Retail Landscape 2026 with James Stewart
Stepping into 2026, small retail business are navigating a retail industry highly driven by technology and digital innovation, evolving customer expectations and shopping patterns, while managing constant challenges with supply chain and delivery. We spoke with James Stewart, Senior Advisor and Retail Industry Expert, as well as previously the National Leader of Consumer and Retail at KPMG, to learn how business can better align strategies and succeed in the new year.
What are 3 crucial aspects that small businesses need to get right in 2026?
Given the volatility of the market and the likely hood that consumer demand will stay relatively soft for some time, I would encourage small business to keep it simple and focus on 3 things.
- Margin optimisation
Too many small businesses chase sales over margin performance. Some don’t understand the basic difference between margin and mark up and what their overall target margin should be to cover operating expenses and overheads. This can sometimes mean is small businesses generate profitless sales which churn cash but don’t improve the underlying outcome for the business owner.
- Inventory management
Stock turn is one of the most important metrics a small business owner can focus on. In otherwords, how many times a year are you selling through your total inventory (at cost)? Many small businesses tie up extraordinary amounts of capital by having too much inventory in their stores and warehouses without understanding what their optimal stock mix and stock holding should be. This often puts a strain on the balance sheet which is unstainable.
- Financial management hygiene
In my experience, too many small businesses are not across the detail of their operating costs and how they impact the overall return to shareholders. This means not only focusing on the practical things like wages, and overhead expenses, but having a good look at the underlying trends in these numbers so that you can pull the levers to protect the bottom line. I love trend analysis because it can give you insight into the future direction of your financial performance.
How is consumer trend shifting and what are the biggest opportunities for retailers?
It may sound like a cliché, but the consumer has never been more digital and more informed about what they are buying and who they want to buy it from. The big opportunity for smaller retailers is personalisation of experience (particularly in store) which can create brand loyalty beyond what the big brands are capable of doing (even with all their data!). I would also encourage smaller retailers to be very active on social media, and create their own authentic posts that display the honesty and integrity of their brands. Posts should be focussed on helping the consumer solve their immediate problem rather than selling a sproduct or solution they don’t want. 
How will AI continue to impact shopping behaviours and the retail sector?
Like it or not, AI (think Chat GPT) is here for good. Its adoption is going to accelerate well beyond most peoples imagination very fast and will become ubiquitous in our lives for generations to come. What this means is customers will increasingly use AI to inform their purchase decisions and at some point will likely have an AI Agent make their purchasing decisions for them. Wow. So what does this mean? Smaller retailers need to have strong websites and social media presence so they and their products can be easily found by AI and AI users.
