The Next Phase of Retail: How Consumer Behavior and Technology Are Shaping the Industry

Key Takeaways:

• Consumers are spending steadily but shifting toward smaller, more frequent, value-focused purchases.
• Retailers are modernizing with digital tools, automation and hybrid shopping to meet evolving expectations.
• AI-driven shopping tools enhance convenience, boosting engagement without changing core shopping habits.

Shoppers Are Spending Differently, Not Less

U.S. retail is adjusting as consumers become more intentional about how they shop. Many households, especially in the middle- and lower-income brackets, are choosing smaller, more frequent purchases as they manage higher living costs.

Even with these changes, overall demand remains steady. Recent government data shows retail and food-service sales rising 4.3 percent year over year to $733.3 billion in September 2025, confirming that consumers are still spending, even if they are doing so in new ways.^*

Younger shoppers continue to buy essentials, convenience products and occasional small discretionary items, while older generations show consistent demand for core household categories. These trends point to a shift in timing and habits rather than a decline in spending, with shoppers placing greater weight on value, flexibility and convenience.

Total US Retail Sales 2022 - 2028 (in trillion USD)

^*Projected. Source: Statista. For illustrative purposes only. Not intended as a forecast or prediction of future results.

Retailers Modernize to Meet Evolving Shopping Habits

As these habits evolve, retailers are updating their operations to make shopping simpler and more flexible. Many companies are investing in digital commerce, loyalty programs and supply-chain upgrades that allow customers to move easily between channels, whether they are browsing online, checking stock on their phones or picking up an order in store.

These improvements reflect rising expectations for convenience, particularly as shoppers spread purchases across more frequent trips. Modernization also increasingly includes automation inside distribution centers, where more retailers are adopting robotics to improve speed, accuracy and overall processing capacity as fulfillment demands grow.

Global warehouse robotics market size, 2024 - 2032 (USD billions)

^*Based on a compound annual growth rate (CAGR) of 15.6% from 2025 to 2032. Source: Fortune Business Insights. For illustrative purposes only. Not intended as a forecast or prediction of future results.

Hybrid shopping has become a central part of the retail landscape. Services like curbside pickup, buy-online pick-up-in-store and same-day delivery have shifted from optional add-ons to daily routines. Retailers with strong logistics networks and well-integrated store operations, such as Amazon, Walmart, Costco, Target and Home Depot, are better positioned to meet these expectations. Their ability to connect online and in-store experiences helps them serve customers reliably as spending patterns evolve.

AI Tools Are Shaping How Consumers Shop

A growing number of retailers are also using AI-supported tools to make shopping feel more intuitive. These features build on familiar habits rather than changing how people shop. Target, for instance, introduced a conversational shopping experience powered by ChatGPT that helps customers search for products and build baskets through simple prompts.

Walmart has used similar tools to guide shoppers through busy periods, and its AI-assisted deal finders, gift planners and in-store navigation aids helped support one of its strongest Black Fridays on record. In each case, the tools are designed to reduce small points of friction and help customers move through decisions with less effort.

Consumers, especially younger ones, have been quick to adopt these enhancements. Many appreciate having helpful suggestions when comparing products or trying to stretch their budgets. For retailers, these tools offer a way to deepen engagement without altering the core shopping experience. They enhance the experience quietly, smoothing out routine decisions and helping shoppers move from browsing to buying with greater ease.

Impact of AI and Machine Learning Use on Retail Performance 2022-2024

Source: Statista.

As of November 30, 2025. These are not recommendations to buy or sell any security. Securities and holdings may vary.

For investors seeking diversified exposure to the evolution of the retail industry, the VanEck Retail ETF (RTH) offers a focused way to access the companies leading and adapting to these shifts.

^* Source: Monthly Retail Trade - Sales Report