The retail industry is in the midst of profound transformation driven by two interconnected forces: the convergence of retail and e-commerce into a hybrid landscape, and the rapid integration of Artificial Intelligence (AI). These forces aren't just altering shopping habits - they're reshaping the entire retail value chain from manufacturing to fulfilment. McKinsey identifies these as key economic game-changers (putting aside broader geopolitical factors).
Two forces reshaping retail
1. The blended future of e-commerce and retail
E-commerce has evolved beyond a simple digital channel into three overlapping segments:
• Manufacturers going Direct-to-Consumer (DTC): Brands like Nike, Zara, and Dyson build direct customer relationships through digital storefronts and direct shipments.
• Pure-Play digital platforms: Born-digital platforms like Zalando and ASOS innovate with personalisation and logistics, with some even branching into physical flagship stores.
• Traditional retailers adopting digital: Giants like IKEA and Walmart are integrating physical and digital experiences seamlessly.
These segments are merging into a highly competitive ecosystem where agility and market intelligence are essential. This blending doesn't simplify competition - it intensifies it, demanding constant vigilance and adaptability.
2. AI-driven retail intelligence
AI has moved from futuristic concept to operational necessity. Retailers leverage AI for personalised recommendations, dynamic pricing, predictive inventory management, and customer service automation, enabling smarter, faster, and more profitable operations.
Additionally, the expansion of cloud computing and the explosion of available data provide new opportunities to understand market dynamics in real-time. Historically, analysing every shelf in Europe was unthinkable; today, online data combined with AI makes large-scale, real-time market analysis entirely feasible.
A strategic framework for AI-enabled retail
Staying ahead requires a structured approach. Recently, Shish Shridhar from our partner Microsoft shared a strategic framework leveraging real-time data, AI, and automation, highlighting essential levers to drive growth.
Customer-facing levers
Place – Sales channels: physical, digital, hybrid
Product – Assortment depth, availability
Value – Pricing strategy, perceived customer value
People – Customer service, store experience
Communication – Marketing, promotions, loyalty programmes
Operational levers ("The Triangle")
Systems – Technology infrastructure, analytics, automation
Logistics – Efficient supply chain, fulfilment methods, delivery
Suppliers – Vendor management, sourcing and COGS
How market intelligence creates a competitive advantage
At Tembi, we equip retailers and brands with large-scale market analytics derived from real-time data. We continuously track over 600,000 online retailers and 300 million products across Europe - among the largest datasets in the industry. By connecting this data with location specifics, company details, and AI-powered analytics, commercial teams gain clarity and confidence in decision-making, eliminating guesswork when it comes to understanding what drives growth.
As I see it, by unifying data across digital and physical touch points, market intelligence at scale enables smarter decisions in Product, Value, and Systems - helping businesses thrive in a hybrid, AI-first retail world.
Place
• Based on the product categories that you excel in - which markets are then optimal, and in which geographies would it be optimal to promote and sell your products.
• If you have or plan to set up physical stores how are they threatened and compared to online retailers, and how is the specific area you think about investing in evolving. This will show whether you can expect optimal levels for sales per store and store traffic.
Product
• Predict which product categories and brands to invest in, when you decide where to play - which product segments are you in with which brand and pricing strategies to drive market share and inventory turnover and hence sales growth.
• Understand the competition in the product categories and brands you are in and the strengths and strategies of the other players in the market.
Improve out-of stock-rate by finding out when products are sold over the year and if that differs in different geographies, and thereby make sure that availability is secured.
Value
• Understand the current (or seasonality-defined) pricing in the market to increase gross margin, right-in-time markdowns, and possibility for price skimming but get an actual X-ray about the real price development in the market.
Logistics
• When being present in the market, or especially entering a new one, you need to know how to make it successful. One of the important things to understand delivery market standards in different markets, e.g. OOH, home delivery, free shipping thresholds, delivery time etc. Some D2C try to negotiate a pan-European delivery contract without factoring ion the different market dynamics, or simply enter with the wrong expectations. This quickly becomes very expensive - e.g. if the customers are used to home deliveries and you go in the market wth parcel boxes, you would need to wait for that to be changed. Hence, very important to understand if you model fits to assure fulfilment accuracy.
Intelligence as the new retail imperative
Success in modern retail isn’t about choosing between physical and digital - it’s about blending them intelligently. In the era defined by AI and hybrid commerce, tools like Tembi provide retailers the crucial insights required to navigate complexity.
Whether you’re a DTC manufacturer, a digital-first retailer expanding your reach, or a traditional retailer enhancing your omnichannel strategy, winning demands strategic clarity grounded in data and real-time market intelligence.
The retail industry is in the midst of profound transformation driven by two interconnected forces: the convergence of retail and e-commerce into a hybrid landscape, and the rapid integration of Artificial Intelligence (AI). These forces aren't just altering shopping habits - they're reshaping the entire retail value chain from manufacturing to fulfilment. McKinsey identifies these as key economic game-changers (putting aside broader geopolitical factors).
Two forces reshaping retail
1. The blended future of e-commerce and retail
E-commerce has evolved beyond a simple digital channel into three overlapping segments:
• Manufacturers going Direct-to-Consumer (DTC): Brands like Nike, Zara, and Dyson build direct customer relationships through digital storefronts and direct shipments.
• Pure-Play digital platforms: Born-digital platforms like Zalando and ASOS innovate with personalisation and logistics, with some even branching into physical flagship stores.
• Traditional retailers adopting digital: Giants like IKEA and Walmart are integrating physical and digital experiences seamlessly.
These segments are merging into a highly competitive ecosystem where agility and market intelligence are essential. This blending doesn't simplify competition - it intensifies it, demanding constant vigilance and adaptability.
2. AI-driven retail intelligence
AI has moved from futuristic concept to operational necessity. Retailers leverage AI for personalised recommendations, dynamic pricing, predictive inventory management, and customer service automation, enabling smarter, faster, and more profitable operations.
Additionally, the expansion of cloud computing and the explosion of available data provide new opportunities to understand market dynamics in real-time. Historically, analysing every shelf in Europe was unthinkable; today, online data combined with AI makes large-scale, real-time market analysis entirely feasible.
A strategic framework for AI-enabled retail
Staying ahead requires a structured approach. Recently, Shish Shridhar from our partner Microsoft shared a strategic framework leveraging real-time data, AI, and automation, highlighting essential levers to drive growth.
Customer-facing levers
Place – Sales channels: physical, digital, hybrid
Product – Assortment depth, availability
Value – Pricing strategy, perceived customer value
People – Customer service, store experience
Communication – Marketing, promotions, loyalty programmes
Operational levers ("The Triangle")
Systems – Technology infrastructure, analytics, automation
Logistics – Efficient supply chain, fulfilment methods, delivery
Suppliers – Vendor management, sourcing and COGS
How market intelligence creates a competitive advantage
At Tembi, we equip retailers and brands with large-scale market analytics derived from real-time data. We continuously track over 600,000 online retailers and 300 million products across Europe - among the largest datasets in the industry. By connecting this data with location specifics, company details, and AI-powered analytics, commercial teams gain clarity and confidence in decision-making, eliminating guesswork when it comes to understanding what drives growth.
As I see it, by unifying data across digital and physical touch points, market intelligence at scale enables smarter decisions in Product, Value, and Systems - helping businesses thrive in a hybrid, AI-first retail world.
Place
• Based on the product categories that you excel in - which markets are then optimal, and in which geographies would it be optimal to promote and sell your products.
• If you have or plan to set up physical stores how are they threatened and compared to online retailers, and how is the specific area you think about investing in evolving. This will show whether you can expect optimal levels for sales per store and store traffic.
Product
• Predict which product categories and brands to invest in, when you decide where to play - which product segments are you in with which brand and pricing strategies to drive market share and inventory turnover and hence sales growth.
• Understand the competition in the product categories and brands you are in and the strengths and strategies of the other players in the market.
Improve out-of stock-rate by finding out when products are sold over the year and if that differs in different geographies, and thereby make sure that availability is secured.
Value
• Understand the current (or seasonality-defined) pricing in the market to increase gross margin, right-in-time markdowns, and possibility for price skimming but get an actual X-ray about the real price development in the market.
Logistics
• When being present in the market, or especially entering a new one, you need to know how to make it successful. One of the important things to understand delivery market standards in different markets, e.g. OOH, home delivery, free shipping thresholds, delivery time etc. Some D2C try to negotiate a pan-European delivery contract without factoring ion the different market dynamics, or simply enter with the wrong expectations. This quickly becomes very expensive - e.g. if the customers are used to home deliveries and you go in the market wth parcel boxes, you would need to wait for that to be changed. Hence, very important to understand if you model fits to assure fulfilment accuracy.
Intelligence as the new retail imperative
Success in modern retail isn’t about choosing between physical and digital - it’s about blending them intelligently. In the era defined by AI and hybrid commerce, tools like Tembi provide retailers the crucial insights required to navigate complexity.
Whether you’re a DTC manufacturer, a digital-first retailer expanding your reach, or a traditional retailer enhancing your omnichannel strategy, winning demands strategic clarity grounded in data and real-time market intelligence.
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