Retail marketers are at a crossroads — here’s how they can adapt

Understanding how retail marketers are responding to these industry shifts can help marketers prepare a more effective strategy for the year ahead.

The new standard of retail media accountability

Retail media has become a channel of performance accountability. Recent research shows that more than a quarter of marketers are pulling out of retail media networks to fund investments in other channels, suggesting that performance is now the primary driver of investment decisions.

Retail marketers want channels that balance cost efficiency and strong returns, and are adjusting their plans accordingly. For many, this means investing more in major retail media players like Walmart and Amazon. However, there has also been a growing focus on smaller, more targeted retail media networks. These smaller platforms now command 25% of the market share, up from 16% in 2024. This helps retailers reach more targeted audiences and drive stronger ROI, while also maximizing the low-cost benefits from larger players.

As teams plan their own retail marketing strategy, media prioritization is critical. That means focusing on channels that deliver meaningful business outcomes and rebalancing the marketing mix to avoid over-reliance on bottom-funnel tactics, where diminishing returns can occur. 

Increasingly, ROI gains are tied to higher-impact formats like video, making it essential to evolve a tactical approach and allocate spend accordingly.

Winning the battle for budgets

The idea of strategic prioritization also applies to overall channel selection.

While more than half of retail marketers (62%) expect budgets to increase this year, they are also facing mandates from their finance teams to be more selective with their investments. Economic headwinds have pushed nearly 35% of marketers to pivot toward lower-cost, high-efficiency channels to justify spend to their CFOs.

To protect and maximize resources, marketers should lean into high-performing organic and paid social channels. These platforms provide the agility needed to maintain a brand presence even when capital is constrained.

Additionally, they should tap into marketing mix modeling (MMM) tools. These tools enable marketers to identify the most effective channel allocations by aligning spend with business objectives. Many MMM platforms also support scenario planning, allowing teams to quickly adjust strategies in response to budget changes or external factors like rising fuel costs without sacrificing performance.

Taking a cautious approach to AI

AI is rapidly reshaping the marketing landscape, but adoption remains tepid among advertisers.

While platforms like ChatGPT have begun introducing ad formats such as CPC placements, only 21.7% of retail marketers are currently investing in generative AI advertising. Nearly half are taking a cautious approach.

However, that doesn’t mean they’re against the technology altogether. A majority of retail marketers (60.9%) are already leveraging AI for media planning and brainstorming, where it can drive efficiency and inspire new ideas.

AI is not going away, so the challenge for marketers lies in determining where it adds the most value. For those hesitant about AI-driven advertising, testing can help evaluate AI’s effectiveness without significant risk. For example, comparing AI-generated media plans with traditional outputs can reveal potential time and cost savings.

When it comes to ad generation, though, marketers may consider steering clear of AI. Research from IAB shows that 30% of Gen Z consumers view AI-generated ads as inauthentic, while 24% say it’s unethical to use AI in creating ads. 

In a market where trust is currency, authenticity must remain the primary filter. If marketers do want to test AI ad generation, they must maintain human oversight to ensure brand authenticity and ethical standards are upheld.

Retail marketers today are operating in a period of significant change. They’re facing increased pressure to maximize their budgets, adapt to a maturing retail media ecosystem and thoughtfully integrate AI.

The retail landscape of 2026 demands a blend of data-driven discipline and creative agility. By prioritizing performance data, maintaining a lean budget allocation and adopting innovation only where it adds clear value, marketers can turn market volatility into a strategic advantage. 

Focus on what is verifiable, invest in what scales and lead with authenticity.

Sponsored by Keen Decision Systems