Retail's Tech-Driven Evolution: Adapting to Economic Challenges
The retail sector, deeply tied to global economic cycles, has witnessed significant shifts in its business model and supply chains. Despite challenging economic conditions, retailers are embracing technology and diversifying their operations to build resilience.
Global retail sales growth is projected to remain low at 3.1% over the next five years. However, retailers are adapting to this environment by investing in automation and AI. By 2030, the automation market in retail is expected to reach US$33 billion, with nearly 70% of routine store tasks automated by 2025.
In the US, consumer spending on goods increased by 0.5% in July, showing some resilience despite uncertainty. Yet, retailers are moderating their expectations. While 74% anticipate positive revenue growth in FY2023, overall growth has significantly dropped from previous years.
To navigate these challenges, retailers are diversifying their supply chains. Production is shifting to regions like Southeast Asia, India, and Mexico for resilience. They are also exploring revenue diversification through retail media networks and capability-as-a-service platforms, generating high-margin, data-driven income.
Retail's evolution continues, with AI-driven operations and diversified supply chains deepening consumer connections and building long-term resilience. Despite uneven profitability and cooling consumer sentiment, retailers are adapting to the current economic environment, investing in technology, and diversifying their business models.
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