Is Retail Changing for Better or Worse? Q&A with Professor Joline Uichanco
The U.S. retail market is an approximately 8-trillion-dollar industry and growing. One reason for this growth is the industry's increasingly innovative business practices. Technological innovations and shifting distribution practices have changed how Americans engage with retailers, from Walmart to Amazon to Target.
In this Q&A, Joline Uichanco, associate professor of technology and operations and faculty co-director of the Tauber Institute for Global Operations shares her insights on the ever-shifting retail landscape.
What are the most significant challenges currently facing the retail industry?
Although the retail industry isn’t as strained as it was during the pandemic, significant challenges remain. For example, the new Trump administration announced broad-based tariffs on imports from its trading partners, such as China, Mexico, Canada, and the EU, which could mean an increase in costs for retailers whose suppliers are affected by tariffs. What puts retailers in a tough spot is that they also need to contend with dampened consumer sentiment due to the persistent inflation after the pandemic. So, retailers must balance pricing strategies that do not alienate price-sensitive shoppers while maintaining profitability amid rising costs.
What trends are emerging in global retail markets, and how do they differ from the strategies of U.S. companies?
In many international markets, there is a strong focus on mobile-driven customer interactions. A prime example is social commerce, where customers complete transactions on social media and content creation platforms. For instance, in China, apps like WeChat integrate social media, shopping, and payment systems in a way that’s deeply embedded in daily life. In this aspect, the U.S. is still catching up, and social commerce remains a small but rapidly growing segment.
In contrast, U.S. retailers have continued to lean with advanced logistics and integrated technology solutions to enhance operational efficiency. For example, Amazon has significantly invested in technologies such as robotic arms and a network of autonomous mobile robots that move goods quickly throughout the warehouse floor. Companies like Target have, over the years, invested in omnichannel solutions that integrate physical stores with digital platforms, offering flexible options like online ordering, in-store pickup, and curbside service.
Retail has become much more a tech-driven industry than ever before. Are there any recent innovations that are affecting the industry?
Hyper-personalization is an exciting trend in retail that uses real-time data, AI, and machine learning to tailor the shopping experience like never before. In the past, retailers relied mainly on past purchases or browsing history to segment customers and design segment-specific strategies. With generative AI, they can sift through huge amounts of data to fine-tune every step of your journey on the spot. This means that product recommendations, marketing messages, and even customer support can feel uniquely customized to you. Plus, smart chatbots and virtual assistants are getting better at offering natural, friendly interactions, making the whole experience feel more personal and responsive.
Walmart and Amazon are the two largest players in the U.S. retail market. How do they differ from the rest of the industry, and how might other retailers look to close that gap?
Amazon excels in e-commerce, offering a vast product selection and fast delivery via Prime. Walmart’s strength lies in its extensive physical store network, combined with its growing e-commerce platform. Competing solely on price is challenging, given the operational efficiencies these giants have perfected over the years. Instead, other retailers can narrow the gap by enhancing convenience, cultivating strong customer loyalty programs, and crafting unique brand experiences that resonate with consumers. Investing in digital transformation — such as upgrading data analytics to better understand and serve customer needs — can provide smaller retailers with the insights needed to tailor their offerings and compete more effectively.
Based on your research and work with the Tauber Institute, are there any emerging trends in retail business practices that you're particularly interested in?
I'm really excited about two emerging trends. First, generative AI is showing tremendous promise in transforming retail. Its ability to analyze huge amounts of data in real time and generate personalized insights can redefine everything from customer service to inventory management. Imagine a system that not only understands individual customer behaviors but also anticipates their needs — this could make shopping more intuitive and engaging.
Equally important is the growing focus on sustainability. Consumers are increasingly demanding eco-friendly practices, and retailers have a unique opportunity to innovate in this space. By integrating advanced technologies, companies can optimize supply chains, reduce waste, and lower their environmental footprint — all while delivering a better customer experience.
