Retailers today face a formidable challenge: building lasting loyalty in a market overflowing with choices. Gen Z and millennials, known for their minimal brand commitment, are driving a shift where success depends on standout products, competitive pricing, and valuable services-all without compromising profitability. Achieving this delicate balance requires integrated, data-driven planning, resilient operations, and personalized engagement.
In 2026, seven megatrends are reshaping the retail landscape: Agentic AI Pilot Across the Value Chain, conversational commerce with Gen AI, in-store retail media, AI-powered personalization at scale, unified AI planning, smart stores with AI and IoT, and robotic warehousing automation.
Evolving Expectations: The Shift to Connected Retail
Retailers are rapidly adopting interconnected technology ecosystems in response to intense margin pressure and evolving consumer expectations. This transformation enables seamless and efficient operations, which are essential for staying competitive.
1. Agentic AI Pilot Across the Value Chain
Agentic AI is now powering real-world operations by automating workflows, boosting employee productivity, and driving efficiency. Retailers such as Walmart are leveraging this technology for commerce and customer service, with the trend expected to move from research labs into full-scale production. Retailers must begin with high ROI use cases comprising high-frequency tasks that can be automated, establish strong data governance, and deploy AI co-pilots before scaling automation. For example, a US electronics retailer used Agentic AI to guide store operations and automate task assignments, resulting in improved productivity.
2. Conversational Commerce with Gen AI
Conversational commerce with Gen AI is transforming product discovery from keyword-based searches to natural conversations, enhancing conversion rates by better understanding customer intent. Google is heavily integrating this technology for shopping, and more retailers are expected to adopt Gen AI–driven conversational product discovery in 2026. Retailers must use context-aware Gen AI search engines trained on structured product data. For example, a conversational PoC helped an electronics retailer boost conversions and order value through natural language queries.
3. In-Store Retail Media
In-store retail media is monetizing ad inventory and influencing purchases through digital displays. Hershey uses targeted campaigns via retail media networks. While retail media has seen widespread adoption online, 2026 is expected to bring more pilots for in-store retail media networks. The firms must evaluate ROI for digital signage and retail media networks, build audience-based packages, and utilize first-party data for attribution. For example, a North American sports brand increased engagement and sales through dynamic signage.
4. AI-Powered Personalization at Scale
AI-powered personalization at scale is driving customer loyalty and lifetime value through real-time tailored experiences. Coffee chain app uses AI to deliver personalized offers, and retailers are expected to scale up hyper-personalization and AI-led experimentation in 2026. Retailers must use centralized customer data platforms and continuous AI-driven A/B testing. For example, a global appliance brand achieved a 130% increase in basket size and gained one million customers through hyper-personalized digital experiences.
5. Unified AI Planning
Unified AI planning is reducing inefficiencies across merchandising, supply chain, and finance by leveraging AI-driven planning. Estée Lauder exemplifies this trend as a global luxury brand utilizing unified demand, supply, and finance planning through O9. More retailers are expected to adopt unified AI planning in 2026 compared to 2025. The firms must invest in unified platforms and foster cross-functional collaboration with shared AI forecasts. For instance, a US food distributor cut inventory costs and stockouts while boosting sales.
6. Smart Stores with AI and IoT
Smart stores with AI and IoT enable real-time optimization, reducing shrinkage, improving customer experience, and boosting productivity. Walmart uses AI cameras to minimize checkout errors. The firms must begin with high-ROI computer vision use cases, ensure data privacy, and use edge infrastructure for real-time alerts on queue congestion, suspicious behavior, and empty shelves. For example, a luxury brand improved customer flow and reduced queue abandonment, leading to increased sales.
7. Robotic Warehousing Automation
Robotic warehousing automation is now handling complex tasks in distribution centers, which is essential for fast and accurate fulfillment. Amazon’s Blue Jay enhances sorting efficiency. The firms must analyze processes to identify automation opportunities and start with cobots to ease adoption and scale gradually. For example, a consumer care brand piloted drone-based stock counting for autonomous inventory checks, maintaining operations and reducing costs.
Why It Matters
Ignoring these trends places retailers at risk of existential threats from rising costs and disconnected customer experiences. They may miss out on high-margin revenue opportunities from in-store retail media, struggle with inefficient operations and outdated workflows, and fail to engage Gen Z and millennials who expect conversational, personalized shopping. Falling behind competitors who build smart, self-aware stores could further erode market position.
The Leadership Playbook for 2026
To lead in 2026, retailers must:
- Focus and Scale: Prioritize 2-3 high-ROI trends and create enterprise-wide rollout plans.
- Break Down Silos: Enable seamless data flow across planning, stores, and digital channels.
- Build an AI-Ready Data Foundation: Treat clean, integrated data as a strategic asset.
- Embed Explainability and Human-in-the-Loop in AI: Promote smart collaboration and continuous learning.
- Empower People through Change Management: Reskill teams to work effectively with AI and automation.
The Bottom Line
Retail’s future is intelligent, immersive, and automated. AI agents will run operations, Gen AI will redefine how customers discover and buy, and retail media will turn stores into monetization engines. Personalization will be instant, predictive, and ubiquitous, while unified planning will collapse silos and unlock agility. Smart stores will sense, respond, and optimize in real time, and robotics will power fulfillment at scale. Retailers must act fast, execute precisely, and scale purposefully or risk being outpaced.
