As the retail industry hurtles through digital transformation, the 2025 Retail Readiness Report by Kyndryl highlights the complex balance retailers must strike between ambitious AI adoption and underlying operational challenges.
With nearly half of retail leaders upgrading IT infrastructure and AI investments up 33% year-over-year, the stakes have never been higher to move beyond fragmented technology toward unified, scalable systems. This blog explores key insights from the report and the strategic priorities retailers must embrace to thrive in 2026.
Retail’s Reality Check: Physical Stores Still Rule
Despite rapid digital disruption, more than 80% of retail sales occur in brick-and-mortar stores, emphasizing the continued importance of physical presence. This reality counters the notion that online sales dominate wholesale. Retailers must therefore hone operational fundamentals, including inventory precision, SKU rationalization, and store agility, to deliver consistent customer experiences.
Omnichannel Integration: The Next Frontier
Only 15% of retail leaders feel they fully utilize their omnichannel systems. The challenge is less about adding new digital channels and more about integrating existing ones seamlessly. Fragmented add-ons and manual workflows create barriers to a unified customer journey across stores, online platforms, and mobile apps.
Agentic AI: Autonomy Meets Retail Operations
Agentic AI systems, which make autonomous decisions, are gaining traction as a way to enhance retail efficiency and responsiveness. However, adoption faces hurdles such as data silos and organizational resistance.
Embedding agentic AI within clear governance frameworks is essential to unlock its full potential. Retail leaders see AI radically transforming job roles—89% expect it within a year—but only a third prioritize upskilling, posing a workforce risk.
Technical Debt: A Hidden Barrier to Innovation
Nearly 25% of retailers cite technical debt as a major constraint, with one-third reporting critical infrastructure reaching end-of-service. This legacy technology burden slows innovation and increases security risks, demanding urgent attention for sustainable modernization.
Strategic Imperatives for Retailers in 2026
- Focus on operational basics: inventory accuracy, SKU rationalization, and agile merchandising.
- Prioritize integration over expansion: unify omnichannel platforms to eliminate silos and manual processes.
- Deploy responsible agentic AI with governance to enhance decision-making and customer service.
- Address technical debt: retire outdated infrastructure to reduce risks and enable innovation.
- Invest in workforce upskilling to prepare for AI-driven role transformations.
These priorities will differentiate retail leaders who can harmonize physical and digital operations effectively.
Conclusion
The 2025 Retail Readiness Report from Kyndryl spotlights a pivotal moment for retailers amid evolving technology and operational pressures. Success in 2026 requires a disciplined approach to technology integration, particularly in omnichannel and AI spaces, while confronting legacy system challenges. Retailers that master this balance will set the pace for future competitive advantage.
For a deeper dive into these insights and recommendations, readers can access the full 2025 Retail Readiness Report by Kyndryl.
