Evolution of the retail industry and its processes

The retail industry has evolved from stores that waited for customers into networks that follow them across channels, and the pace is not slowing. Retailers sell to the end consumer, so their processes, technology and data must serve the buyer's habits. The winners are those that connect physical and digital experiences without losing efficiency.

Picture the budget meeting of a regional apparel retailer with forty stores and a young online shop. The chief executive asks why web sales grew but profit did not. The chief operating officer answers that returns from online orders are piling up in the stores, the chief marketing officer says that campaigns bring buyers who then cannot find the same stock in their size, and the chief financial officer points out that shipping promises are costing margin. Every executive is right, and the company is still losing money. Nobody owns the experience between the click and the shelf. This scene is illustrative, but it describes the retail conversation of this decade.

The scale of the shift is visible in the numbers. Insider Intelligence, now part of EMARKETER, published a global retail forecast in which it projected that worldwide retail sales would grow 5 percent year over year in 2022 to more than $27.33 trillion. That accelerated growth means change. The main objective of retail is to sell to the end consumer, which means being clear about the buyer personas, adapting quickly to changes in habits and directing every strategy toward the customer. This industry has had to evolve hand in hand with consumer expectations and demands, and the rest of this article looks at what those expectations are, what changed, what the data say today and what executives should do about it. If your sales team is also reviewing how it works, our article on systematization in sales departments is a useful companion.

What is the retail sector?

The sector comprises businesses that sell directly to end customers. A retailer acquires products in high volumes and then sells them in small quantities to the consumer, being one of the last links in the chain. The manufacturer produces the goods, a wholesaler buys them for resale and the retailer purchases them to market to the final buyer. Restaurants, department stores, outlets, supermarkets, online stores and any business that sells to the end consumer are retail.

To understand the concept more broadly, three examples help. In 1962 Sam Walton opened the first Walmart, which today is a supermarket and general merchandise chain that markets every kind of consumer product to end customers. According to the company's results, Walmart's total revenue for the fiscal year ended January 2026 was $713.16 billion, up 4.7 percent, and its global e-commerce sales reached $150.4 billion. Amazon, considered the most important online retailer, reported that its net sales for 2025 were $716.9 billion, up 12 percent from $638.0 billion in 2024. That figure includes services such as cloud computing and advertising, so it is not purely retail, but it shows how far a company born online has traveled. Among specialty retailers, brands such as Nike or Calvin Klein operate physical and digital stores to sell their products.

Two companies of similar revenue and very different origins, one that grew from the store outward and one that grew from the website inward, now compete for the same customer. That is the best summary of how the industry has changed. For a method that connects process design to the customer's view, see our article on how value stream mapping drives customer experience.

How did technology and the pandemic change retail?

Being clear on the concept and on who retailers are, let us look at the most significant change the industry has undergone. The pandemic brought a series of alterations that shook the retail market. In many countries physical stores had to remain closed for an extended period, which forced people to look for other options. Companies that had refused to digitalize their business processes, invest in technology and offer multichannel retailing had to adapt quickly to survive the abrupt change.

From the customer's perspective, many people moved to telecommuting, could not leave home or faced time restrictions, and in general nobody wanted to expose themselves. That altered buying habits, because businesses began offering options to solve those pains. Even before the pandemic there was already talk of digital transformation, but the event accelerated digital efforts, and some companies even eliminated physical channels. As McKinsey put it, even before the pandemic consumers had begun to embrace the selection and convenience of e-commerce, and in 2019 e-commerce represented approximately 25 percent of total retail sales. The article attributes that estimate to Euromonitor International, and it describes a global picture. Measures of a single country differ, as the next section shows.

The problem for many companies was the abrupt transition without a plan or a strategy. They found themselves with a technology tool but without defined processes to guide the business. Businesses rushed to implement e-commerce or to open accounts on every social network without being clear about who the buyer persona was, what the customer journey looked like, which processes affected the experience, how to communicate the value proposition, or whether the business model should change. The lesson, which we develop in defining processes before automating, is that technology multiplies whatever process it is given, good or bad.

For deeper reading on the retail customer, see why to apply the customer journey in the retail industry and our guide to the buyer persona in the retail industry.

What do the numbers say about retail trends and challenges today?

With new consumer habits and patterns, retail businesses need a digital presence to maximize sales, but that comes with the obligation to maintain consistency across all channels, processes and people. After nearly two years of restrictions, consumers also returned to physical shopping, and the data now show a mature balance and not a replacement of one channel by the other. The U.S. Census Bureau reported that e-commerce sales in the second quarter of 2026 were an estimated $340.2 billion, or 17.1 percent of total retail sales on a seasonally adjusted basis, up 12.2 percent from the same quarter of 2025. Online retail keeps growing faster than the total, yet more than four out of five retail dollars in the United States are still spent through other channels. The customer moves between both, and the business has to follow.

That movement is what the Shopify retail statistics captured when they were published. According to Shopify, 54 percent of consumers said that over the next year they were likely to look at a product online and buy it in-store, while 53 percent of shoppers were likely to look at a product in-store and buy it online. These figures reflect the importance of choosing channels based on the buyer persona. It is not just about physical or digital channels but about being in the right places to respond to the customer's needs.

The same source reported other statistics of interest for the sector. Forty percent of brands said that delivering experience-driven retail would be one of their top priorities for the coming year, but 57 percent said coordinating it would be a significant challenge. Nearly half of brands said that unifying online and in-store operations and data would be their biggest challenge over the next year, and as a result 53 percent of brands were investing in tools that allow them to sell anywhere. On average, 46 percent of retailers planned to increase their investment in digital channels. In the last year, 32 percent of customers had abandoned their shopping carts because the estimated shipping time was too long. These numbers date from the period after the pandemic, so read them as a snapshot of the concerns that shaped the current model and not as a measure of today. What has not changed is the underlying difficulty. Coordinating stock, price, promise and service across channels is hard, and customers notice every gap. To see how routine work can be removed from that coordination, read our article on automation in the retail industry.

Taken together, the three data points tell a consistent story. The channel mix keeps shifting, the cost of getting the experience wrong keeps rising, and the companies that cope best are the ones that know their customers well enough to predict where they will shop next. A retailer that can answer who its best customers are, what they buy in each channel and where they get frustrated has an advantage that no single campaign can copy. That knowledge is built from data, from conversations with store staff and from the patient work of mapping journeys, which is why it tends to belong to organizations with the discipline to maintain it.

What recommendations should retail leaders follow?

There are four main factors to take into account in the retail sector, and each one maps to a decision a leadership team can take this year.

The first is omnichannel. Customers expect to receive the same experience through a physical or a digital channel, and companies expect to close the sale through any medium, which leads to omnichannel. In practice it means one view of the customer, one view of stock and one set of rules for prices, returns and promises, so the apparel retailer of our opening scene can accept a return in any store and recognize the buyer on the web. The second is fast processes. In the digital era the expectation is that everything is quick. Just as we find an answer on Google in a couple of seconds, the consumer expects to complete the purchase process efficiently, almost immediately. Every extra form field, every unclear delivery date and every payment failure is a place where the sale leaks.

The third is customer experience. The key to this industry is repurchase. To obtain good satisfaction rates, a constant desire to buy, loyalty and a long-lasting relationship, it is necessary to build strategies focused on customer experience design. The fourth is personalization. According to Epsilon, 80 percent of consumers are more likely to make a purchase when brands offer personalized experiences, a finding from an online survey of 1,000 consumers run in 2017 and published in 2018. The figure is older than most of the others in this article, so treat it as directional, but the direction has not reversed. To achieve personalization it is necessary to know the customer, their process, their expectations and their habits, and that is done through data collection and analysis.

What this means for the C-level

For the chief executive of a retailer, the first decision is to name an owner for the end-to-end experience, from the first click to the return of the product. In many companies that role does not exist, and the symptoms are the ones in our opening scene, with growth that does not turn into profit. The chief operating officer should treat stock accuracy and fulfillment promises as customer-experience metrics and not only as operations metrics, because a shopper who is told that an item is available and then cancelled does not separate the website from the warehouse.

The chief financial officer should look at profitability by channel and by journey, including the cost of returns and shipping, and not only at revenue growth. The chief marketing officer should measure how many acquired customers buy a second time, since repurchase is the key to this industry. The chief information officer should make the customer record and the stock record available across channels, because omnichannel without shared data is only a larger number of places to disappoint the customer.

How to start on Monday morning

Start with one journey that crosses channels, such as buying online and returning in the store, and walk it as a customer would, with a stopwatch and a notebook. Write down every point where the customer must repeat information, wait for an answer or accept a different rule depending on the channel. Rank those points by how often they occur and how much they cost, and fix the most expensive first.

Then pick the buyer persona that contributes most to margin and ask whether the offer, the channel and the message fit her habits. Where the answer is no, decide whether to adjust the process or the proposition before buying any new technology. A short list of three or four changes with an owner and a date is more useful than a large transformation plan that nobody can start. When you are ready to organize the work, the six steps that bring your company closer to digital transformation offer a simple sequence, and the Customer Journey Toolkit helps you describe the stages and moments you have just observed.

Finally, agree on how you will know the changes worked. Choose one measure of experience, such as the share of orders that arrive on the date promised, one measure of efficiency, such as the cost of handling a return, and one measure of business result, such as repurchase within ninety days. Record today's value, review it monthly with the same group of executives who attended the first walk-through, and keep the list short. Retail teams that measure a few things consistently usually improve faster than those that build large dashboards nobody opens.

How ICX helps

The key for the retail sector is to know the customer, understand the buying process and its touchpoints, define the proper channels and standardize efficient processes, with marketing, sales and customer service strategies customized for each buyer persona and focused on the experience. At ICX Consulting we support retailers in that work. We map the journeys that matter, redesign the processes behind them, and connect the commercial, marketing and service teams around a shared view of the customer through our customer experience and business process practices. Would you like to find out where your own channels lose sales? Request a diagnostic with an ICX consultant.

Frequently asked questions

Is physical retail declining because of e-commerce?

Not in the data. In the United States, e-commerce was 17.1 percent of retail sales in the second quarter of 2026 according to the Census Bureau, so most retail spending still happens through other channels. What is changing is how customers combine stores and online, which is why consistency across channels matters more than the choice of one.

What is omnichannel retail?

It is an approach in which the customer receives the same experience, information and service whether they interact in a store, on a website, on a mobile app or through a contact center. It depends on shared data for customers, stock and prices more than on any single technology.

Why is customer experience important in retail?

Because retail depends on repurchase. A customer who finds the product, receives it as promised and gets help when something goes wrong is more likely to return, and a loyal customer costs less to serve than a new one is to acquire.

Where should a retailer start when transforming digitally?

With the customer and the process, and not with the tool. Define who the buyer persona is, map the journey, identify where the experience breaks, and then choose the technology that fixes those specific points.

Retail will keep changing, and the companies that last will be the ones that organize themselves around the customer and not around the channel. If you want to talk about what that means for your business, talk to an ICX consultant and we will help you turn your stores, your website and your data into one coherent experience.