency without cutting quality. Occupancy driven energy management, smarter staff scheduling and predictive analytics can help reduce waste while still protecting service levels.
The other side of the equation is consumer expectation. Nowadays, shoppers want speed, personalisation and seamless experiences that move smoothly between digital and physical channels.
Both Forbes and StartUs Insights point to consumer empowerment as one of the biggest drivers of disruption. Click and collect, loyalty programs linked to in store promotions and QR enabled campaigns are no longer optional extras. They have become the standard experience that customers look for, and retailers who fail to deliver risk losing relevance.
As we progress more towards the AI world today, technology is no longer a side project. Predictive analytics, AI powered computer vision and real time dashboards are moving from pilot programs to industry wide adoption.
Yet many organisations still struggle to make the leap from small scale trials to a way of working that covers the entire business. Adoption is often the sticking point, tools can sit unused if staff do not trust the data or do not see how it helps them day to day.
Moving from pilots to full scale requires investment in training, dashboards designed with simplicity in mind and embedding insights into daily routines.
Additionally, trust has become another central issue as customers want to know how their data is being collected and used, and regulators are putting more pressure on retailers to be transparent. The answer lies in simple communication.
When shoppers understand that people counting or occupancy data is anonymous and used only to improve their experience, they are more comfortable with its use. Privacy by design systems, anonymised analytics and clear signage are becoming the new baseline for retailers who want to build trust.
On top of seamless shopping experience and privacy control, sustainability is also the main focus of the businesses. Harvard Business Review shows that customers increasingly expect measurable commitments to reducing waste, lowering emissions and running ethical operations.
Therefore, retailers are now expected to prove that they are serious about sustainability, not just talk about it. For instance, occupancy based lighting and heating, smarter campaign planning to reduce waste, and energy per customer visit as a tracked metric are all examples of how operations can be tied directly to sustainability goals.
No matter how advanced the technology becomes, people remain at the centre of retail success. Change cannot be managed from head office alone. Staff need clear training, leadership support and trust in the tools they are asked to use. Customers need honesty and empathy from the brands they choose. Technology provides the enablers, but people turn that potential into performance.
The years ahead will not be simple. Costs will stay high, customers will expect more, technology will demand new ways of working, privacy rules will grow stricter and sustainability will continue to rise in importance. Yet each of these challenges also offers a chance to build stronger businesses. Retailers who embrace efficiency, design experiences that feel seamless, invest in training and transparency and meet sustainability demands head on will not only survive but thrive.
As Forbes put it, the future will belong to those who adapt quickly. Want to see how data can help you prepare for the future of retail? Explore how Merlin Cloud supports retailers to adapt with agility.