Study: Retailers scale back growth plans as global pressures mount

Global retailers are becoming more cautious in their approach to growth strategies amid intensifying economic and geopolitical pressures, according to new research from World Retail Congress (WRC), Incisiv and Manhattan Associates.

The study, released at this year’s WRC, which kicked off yesterday in Berlin and will run until April 29, found that fewer than one in six retail executives are currently pursuing aggressive expansion, with most shifting focus towards cost control, operational efficiency and selective growth.

‘The certainty is gone…’

The research, based on 336 global C-Suite executives, highlights a major shift in priorities, particularly as factors driving current market volatility become permanent disruptors rather than short-term. “The certainty is gone,” the report states.

Of the CXOs surveyed, only 52 percent said they were selectively expanding, while just 35 percent said they were in “full defense mode”. External pressures, like geopolitical instability and trade disruption were cited by over three-quarters of respondents as key in shaping strategy, while 72 percent said inflation and margin pressure were causing structural constraints.

In a statement, Ian McGarrigle, chair of WRC, said: “The operating environment for retail has fundamentally changed. Geopolitical instability and inflationary pressures are now the norm, shaping the day-to-day reality for businesses across every market. Retailers are having to rethink how they grow, where they invest and how quickly they can respond.”

Persistent execution gaps challenge targeted investments

Investment is still present, yet companies are becoming more targeted, focusing largely on customer experience and personalisation (72 percent), AI and advanced technology (58 percent), and supply chain capabilities (56 percent). Despite this, a notable seven in 10 executives stated they could not move between decisions to execution as swiftly as competitors due to, in a large part, a persistent execution gap.

In regards to AI, CXOs expressed both concern and opportunities. A substantial 98 percent of executives were concerned that AI-powered search would reduce brand visibility. “AI is beginning to intermediate that moment before a consumer reaches any brand’s owned touchpoint,” the report notes, underlining the importance of product data, content quality, and digital presence.

Execution of AI remains limited, despite a strong belief in the technology. While 91 percent of CXOs expect AI to be “table stakes by 2030”, only 29 percent have the foundations of the data and technology in place. The report identifies this gap as one of the most important risks. “The organisations moving fastest in this environment are not the ones with the most sophisticated AI models or the most ambitious transformation roadmaps. They are the ones with the operational infrastructure to act on what AI tells them.”

Stores to become ‘anchor’ of commerce in 2030

Elsewhere, in physical retail, roles are evolving. Stores were still seen as essential in building customer relationships among 86 percent of executives, while 81 percent see them as the “anchor” of commerce in 2030. Stores themselves are moving into hubs for fulfillment, digital engagement, and brand experience.

Speaking on the data, Katie Foote, SVP and CMO of Manhattan Associates, said: “As customer expectations rise, personalisation is no longer a nice-to-have. Shoppers expect retailers to know them, anticipate their needs and deliver seamlessly across every channel. That only happens when retailers can apply AI to real-time inventory, order and fulfilment data.

“Unified commerce is what brings those pieces together, turning AI from a promise into the kind of connected experience that builds loyalty and drives profitable growth. This becomes even more important with the current macroeconomic trends and volatile global environment.”