Retail enters ‘control economy' as growth concentrates in digital channels

Competition is shifting from expansion to control over pricing, visibility, and consumer choices.

Global retail growth slowed in 2025, rising just 2% in real terms, yet e-commerce accounted for around 80% of total expansion, showing that expansion is increasingly concentrated in digital platforms rather than the broader retail ecosystem, the Euromonitor International said.

“Whilst growth has not disappeared, it has become concentrated in fewer channels, fewer platforms and, increasingly, fewer decision-making systems,” the report said.

Retail competition is shifting toward control—over pricing, discovery, margins, and consumer decision-making.

“Thus, 2026 is not simply a phase for omnichannel optimisation, but broader ecosystem complexity is calling for a competitive reset,” the report added.

Companies that fail to secure influence in these areas risk long-term decline, it added.

Retail operations are being reshaped by escalating geopolitical fragmentation and tightening trade rules, including the repeal of the U.S. de minimis exemption and similar regulatory shifts across the UK, Japan, and the EU.

Ongoing geopolitical tensions, including conflict in the Middle East, are further intensifying supply chain instability.

According to Euromonitor International’s Voice of the Industry Survey 2025, 62% of industry professionals expect global tariff changes to impact their business within 12 months.

These pressures are translating into direct cost increases, such as war-risk surcharges of $1,500–4,000 per shipping container, rising fuel costs, and vessel rerouting adding 10 to 14 days to transit times.

The impact is already visible across retail operations. Platforms such as Temu have extended delivery windows, whilst Inditex has reported garment delays linked to air cargo disruptions at Gulf hubs.

Whilst companies are attempting to diversify sourcing and improve efficiency models, analysts warn that traditional globalization strategies are under structural pressure.

Consumer behavior is also shifting toward sustained cost-cutting rather than short-term inflation response.

Findings from Euromonitor International’s Voice of the Consumer: Lifestyles Survey (Jan–Feb 2026) showed that 47% of global consumers plan to save money over the next 12 months, indicating that price sensitivity is becoming a structural, long-term behavior rather than a temporary response to inflation.

Consumers are increasingly influenced by ultra-low-cost digital platforms, algorithm-driven price transparency, and slower overall discretionary spending growth.

In response, many are expanding tiered assortment-expanded private label, loyalty-driven value ecosystems, and banner extensions.

“As such, retailers must choose where they compete on price and where they compete on differentiation,” the report said. “Trying to defend both positions simultaneously is proving untenable.”

Artificial intelligence (AI) is emerging as one of the most disruptive forces in retail—not only as an operational tool, but as a new layer controlling product visibility and discovery.

Nearly 50% of firms say AI already affects their business, whilst 42% plan to increase AI investment.

AI is being deployed across pricing automation, inventory management, supply chain optimization, and customer targeting.

However, the more significant shift is in discovery, where generative AI systems are increasingly shaping what consumers see and ultimately buy.

AI-driven referrals to e-commerce platforms grew by 304% in 2025, far outpacing growth in traditional traffic channels.

As a result, visibility is increasingly being mediated by AI systems rather than directly controlled by retailers or marketplaces.

“The key challenge for retail leaders is no longer just how to grow, but how to remain discoverable, preferred, and profitable in systems they do not fully control,” Euromonitor said. “The retailers that succeed will share a distinct set of strategic capabilities, which we outline in our 5-vector strategy reset.”