Omnichannel

Why CX outcomes, not price cuts, will drive retail growth in 2026

Staying competitive shouldn’t start with slashing prices. While discounts may deliver a short-term lift in revenue, they steadily erode margins and train customers to wait for deals.

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February 24, 2026 by Banwari Agarwal — CEO Retail & CG and Digital Business, Sutherland Global

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S&P Global forecasts real consumer spending growth to slow to 2.0% in 2026, down from a 2.7% average over the past three years. With inflation lingering and labor markets cooling, households are becoming more selective about how and where they spend.

The result isn't a collapse in demand, but rather a recalibration. For retailers, this means more brands competing for every slice of a shrinking retail pie, with almost every micro-segment already saturated. But staying competitive shouldn't start with slashing prices. While discounts may deliver a short-term lift in revenue, they steadily erode margins and train customers to wait for deals.

In 2026, the real battleground will be the retail customer experience, not pricing power. By investing in smarter CX transformation, retailers can continue to grow even as spending slows.

Beyond creating smoother transactions, CX shapes how a brand feels across the entire shopping journey — online, in-store, and post-purchase. When executed well, it makes every interaction feel intentional, relevant, and worth the spend.

To deliver this at scale, your store needs personalization driven by AI-powered analytics, turning customer insight into timely experiences that build loyalty and protect margins.

In 2026 CX will win over price

In a slower spending environment, price cuts may spark short-term sales for both e-commerce and brick-and-mortar retailers. But without structural change, discounting compresses margins and forces brands to compete on the one lever customers always push down: price.

Repeated markdowns weaken your brand's perceived value, signaling that your products were never worth full price to begin with. Over time, promotions define your brand, customers come to expect deals before they buy, and loyalty wanes.

Gen Z illustrates this dynamic clearly: 79% say they wait for items to go on sale, while only 21% regularly pay full price. When discounting becomes a default strategy, brands train customers to delay purchases while undermining their own pricing integrity.

Competing on elevated customer experience is a much more sustainable path. Smarter CX reduces friction and saves customers time by simplifying choices and creating predictability — and that's a benefit people return for, even in a cautious spending climate.

In practice, this means delivering on promises and minimizing hassle: pickups ready on time, fast and transparent returns, and accurate delivery windows with proactive updates. It also means creating clarity in the buying journey with transparent pricing, intuitive comparisons, and a digital customer experience that remembers individual preferences across touch points.

This is the customer experience transformation retailers need in 2026 to fuel growth. With AI-powered analytics, these improvements become scalable and consistent, turning positive experiences into repeat business, stronger loyalty, and margin protection in ways discounting alone cannot.

4 CX moves that will separate brands in 2026

Across brands and channels, a few key priorities will distinguish innovative retailers from those still relying on an old playbook. Take these steps to make sure your brand is ahead of the pack:

1. Establish personalization as your CX baseline

Personalization is now table stakes in customer experience management. Shoppers want their digital experiences to reflect their behavior, purchase history, returns, and renewals, not just their name in a subject line.

The good news is that retailers don't need to begin with one-to-one models for every customer. Segment-level insights by region, demographic, product category, or shopping mission can create more tailored, relevant experiences by aligning product assortments to local preferences, price sensitivity, and delivery expectations. As data maturity grows, those segments can be enriched with individual-level signals through customer data platforms and AI analytics. By simplifying choices and making it easy to find the right product, this baseline personalization increases conversion confidence and repeat behavior, decreasing retailers' reliance on discount-driven demand.

2. Build an omnichannel source of truth

Customers don't think in channels. They expect a unified omnichannel customer experience as they move between web, app, store, and service. In 2026, this means designing for continuity throughout the buyer journey.

This continuity requires a shared, near real-time source of truth across touch points. When channels draw from the same data, customers can move from online to in-store without friction: delivery windows stay accurate, items shown as available actually are, and associates can pull up an online cart and confirm the same price at checkout.

Extending data fidelity across stores makes the brand feel consistent, reinforcing customer trust while reducing fulfillment errors and service escalations. This combination strengthens loyalty and supports margin protection, lowering cost to serve.

3. Design AI to pay for itself

AI-powered analytics deliver the most value when they are tied to specific customer experience management goals, such as higher conversion, reduced returns, or improved service efficiency.

Start with a focused use case and build around it. For example, a smart chatbot designed for self-service can handle common tasks like checking order status, initiating returns, or answering product questions, resolving issues faster while easing pressure on support teams.

Each initiative should also have defined CX and margin metrics, such as containment rate to track performance and refine over time. This doesn't require a massive system overhaul — just a steady pipeline of targeted experiments, each with clear goals and a plan to scale what works.

4. Scale smarter personalization with AI

Once the basics are solidly in place, AI analytics can take personalization further, surfacing next-best actions and tailored offers in real time based on complex behavioral patterns.

Agentic AI enhances this by carrying context across touch points, resolving routine tasks end to end, and equipping employees with richer insights to deliver more relevant, valuable service.

Done well, AI supports the entire customer lifecycle — from discovery and purchase to returns and renewals. An AI agent might recommend the right product based on browsing behavior, while a store associate can access that same context to assist with upsells or support. The result is a seamless, personalized experience that builds trust and loyalty.

CX is the sustainable advantage

Discounts will always have a place in retail, but in 2026 they can't anchor a strategy. The more durable advantage comes from smarter CX to deliver a seamless, consistent experience across channels that feels personal, reduces friction, and delivers real value.

The goal shouldn't be simply surviving on thinner margins. Retailers that put customer experience at the center of their operating models will be best positioned to navigate 2026 with healthier growth and a more resilient customer base that keeps choosing them, even when spending slows.

About Banwari Agarwal

Banwari brings deep expertise in digital technologies and operations and over 25 years of leadership experience across the US, Europe, and APAC. His strategic vision has driven transformative outcomes in digital business services across multiple industries, delivering innovative, cutting-edge solutions across industries.

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