The future of merchandising

Merchandising teams are reorienting their strategies around the consumer, leveraging data-driven insights, technology, and AI to deliver more personalized products, experiences, and value at every touchpoint. 

Why it matters: Retailers who place the consumer at the core are far more likely to differentiate themselves and capture spend in a world overflowing with choices. We are seeing legacy players fall to the wayside in the market because they are no longer relevant to their consumers, and this relevancy is based on personalized factors. This is happening right now, and delaying investment here could be devastating in the very short term.

Where retailers are missing out: Retailers are not using consumer KPIs to plan and measure success. They are also not involving consumers in shaping products and experiences to a large degree (e.g., by building digital communities and leveraging real-time engagement platforms). There is evidence that involving customers in product and assortment development (through various means) enables retailers to adapt quickly to changing preferences and deliver offerings that stand out in a crowded market.

Merchandising teams are prioritizing capabilities that enhance the shopping experience, reduce friction, and strengthen customer loyalty through convenience, connection, and choice.

Why it matters: Agile business models enable retailers to quickly respond to shifting consumer trends and stay ahead of the competition. By prioritizing capabilities that create flexibility for consumers, retailers can accelerate value creation and achieve measurable results.

Where retailers are missing out: Retailers are treating supplier relationships as transactional and are not investing in them strategically. To stay resilient and competitive amid market volatility and pricing pressures, retailers should prioritize building strong, collaborative partnerships with suppliers.

Merchandising teams are prioritizing advanced technologies like AI to stay ahead of future demands and automate the highly manual parts of their roles. 

Why it matters: By embracing advanced tools and data-driven decision-making, retailers are better equipped to meet consumer expectations and operate efficiently, even amid evolving planning complexities and industry disruptions. Embracing AI not only enhances decision-making, but it can also automate the awful, leaving merchants with the time they need to focus on the consumer and the best category and product choices. 

Where retailers are missing out: Retailers are still not aggressive enough at eliminating the non-value-add work that consumes merchants’ time. As a result, many retailers are relying on broad, mass strategies simply because that is what they have time to do. Most are not using AI and advanced analytics to micro-merchandise. By harnessing local data to tailor assortments, pricing, and promotions to specific consumers, retailers can boost relevance, better meet local needs, and drive spend.

Survey results indicate that organizational complexities and misaligned priorities are preventing merchandising teams from reaching their full potential. 

Why it matters: With the right alignment, skill sets, and change-ready mindsets, retailers can create efficient and collaborative organizations with the consumer at the center. 

Where retailers are missing out: While many retailers emphasize agile ways of working, few have truly embedded them within their organizations in a way that drives meaningful change. Cross-functional sprint teams and rapid test-and-learn cycles, for example, help teams build new skill sets in collaboration, adaptability, and data-driven solving. By institutionalizing agility, retailers can break down silos, accelerate decision-making, and adapt more quickly to shifting consumer trends and technology advancements, positioning themselves for sustained competitive advantage.