Retail is one of the most tightly linked industries to global economic cycles and is, therefore, one of the industries most intrinsically reshaped by global uncertainty. Retail has undergone frequent and radical changes to its business model, from the emergence of e-commerce to the need for socially distanced shopping and beyond. As the world economy enters another chapter, retail is poised to respond. But if history is any guide, this industry doesn’t just withstand changing winds—it uses them to help fill its sails. From artificial intelligence (AI)-driven operations to new revenue platforms and diversified supply chains, retail continues to evolve in ways that deepen consumer connection and build long-term resilience.
A multifaceted economic picture can complicate the retail landscape
To understand the ways retail has evolved (and is still evolving), it’s important first to understand the current economic conditions, which remain complex.
Tariffs are top-of-mind for consumers, retailers, and economists alike, creating uncertainty and leading to hesitancy from businesses around the world. In the US, consumer spending remained solid thanks to rising wages and strong employment. Of note, spending on goods increased by 0.5% in July, with June’s numbers also revised upwards – a sign that consumers are continuing to spend despite ongoing economic and geopolitical uncertainty. In tandem, concerns over rising credit card delinquencies and policy uncertainty cast shadows over the remainder of 2025. Meanwhile, in Europe, weak productivity persists despite easing inflation and interest rates, with Germany facing particular industrial headwinds due to high energy costs and declining Chinese demand.
As retailers navigate this environment, they’re simultaneously dealing with declining consumer sentiment and demand. According to Deloitte Global’s Global Powers of Retailing 2025 report, global growth forecasts for retail sales remain historically low, with a five-year outlook averaging just 3.1% — the weakest in decades. Profitability among retailers is improving, albeit unevenly; consumers, still fiscally cautious after years of an inflationary environment and price shocks, are curtailing discretionary spending. Retailers, in turn, are moderating their expectations: 74% of the Top 250 global retailers reported positive retail revenue growth in FY2023. However, overall revenue growth saw a significant drop from previous years when post-COVID-19 pandemic rebounds and inflation-driven price hikes temporarily spurred higher sales. This deceleration suggests that the era of pent-up consumer demand is fading, giving way to a more cautious environment marked by shifting consumer priorities, margin pressure, and restrained discretionary spending.
The imperative for retailers: agility, again
Against this backdrop of uncertainty, retailers should look to reinvent themselves by employing new ways to counter cooling consumer sentiment and further bolster their business in the current economic environment.
In fact, many are already embracing tools that make them more agile, including doubling down on automation and AI to help offset economic strain and labor scarcity. Automation in global retail is projected to reach US$33 billion by 2030, with nearly 70% of routine store tasks expected to be automated by 2025. Technologies like Generative AI (GenAI) are being deployed to help manage inventory, personalize marketing, and even assist in physical store interactions—from smart carts to AI-powered receipts and product suggestions.
These investments are not abstract tech bets but rather performance imperatives. Retailers using AI saw sales and profit growth of 250% in 2023, according to IHL Group findings included in Deloitte Global’s report. Moreover, 98% of retailers are slated to invest in GenAI by the second half of 2025, with nearly three-fourths of those currently using GenAI reporting both cost reductions and revenue increases. The AI wave isn’t just augmenting back-end processes, but experiential retail, too. Brands now employ augmented and virtual reality for digital try-ons, immersive displays, and even shoppable windows – with the goal of reducing returns and deepening customer engagement.
To further protect themselves and their profit against unpredictability, retailers are exploring revenue diversification through retail media networks and capability-as-a-service platforms—both tech-enabled avenues that generate high-margin, data-driven income. As adoption of these innovations becomes more widespread, retailers must keep pace or risk being left behind.
Safeguarding supply chains
At the core of today’s retail recalibration lies a reordering of global trade dynamics, thereby impacting retailers’ supply chain strategies. Supply chain diversification – a theme with major implications for retail sourcing and cost structures – has picked up, and brands are increasingly shifting production to Southeast Asia, India, and Mexico, seeking resilience amid geopolitical matters.
Meanwhile, the concept of Supply Chain as a Service (SCaaS) is gaining traction, enabling retailers to outsource logistics, warehousing, and even planogramming. By leveraging third-party expertise and proprietary technology, retailers are balancing cost control with agility.
Amid these structural shifts, one constant remains: the primacy of the consumer. A new generation of shoppers is rewriting the rules, demanding transparency, personalization, and seamless omnichannel experiences. As the global economy remains uneven, the retail sector’s success will depend on its ability to adapt to economic conditions and consumer needs. From trade strategies to tech transformation, success in this new era will be for companies who understand that resilience is no longer just about enduring shocks but about building systems, relationships, and platforms that anticipate them.