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Behind the Numbers: an EMARKETER Podcast
The Great BTN Bake (Take) Off — Retail Trends for 2026: How AI Will Change the Digital Shelf and IRL Customers Interactions | Reimagining Retail
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- [00:02]
A
Hi, everyone. Today is Wednesday, January 7, 2026. Welcome to eMarketer's weekly retail show, Reimagining Retail, an Emarketer podcast. This is the show where we talk about how retail collides with every part of our lives. I'm your host, Susie Deva Kenyon, and on today's episode, we're exploring two of the trends from our retail trends to watch report. Bake Off Style. Joining me, we have veterans Blake Drosch, senior analyst, joining me in the studio. Hey, Blake.
- [00:34]
B
Hey, Susie. Good to be here.
- [00:36]
A
Nice to have you. Happy New Year.
- [00:38]
B
Happy New Year to you, too.
- [00:39]
A
And we have principal analyst Sky Canavas joining us from Texas. Hey, Sky.
- [00:43]
C
Hey, Susie. Hey, Blake. Happy to be here.
- [00:45]
A
We're so happy to have you. And I'm so happy that I have podcast veterans who were responsible for our retail trends to talk to me all about their trends. Bake off styles. So 2025 felt like a lot. We weren't imagining it. Everybody felt it. Retailers spent the year navigating shifting consumer behavior, an uncertain macro environment, and of course, an ever changing AI landscape. And it seems that 2026 will be no different. The signals aren't slowing down, and the pace of AI innovation across the retail ecosystem is only accelerating. So today we're going to break down two of our trends that we think you need to keep an eye on. The ones that will matter the most as you think about how to show up, compete, and connect in the year ahead. So, Bake Off Style, let me tell you more. Welcome to the great retail takeoff, where our bakers or takers will bring their boldest predictions into three the signature take, the how will it technically play out challenge, and the final show stopping argument. Cooking skills are optional, but hot takes are required. Before we dive in. I want to warm up with what is your favorite dessert? Sky?
- [01:57]
C
I'm a big fan of pumpkin pie. At this time of the year, I don't know if I would eat it year round, but I probably could.
- [02:04]
A
I don't think I've ever heard anyone say that. Remember when we were doing jello and the jello molds and everyone's like, pecan pumpkin? I don't know.
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C
I love it, especially when it's combined with cheesecake.
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A
Oh, yeah. Well, that's different. That just changed it. What about you?
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B
I would. I'm gonna go with ice cream. I love ice cream and I'd eat it year round, even in the dead of winter.
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A
Really? Favorite flavor? Pistachio.
- [02:27]
B
I do like pistachio, but my favorite flavor is chocolate chip cookie dough.
- [02:34]
A
Okay, well, thank you for indulging me with your favorite desserts. Let's get to it. As a reminder, we've got three rounds. Round one is all about the signature take. This is where each of you has a minute or less to. To set the stage. What's your trend, and what's the big idea behind it? Blake, let's start with you.
- [02:50]
B
Yeah. So the trend that I'm gonna focus on is about retailers sort of reinventing the ways that they connect with their customers in real life. And the premise of this really goes back to what is happening online right now. I think over the last 10 to 15 years, there's been this sort of realization that the promise of brand being able to use digital channels to connect with their consumers directly. So the D2C revolution that we saw play out online but has now really reached its limitations is giving way to sort of a disconnection between brands and their customers. Right. So think about everything from the rise of marketplaces to social commerce and all of the ways that consumers are shopping online that don't involve direct interactions with the brand. And now with AI, right. The threat of that happening at a greater level if people start shopping on these platforms, and that is really going to force retailers back into the physical space in order to connect with consumers in new, meaningful ways.
- [04:01]
A
So the store. The store is back again.
- [04:03]
B
The store is back. And then maybe a little bit more than the store. Right. And I think that's what we'll sort of get into, is retailers thinking of new inventive ways to reach people just in the physical world. Right.
- [04:15]
A
Cool. Love it. Sky, what about you? What's yours?
- [04:18]
C
Sure. My trend is focused on the online world, and it's looking at how retailers and brands will have to adapt to speak to new audiences online. And these are specifically the AI audiences. So as AI shopping assistants and agents become a bigger part of shopping, brands have to rethink how they approach their product content just through to serve three distinct audiences at the same time. So the human shoppers, and then you have human consumers using AI tools and assistants and the autonomous AI agents. Now, human shoppers have long been a focal point for retailers and brands. The autonomous agents are a little bit further out in the future. The use cases are a little more limited. So the big focus, I think, for 2026 will be working with product data to enhance visibility on AI platforms that are being used by humans.
- [05:16]
A
I love this one too. I think it's also going to impact all the KPIs that retailers have to think about. So with that, thanks for sharing your trends. Round two. Now I want you to dig in a little deeper and the round is actually called how it will technically play out challenge. This is where I want you to tell me a little bit more, not just what the trend is, but how is it going to show up through 2026? What are the changes? Who's impacted? What does it look like in the real world? Blake, let's start with you and the store.
- [05:46]
B
Yeah. So I think, you know, it is largely going to revolve around the store. And I think we've seen a lot of retailers already sort of reinvent the ways that they position their flagship stores in major cities to bring their shoppers ins of different experiences. Right. There's definitely an element of that. But I think too the interesting thing, and one great example of this, which actually sky, to her credit, reminded me of when I was writing this trend, which is what Ulta Beauty did last year, which is have a ticketed consumer event at a convention center in San Antonio where they basically invited a lot of their brands, they invited a lot of influencers and then sold tickets to their customers for them to come in and, you know, enjoy the community aspect of the shopping experience. Right. And I think that is something that we're going to see a lot of brands do in order to foster community, connect with their customers, but also create additional revenue streams. Right. I mean, we've seen many industries sort of monetize events in a way that actually can really, you know, support their business. Like think about, you know, the publishing industry, for example. And I think that is something that we are going to see more brands get into this year.
- [07:10]
A
So it sounds like it's multilayered, bring people into the store, create a community hub, get them to love you so they keep coming back. A loyalty play.
- [07:20]
B
Yeah. And even we're even seeing some brands get involved in sort of micro communities on social media and reaching them that way. So think about. And these aren't just, you know, just communities that exist online, but think about like run clubs and like parenting groups, things of that sort. So there are all different types of ways that brands can, you know, leverage what's happening online in order to bring those experience into the physical realm.
- [07:48]
C
I think that Ulta is a really great example of that multi layered approach that you mentioned, Suzy, because they had that huge event in San Antonio that really brings in their die hard fans. But they also supplement that with the astounding number of like 20,000 in store events throughout the year in all their different stores. And that creates opportunities for repeat visits from consumers. You know, beauty is so big among younger consumers, and Gen Z in particular, who are seeing a lot of content online and are digital natives, but they spend so much time online that they're also driving a lot of store traffic because they want something different. They want the real world experience to supplement their online experience and to enhance their social media presence. So I think we'll see stores like Ulta and other stores, even smaller stores that can serve as backdrops for their social media content. And, you know, so it's kind of a cycle where there's a lot of interplay between the digital and the store world.
- [08:51]
A
So, you guys, we've been following retail for a long time together. Stores aren't new, right? It's 80% of sales. So why, why in 26, does this matter now?
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B
I think there's. I mean, there are a couple of reasons, right? I think what sky is saying about Gen Z is, is really spot on. Like, we're seeing that retailers are also, you know, reinventing the way that they're catering the stores, the way that they're setting up stores and catering these events to Gen Z. And I think there's, you know, it's kind of what is old is new again, right? Gen Z is sort of breathing new life into the shopping mall experience. So it is not. It's nothing new. And you're Susie's other favorite example about the Netflix retail store, right? So just ways of creating experiences to get people to engage with these brands. And it really is like, as Sky. Sky pointed out, like it's a flywheel effect, right? Because it is sort of. It's creating these experiences that then go online and then just have this sort of rippling effect where it is all around good for the retailer as a brand. And yes, it's nothing new, but it's something that needs to constantly be reinvented in order to remain fresh for the way that technology has evolved and how technology plays into it and younger generations as they get older and have more buying power.
- [10:14]
C
And those two also connect because shoppers, and particularly younger shoppers, are increasingly bringing their phones into stores and using them in stores, whether through retailer apps. Or we can see them starting to use like AI tools, platforms like ChatGPT to maybe have a conversation and learn more about products while they're shopping. But I think the retailer apps are really important. It's really how shoppers prefer to engage with loyalty programs. According to a recent survey we conducted last fall and also retailers know that those app shoppers who are using apps while they shop spend significantly more. Both Target and Walmart executives have noted that there are shoppers that are using the mobile apps while they shop in store are spending 25 to 50% more on average during their visits than the shoppers who are not using their apps. And that could be because they're already loyalty program members or they're more tech savvy and higher income consumers who are using the apps in stor. But it's really important to maintain that digital connectivity because it gives them a holistic picture of their consumer across channels. And the app is also a really great channel for in store retail media and putting offers in front of consumers while they're shopping, while they have very high intent in a way that's very cost effective for retailers and can be measured a lot more effectively than some of the other in store media tactics that they might invest in. Right.
- [11:49]
A
And I think for me also the underlying, underlying component is that as AI becomes so we'll come to your trend in a second, Sky. But as AI becomes more sort of in the mainstream, quote, unquote mainstream, that human connection that is at the store level will be critical. And this is one where you guys do you see that whether you're a big shop or small shop, you can lean into this trend and you don't necessarily need to have the biggest, deepest pockets.
- [12:17]
B
Yeah, having a large retail footprint I think certainly helps. If you've got a huge flagship store in Times Square that gets a ton of foot traffic, then obviously you're ahead of the game. I think it's something that all retailers can get involved in. A lot of the times it's these smaller retailers that actually do a really good job of it is having a personal connection with their shoppers in the store. I think there are all different ways that retailers can approach it.
- [12:47]
A
Cool. With that sky, tell us about your trend. How is it going to unfold over the next year?
- [12:52]
C
Sure. So I think retailers and brands have long thought of product pages as a bit of an afterthought. They're something you need and have to be able to plug into your own sites as well as other channels like marketplaces or providing that information for retailers. But now I think they're really coming to the forefront because of the how AI shopping assistants and agents work. And it's not just the product page, but all of the product content that now has to serve these three distinct audiences. So what appeals to a human consumer, the visual elements, the imagery, the Storytelling that's consistent across brand channels might not be the same as what AI shopping assistants or chatbots are looking for. They're looking for really in depth product information that's well structured. They need a lot of content. They need a lot more content than what typically meets the eye on a product description page. And they're looking for comparison points, questions being answered. They want to be able to fit the product into the context of a conversation and match it to the intent of the user who's making the query. So that's really starting to shift how retailers and brands think of their product content. Think of what they can use to supplement their product content in different ways, not just through their own content, but through user generated content or social content, video content that can then be surfaced by the LLMs because we see they often cite sources like YouTube or Reddit. So that's going to draw more brand attention to those channels and more brand investment in those channels to ultimately improve their AI visibility.
- [14:45]
A
For me, one of the things that struck me for this particular trend was this, I'm going to call it a tension. I don't know if it's the right word to use in this context though, between making sure you have the right information for the product pages and about your product throughout all the different digital channels that a human being is excited about, that will draw them in and get them to want to purchase, but also that an LLM understands. What did that look like for you as you were researching the trend?
- [15:14]
C
So one possible possibility is that brands and retailers start to create websites or pages that really are made for LLMs. Just I think as we have like that made for search or made for advertising websites, there will be pages that have a lot more useful content for the LLMs to read. But I think the attention on the user generated content is really compelling because that's content that can appeal both to humans as well as the LLMs because it provides a social proof, the validation that they're looking for.
- [15:54]
B
Yeah, and I think it is interesting and when you start to think about using AI to sort of optimize these product descriptions, you're creating product descriptions via AI to be consumed by AI. And it's like it all feels very like makes your head spin and there's no human element in it at all. But I think the point where, and a lot of our trends do touch on this, just sort of thinking about how do you basically create a strategy that does both. And I think working with creators and make sure you're spending your ad budget strategically on platforms where AI tends to go to look for product reviews and descriptions. These are all things that good marketers should and retailers are probably already doing. And it's about sort of, I think just figuring out which areas of your strategy to sort of turn the dial up a little bit to optimize for the sort of the future of AI driven shopping recommendations than it is really just throwing out the playbook and starting from scratch or focusing all of your putting all of your chips into the pot of, of new websites specifically catered for AI. I'm sure that will be a part of it, but there's also a lot of traditional marketing and good marketing at play too.
- [17:23]
C
Yeah, I think we hear about how some brands and retailers are looking to SEO strategies to kind of inform their geo or generative engine optimization strategies. And they're definitely not like for like, but they do share some underlying best practices that can be used for the transition. And it will be a transition because search and particularly Google search are really here to stay and so widely used that it's not going away anytime soon. And even as Google manages the transition into more of its AI mode for users. But it also helps to address some of the challenges of the unpredictability because as we get new AI models and they're continuously being trained, their output is less predictable. You can't use the same strategies as SEO where keywords go in and they come out in the results. So it's very different. It has to be a lot more adaptive. And I think it's interesting. One of the other trends we have is how retailers are leaning into establishing their own creator platforms. And we saw late last year we saw Lowe's get in on this trend of launching a creator network and that's something that Home Depot has also done. And these are not retailers that we typically think of as being big in the creator space. But they sense the opportunity both to use creators to establish better relationships with their engagement with their human shoppers as well as to potentially provide better data for the LLMs to work with.
- [18:59]
A
This trend for me is also really important in terms of it almost feels like it's the first time ever where retailers will have to think about, I don't know if multimodal is the right word, but like multi layered consumer types that are not sort of made made up of the same type of cells kind of, if you will. Right. And it's fascinating. It has started already a little bit late last year. Sky, do you have a good example of who's doing it? Well now who's courting both the LLMs and the humans.
- [19:30]
C
I think Walmart is one through its very widely noted partnerships with OpenAI both to sell its products directly in ChatGPT with ChatGPT's instant checkout, and working with OpenAI to enhance its native shopping assistant Sparky. And Walmart also has a burgeoning creative network. It's been working really hard to appeal more to young consumers like Gen Z shoppers in particular and a broader more range of more affluent consumers. And it's been refreshing its stores importantly, more importantly to give them a better look and make them feel more inviting.
- [20:10]
A
I love that example is true. Walmart really is doing some fascinating things right now to court every type of consumer in every bracket under the sun and it'll be interesting to see what they do this year. Round three it's the show stopping argument. This is where I want each of you to pull out your strongest case. Why is your trend the one and only one to watch in 2026? This is your closer. Give it to me in a minute or less. Why are you right? Blake, let's start with you.
- [20:40]
B
This is the signature ingredient. I guess if you had to do a baking plunge.
- [20:45]
A
I tried but it didn't work.
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C
That's okay.
- [20:47]
B
That's okay. I would say that the reason why it's the most important Trend is that 80% of sales are still going to happen in the store. So it's always going to be the most important channel for retailers to optimize and to do well. And it's always gonna be the biggest opportunity for retailers to connect with their customers because that is when they are in the shopping mindset and they have total control over what's happening in that experience. It doesn't necessarily mean that, I mean it doesn't mean at all that retailers should forego connecting with customers across the digital landscape. It's very important particularly in terms of how much discovery digital channels drive for new brands and but the store is still as important or in many cases more important in product driving product discovery as well. So I would say that's a pretty good reason for it being the most important trend.
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A
I would say sky, what's your one why this is the right trend for 2026?
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C
Because brands have to think ahead to how they show up online and how consumer behavior is adapting rapidly to shift to other channels. And AI is a big one. And a big one is going to be like how Google starts to move consumers more into shopping with all of the new features that it's rolling Out. So brands really have to pay attention to how they shop, not only in the AI platforms, but as more of the big retailers like Walmart and Amazon enhance their in app AI shopping assistance, they also need to be focus on how their products are showing up in those AI conversations. We see that those shopping assistants are driving a lot of sales for the retailers. And so brands really have to pay attention to what they can do to have the best opportunity of showing up for consumers.
- [22:47]
A
Thank you both for participating in our first bake off to talk about our retail trends. There are other trends in our report that were all equally important. I'm supposed to pick a winner. I was told to pick a winner. I can never pick a winner. Everybody's a winner. But if I had to pick one, I would say the more immediate thing, because as Blake, you pointed out, 80% of sales are already in a store. So if people are not concentrating on the store channel, then they're already losing. But the newer trend, I think is the duality or the triality of the multiple types of customers and you really have to hit that one hard for 2026 to win. So by a little margin, sky wins.
- [23:35]
C
Well, I think even how brands show up online and across channels is going to drive more traffic to stores eventually. So retailers, brands that do it well, they're going to see that with their in store sales as well.
- [23:49]
A
And everybody knows who listens to the podcasts and follows us that the store is king. It's 80% of sales. You will not be able to survive without a store that is performing well.
- [24:00]
B
I do agree that I think it is that Sky's trend is the most important for the reason that, yes, retailers always need to be looking to the future. And if you're not already effectively using the store to reach customers, then that's a problem. It is table stakes. Right. It's something that retailers, you know, from an existential point of view, need to be doing well. So I think that, you know, the, the immediacy and the biggest trend is definitely, you know, getting ready for the future of shopping.
- [24:31]
A
Absolutely. But just, just so that everybody knows, we did pick the trend and it is one of our five trends. Because if you don't bolster your store and turn it into a community hub, you will lose.
- [24:43]
B
Right, Exactly.
- [24:44]
A
That's all the time we have for today. Everybody knows we could keep talking about this, but unfortunately we have to stop. Thank you, Blake.
- [24:50]
B
Thank you. It was a pleasure.
- [24:52]
A
Always a pleasure. Thank you, Sky.
- [24:54]
C
Thanks, Susie.
- [24:55]
A
Congratulations on your win.
- [24:56]
C
Thank you.
- [24:57]
A
And thank you listeners and to our team that edits the podcast. Please leave a rating or review and remember to subscribe. I'll see you for more reimagining retail next Wednesday as we talk through the most interesting takeaways from NRF 2026 live from the conference in New York. So if you want to come say hi, we'll be in Podcast Booth B from 1 to 4 o'clock on Monday, January 12th. And of course, on Friday, you can join Marcus for another episode of behind the Numbers, a Knee Marketer podcast.