Retail is transforming at lightning speed, shaped by AI, seamless shopping experiences, and sustainable practices. A new retail industry report from SAP delves into these shifts and reveals how savvy retailers can use AI to elevate personalization, adopt dynamic pricing to optimize profits, and turn returns into new revenue streams.
As consumers demand more convenience and accountability, retailers that are ready to integrate omnichannel flows and eco-friendly packaging will be primed to lead. So here are some hot takes from the report to stay ahead in the evolving retail game:
AI and Personalization
Retailers not using AI to meet customer expectations risk being left behind, as AI is not just a one-time tool but a transformative asset. While 61% of shoppers support more AI in retail, 40% believe most marketing emails lack relevance and 23% think retailers do not personalize content effectively. By adopting AI for personalization, 78% of marketers have increased customer engagement and 75% reported improved customer loyalty. The takeaway: Investing in AI-driven personalization not only meets customer demands but can significantly boost engagement and loyalty.
Omnichannel Integration
Seamless customer experiences across digital and physical channels are now the standard, with 80% of retailers syncing customer carts across platforms. By making returns easier, as 65% of retailers already do, businesses can enhance loyalty and encourage repeat purchases. The opportunity is clear: retailers that streamline omnichannel shopping can capture more customer loyalty; for newer brands, this is a strategic differentiator.
Dynamic Pricing and Inventory Management
AI-driven dynamic pricing is becoming a game-changer in the retail space, allowing real-time price adjustments based on market conditions. AI-based pricing can increase revenue by 1.3% annually on average. Additionally, 67% of consumers want real-time stock updates and 31% find items are often out of stock, underscoring the need for predictive inventory management. Retailers that leverage AI for both pricing and stock visibility can enjoy enhanced profitability and meet customer expectations more reliably.
Returns as Revenue
Returns — often seen as a hassle — present untapped revenue potential. By adopting strategic return incentives such as in-store bonuses, retailers can boost foot traffic and secondary sales. Thirty-three percent of U.S. shoppers intentionally over-purchase with plans to return some items. AI-led returns processing can reduce return rates by an average of 26%. Creative return programs, such as second-chance sales and re-commerce, offer a way to turn returns into customer loyalty and revenue opportunities rather than costs.
Sustainable Packaging
Upcoming regulations across the EU, U.K., and certain U.S. states mandate heightened recycling targets — 65% recycling by 2025 in the EU, for example — within the near- to mid-future. While many businesses are aware of the targets, they are not ready for them. As packaging solutions evolve, brands investing in eco-friendly packaging and reusable solutions can gain a competitive edge and connect with increasingly eco-conscious consumers. Retailers that see beyond short-term recycling and invest in sustainable, or even regenerative, packaging are positioning themselves for long-term success in an environmentally driven market.
As retail transforms, staying adaptable, data-driven, and customer-focused is essential. The SAP report reveals the winning strategies of top brands, from harnessing AI to reimagining returns and leading in sustainable packaging.
Explore the full report for actionable insights and strategies that can elevate your business — and catch these insights live at industry events like NRF, where retail’s future is on full display. Your blueprint for the next big move starts here.
Joerg Koesters is head of Consumer Industries Solutions Marketing at SAP.
