For retailers chasing growth, 2027 will be a difficult year. Consumers are ever more selective, investors demand greater discipline, and retailers will need to demonstrate immediate economic benefits from any investments. Here are three predictions for 2027 that we expect may shape the year:

  • Real US and European retail sales growth will be near zero. While retail sales will continue to increase in nominal terms, inflation (particularly from high energy costs) and persistent economic pressure will leave retailers fighting for share rather than benefiting from meaningful market expansion. As shoppers across income levels become more “choiceful” (i.e., frugal), winning retailers will be those that make savings, convenience, and loyalty benefits easy for their customers to understand and to access. Even essential goods retailers that benefit from many consumer goods categories will find themselves challenged by shoppers who scrutinize nearly every purchase decision. What to do: Plan for lean marketing budgets and limited room for promotions. Customer retention strategies like emails and texts to your shopper base will resonate more than ever.
  • Private equity will try funding AI-powered turnarounds at struggling retailers. Private ownership could offer struggling retailers such as Kohl’s or Macy’s a compelling narrative built around automation, agentic AI, and labor cost reduction. We don’t believe technology alone can solve years of underinvestment in merchandising, stores, inventory, and operational fundamentals, but investors believe otherwise. Retailers with strong balance sheets should continue investing in core capabilities; those players will be best positioned to gain share while competitors focus on restructuring. The biggest winners may ultimately be companies that pair operational excellence with selective technology investment rather than those that aggressively pursue AI as their central transformation strategy.
  • Google will transform agentic shopping by focusing on deals and savings. How and whether answer engines capture a substantial percentage of shopping queries remains to be seen. One quick path to success for the answer engines is to focus on helping consumers find the best available prices and promotions. As economic pressure keeps shoppers focused on value, technologies that simplify comparison shopping and uncover savings opportunities will gain traction, particularly in frequently purchased categories such as grocery and household goods. This evolution could accelerate a new shopping behavior in which consumers are more likely to begin their purchase journey with an answer engine rather than a retailer website or marketplace. Stay on top of quickly evolving agentic answer engine optimization (AEO). And recognize that it’s not just about the tech — internal processes are the weakest part of your AEO strategy. Bring in colleagues across the organization early on: AEO requires coordinating content, IT, social media, PR, paid media, brand marketing, information security, and legal to monitor and augment authority across engines.

Retailers Need To Be Laser-Focused On Delivering Value To Shoppers

Retailers should prepare for a market where value carries more weight than ever as shoppers focus on affordability. Some retailers will race to the bottom with competitive pricing, but others that are long-term-outcome-focused will strengthen customer retention programs, invest in operational excellence, create distinctive products that cannot be easily price-compared, and apply AI where it delivers measurable business outcomes. We suspect that AI investment decisions will become particularly difficult as many use cases deliver uncertain or even negligible results.

Forrester clients can read the full Predictions 2027: Retail report for additional predictions and our recommendations to shape their retail strategy and roadmap for the year ahead. The report also explores how economic pressure, evolving consumer behavior, AI adoption, and changing competitive dynamics will reshape the retail landscape in 2027.

Not a client? Find additional complimentary Predictions resources, including blog posts, guides, and webinars, on our Predictions 2027 hub.

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