Leon Smith
Partner, Consumer
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Transforming retail: Five disruptors reshaping the industry globally
Partner, Consumer
Blog
10 min
11th June 2025
Developing a retail strategy that both holistically and individually addresses today’s interconnected trends is crucial. Here, Leon Smith, partner at Newton, reveals questions for senior leaders to consider in overcoming five issues causing planning paralysis throughout the retail industry globally.
The retail industry is entering a new era- one defined not just by the acceleration of digital innovation, but also by shifts in consumer expectations, margin pressures and macroeconomic volatility. Interlinked disruptive forces are reshaping retail. Affecting every element of the supply chain, manufacturing and distribution, these disruptors profoundly impact retailers’ ability to make both long- and short-term decisions. How can leaders find a way ahead? In this article, I outline each key connected issues, and then how to find focus amongst the complexity.
Disruptor 1: Geopolitical uncertainty
Constant global uncertainty is going nowhere. Inflation, tariffs and high interest rates are impacting consumer sentiment. Retailers are adapting supply chains and are now investing in supply chain resilience, including local sourcing, nearshoring and supply diversification to mitigate future risk.
How do you ensure your business can look to the future when planning seems impossible?
Whether a fashion retailer looking to grow globally or a grocery retailer fighting for market share, the steps are the same. Many retailers have established cross-functional steering groups of senior leaders to better respond to these challenges. Together, map out and understand the data available at each step, and scenario model the impact of each of the geopolitical issues the business is facing. How will challenges affect the cost base and the supply chain? What conclusions can you draw from that information? Crucially, what is the impact on the cost to serve?
Disruptor 2: Rising labour costs
In many parts of the world, especially in the US and UK, labour costs are increasing and we’ve seen a spike in retail clients coming to us for support in driving greater labour and workforce productivity.
How do you improve workforce productivity while doing what’s right for the customer?
Again, really understanding your exact organisational situation is vital. Does the business know what everyone in the workforce does every day? What are their non-value-add activities? What can be optimised? If you have a store footprint, how do you balance cost productivity with customer service? How do you transform stores, ensuring you have the right people in the right places at the right times?
Of course, automation is another way to support freeing up front-line staff to engage with customers while digital tools can provide better stock visibility and experiences, which brings us to our next disruptor.
Disruptor 3: Making sense of AI and technology
Every business is being bombarded with AI opportunities right now. From AI-powered chatbots and personalised marketing to cashier-less stores and smart shelves, technology is transforming every aspect of retail. However, many retailers don’t know how to select the right options and organise around them.
So, what is the best approach to enabling your team to identify and embed the right tech?
It sounds obvious when I say it but start with your strategic priorities, not the digital opportunities. Make sure your team knows their short and long-term focus so they can dive into the details of your business’ biggest growth levers and operational challenges.
Predictive analytics, automation and machine learning are helping retailers optimise everything from inventory and logistics to customer engagement. For example, machine learning can use sales and shop data to estimate size and colour demand by location to optimise on-shelf availability. It would take days to even download that information, let alone analyse it. Or if your growth focus is store expansion, AI can compare local demographic data and footfall to internal customer insight data to project the potential of locations.
Once you’ve identified the use cases where technology can have the greatest potential impact, only then do a market scan to see what digital opportunities exist.
Disruptor 4: Rise of private label
Supermarkets originally developed their own private-label products as a low cost alternative to well-known brands but those products are now gaining brand resonance in their own right. Private labels are evolving into private brands, with grocers developing differentiated products that rival national brands in quality and emotional appeal. This shift not only captures higher margins but also builds stronger customer loyalty.
How can you capitalise on this opportunity within your category strategy?
As always, make sure your objectives are set and socialised. Based on sales performance and your customer insights, what should the strategic position of private label products be within the range? How much will you invest in building recognition and resonance?
Many retailers are using private label to drive innovation, personalisation and brand values to reach a new customer base. Again, model the scenarios, including projecting forward based on consumer trends.
Disruptor 5: Changing consumer behaviours
Changing consumer behaviours are redefining retail priorities. In particular, the health and wellness revolution is here to stay. It spans every generation and for the first time in a decade, obesity levels have fallen in the US.
What brand portfolio fits this future? What sort of food and clothes, and of what sizes, do people want?
You know what I’m going to say by now: scenario model what this disruption means across your organisation. Map ahead with relevant data, for instance, considering if you should be stocking more activewear and in smaller sizes, or creating protein rich products.
But, in a world of uncertainty, the truly vital shift is to start to proactively adapt to not just this trend, but always look to the horizon. Future scanning and leading the change can go some way in supporting your own strategic decision-making, as well as increasing customer loyalty and strengthening your brand in the eyes of consumers.
What’s striking is the deep connection between these disruptors. If people are healthier, will they buy fewer chocolate bars, and what is the impact of that on the price of cocoa and the supply chain? If labour costs rise, is AI a potential long-term lever? Is developing and investing in branded goods an unmissable opportunity at a time when growth elsewhere is a challenge?
The retail sector is in the midst of a dynamic and challenging transformation. Retailers that embrace digital innovation, customer-centric models, sustainability and operational agility are more likely to thrive. As the industry continues to evolve, the winners will be those who see disruption not as a threat, but as an opportunity to reinvent the future of shopping.
If you’d like to find out more, please use the link below to get in touch.