Retailers are navigating one of the most significant periods of change the industry has faced in years. AI is reshaping how teams work and how customers discover products, while economic uncertainty and new competitors continue to put pressure on margins and customer expectations.
Success will not come from responding to each challenge in isolation. Instead, it depends on the strength of the ecosystem behind the retailer: the ability to connect suppliers, systems, inventory, and fulfilment so the business can adapt quickly as the market evolves.
Four forces are shaping that environment today, and together they are redefining what retailers need to prioritise to remain competitive, writes Ed Bradley, Chief Growth Officer, Virtualstock powered by Logicbroker.
The AI-powered workforce
Just last year, many people were still talking about AI in fairly broad terms. Now, employees are using tools like Claude to write, analyse and improve workflows themselves. Everyone is becoming a builder. If you have a good idea, you no longer need to wait for a long development cycle to test it.
That creates a huge opportunity for retailers. From product onboarding and merchandising to customer service, every business has processes that are slower or more complicated than they should be. AI allows retailers to look at efficiency differently, reducing manual work, improving decision making and helping teams respond to customer needs more effectively.
The opportunity is big, but it also comes with new responsibilities. Experimentation cannot become a free-for-all. We’re still in the early stages of the AI era, and in many ways, it feels like the AI wild west. Employees are using AI tools in different ways and inputting information without oversight. AI capabilities are changing at speed, and policies and legislation are still catching up.
Retailers need to encourage experimentation and implementation, but they also must put in place clear rules around data security, compliance, and governance. Getting this balance right will be essential to capitalise on AI’s potential without creating unnecessary risk.
1. Agentic commerce
There’s been a lot of noise about the ‘death of the website’: the idea that checkout will happen directly inside LLMs and AI agents will simply choose products on behalf of customers. But if you step back, new channels rarely replace existing ones overnight. People still want to browse, compare options, read reviews and shop around before making purchases.
What is changing is the way customers express what they want. Instead of searching for a new t-shirt, people are describing what they need, including the occasion, budget and style they’re looking for. That’s a very different discovery journey, and it requires a different approach to targeting and optimisation.
High-quality product data is key in this agentic world. If an AI tool recommends the wrong product or hallucinates a product detail, customers are more likely to blame the retailer than the technology, creating a reputational risk. AI tools rely on accurate product, inventory and delivery information to recommend the right products. Retailers therefore need connected supplier systems and livestock visibility to ensure information stays consistent as ranges grow.
For now, agentic commerce should not be treated as a replacement for existing channels but as another layer of the retail experience. Business leaders must ensure their data and infrastructure are ready for it.
2. Economic uncertainty
A challenge that isn’t new is the tough conditions in the market. The cost-of-living crunch has made customers more selective, while inflation, geopolitical uncertainty, and ongoing supply chain disruption continue to make planning harder.
With retail sales plunging the most in the last three months since 1983, retailers are under pressure to make sharper decisions on pricing, investment, and operations. They need to protect margin, but they also need to keep investing in the areas that make them more competitive.
This is where more flexible fulfilment models, including dropshipping, can play an important role. Dropshipping allows retailers to test new product lines and tap into trending categories with minimal upfront investment, all while delivering greater convenience and expanding basket sizes.
Retailers that can plan around demand, flex their range, communicate clearly with customers, and keep service consistent will be able to find growth even when the market seems bleak.
3. New competition
Finally, China-founded businesses such as Temu and SHEIN have reshaped expectations around price, speed, range, and convenience, particularly among younger customers who are already comfortable discovering and buying through digital channels.
Customers have become used to wide choice, constant availability and very little friction. They expect to move quickly from discovery to purchase.
For established retailers, the answer is not to abandon your core values and commitment to quality. Competing purely on price is difficult, and for many brands it would weaken the very things that make them distinctive. The better tactic is to lean in: be clear about why customers should choose you, curate a selection that stays in line with your ethos and then make sure the experience supports that promise.
Trust, quality, service and curation still matter, but they need to sit alongside convenience and speed.
Where this leaves retailers
Taken together, these four forces point to the same conclusion: retail leaders cannot afford to wait for things to settle.
AI is changing how teams work. Agentic commerce is changing how products are found. Economic volatility is affecting customer demand, and new competitors are raising standards.
No one has a perfect view of where the market is heading. What matters is being close enough to the customer to see when behaviour is shifting and flexible enough to respond before that shift becomes a problem. Waiting for certainty might feel like the safer option, but in this market, it is becoming one of the most expensive strategies of all.
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