7 retail industry problems and solutions

72% of business owners say it’s harder than ever to run a business, highlighting the retail industry challenges they face.

That number tells us something important about both retail problems and solutions. The challenges are real, but so are the opportunities they present.

The retail industry is being reshaped. Reshaped by technology, by customer expectations, by global shifts that demand faster, smarter, and more agile responses. These are indicators that it’s time to reassess, improve, and lead with purpose.

While economic uncertainty may be out of our hands, internal operations are not. The systems behind the scenes (the processes, people, the tech stack they rely on) are fully within our control.

That’s where change starts and where real resilience is built.

Retail is not in decline; it’s in transition. The businesses that embrace that truth are the ones that will define the future of this industry.

This is a time for action. A time to run health checks on how we work, challenge what’s been “good enough” for too long, to adopt tools and strategies that aren’t just reactive, but visionary.

Because when internal efficiency meets innovation, retail becomes not just sustainable, but unstoppable.

Today, we’ll look at the key retail problems and solutions. Let's get into it.

Understanding today’s retail challenges

Let's first zoom out to get a better understanding of the current landscape before getting into the nitty-gritty of the actual issues retailers must tackle.

What are the biggest retail problems in 2025?

In 2025, the most common challenges we see across the board fall into two areas:

1) External pressure

2) Internal inefficiency.

Externally, the economic landscape is uncertain. Costs are rising across various supply chains. Consumer habits are even harder to predict, and competition (from both physical and online stores) is relentless.

Customers expect speed, convenience, and personalisation, all at the same time. And if they don’t get it, they move on, often without warning.

Now, internally, many retailers are still operating with outdated systems, especially in their inventory management. Inventory is tracked manually (and slowly), teams work in silos, data isn’t shared, or worse, isn’t generated at all. When decisions are made slowly, businesses lose momentum. When operations are inefficient, margins shrink.

Why small businesses are hit hardest

While these challenges affect all retailers, it’s small businesses that feel the weight most intensely.

They usually have tighter margins, smaller teams, fewer suppliers to fall back on. When one piece of the chain breaks (like a delayed shipment or a sudden drop in foot traffic) it has real consequences.

Research from Shawbrook found that 78% of SMEs are worried about inflation and the cost of living. Other studies show how even modest declines in sales or delayed payments can create serious pressure. In fact, 90% of small businesses face late payment issues in the retail sector, and even a single month of poor cash flow can be dangerous.

But there’s also an upside. Small businesses are more agile. They can adapt faster, adopt new tools more easily, and shift strategies without the red tape. That flexibility is a strength, but only if it’s used intentionally.

So where does that leave us?

These challenges aren’t going away. But they are manageable, and businesses can learn how to overcome these challenges. With the right technology, the right strategy, and a willingness to change how we operate, it’s possible not just to survive—but to grow.

Understanding the challenges is the first step. Taking action is the next.

1. Supply chain disruptions

First up in our retail industry challenges is supply chain disruptions.

This year, supply chains are facing serious challenges. Experts expect fewer shipments arriving in the country, which started in May and is expected to continue through the coming months.

One big factor is the tariffs introduced by the Trump administration. Retailers rushed to bring in lots of goods early, trying to avoid paying higher tariffs later on.

Now, they’re holding back and relying on the stock they already have.

The National Retail Federation says imports could drop by 15% or more this year. Jonathan Gold, the NRF’s vice president for retail supply chain policy, explained that retailers have been stockpiling for months, but now they’re waiting to see what happens next.

How delays affect inventory and sales

In the past, a lot of retailers used what’s called a just-in-time system. This just means that products would arrive just before they were needed on store shelves. There wasn't any extra stock sitting around waiting to be used. But recent political and world changes have affected this. Now, retailers keep extra inventory as a safety net.

The problem with this is that safety net is causing new challenges. Many retailers have too much of the wrong products and not enough of what customers actually want.

A survey of retail CFOs showed only 22% think their inventory is in good shape. Most reported shortages, especially for popular items. Some shipments are even getting stuck at borders, making things worse.

With fewer new imports coming in, the products already on the way will have to move faster through the system. Retailers need to predict what customers want, so the right products end up on shelves in time for the busy summer and fall seasons.

Cloud-based solutions for supply chain optimization

Now, here’s the bright spot: technology can save the day. Cloud-based supply chain tools, like a retail POS system, give retailers real-time updates on inventory, help track shipments, and even forecast demand. Retail supply chain management is a complex and dynamic system influenced by trade laws, international relationships, and quality control.

It’s like giving your supply chain a sixth sense, knowing where things are, what’s coming, and what’s needed next. Using these tools means retailers can be more flexible, reduce waste, and avoid those dreaded empty shelves.

2. Changing customer expectations and consumer behavior

Retailers who don't put the customer first are going to come into a lot of problems.

You see, customers are the only reason that your retail business exists. Poor customer service plus not offering solutions that cater to their ever-growing expectations of what retail shopping should look like can really hurt your brand.

Let's meet the modern consumer and look at some consumer behavior trends.

Meeting the demands of the modern consumer

Over the weekend, your customer (let's call her Juliette) lost her laptop charger. It was Sunday evening when she figured it out. She had work first thing Monday.

Juliette needs a charger fast. But it’s Sunday. Most stores are closed. What does she do? She goes online. This is exactly why shopping online has become so important. Capital One found that last year, 2.71 billion people worldwide shopped online. That’s nearly a third of the world’s population.

Now, this isn’t Juliette’s only expectation. She also wants to be able to pay on her Amex. She wants the site to remember her preferences so she doesn’t have to fill out endless forms. She wants delivery options that fit her schedule, and fast shipping, ideally same day.

Customers today expect a seamless, personalized experience. According to Salesforce, 66% expect companies to understand their unique needs and expectations and 52% expect all offers to be personalized. Payment processing also has to be top tier, with 90% expecting an omnichannel payment experience.

Improving customer engagement with digital tools

So, how can retailers keep up with Juliette and customers like her? The answer lies in using smart digital tools. Digital tools and data analytics are essential in understanding customer behavior and preferences.

Tools like Customer Relationship Management (CRM) systems are a great place to start. They help retailers track customer preferences, purchase history, and even browsing behaviour. This customer data allows businesses to tailor marketing messages and offers that really hit the mark, helping to retain customers.

Retailers must invest in high-quality customer service to retain clients and build brand loyalty. Mobile apps and chatbots do this by keeping the conversation going 24/7. According to research, 77% of customers expect to get immediate help when they need it. Chatbots provide quick answers and help guide customers through their shopping journey, which boosts satisfaction and sales.

Finally, let's not forget about social media. 60% of consumers say they’re influenced by social media when making purchase decisions. Retailers who engage with customers on these platforms build stronger relationships and drive more sales.

3. Inventory management issues

Inventory problems are a big challenge for retailers. When the right products aren’t in stock, customers get frustrated. This leads to lost sales and unhappy shoppers. In today’s retail sector, customers expect things to be easy and fast. If you can’t deliver, they will go somewhere else.

Common pitfalls and lost sales opportunities

Many retailers struggle with keeping the right amount of stock. Sometimes, they have too much of items that don’t sell and not enough of what customers want. We spoke about this earlier but, disruptions with supply chains have made this even harder this year.

If your inventory doesn’t match what your customers expect, it hurts your business. Poor inventory management can also mess up your marketing efforts and cause confusion. This means missed chances to make sales and keep customers coming back.

Smarter inventory tracking with POS integration

The good news is there are solutions. One of the best is linking your inventory with your POS system. This gives you real-time inventory data across all your sales channels - online, in stores, and more. With this information, you can quickly adjust your stock and avoid running out of popular items.

4. Customer loyalty and retention

Keeping customers loyal is one of the toughest challenges for retailers today. Shoppers have endless choices. So, holding onto them is more important than ever.

Why shoppers leave—and how to retain them

Shoppers often leave because:

• They don’t feel a personal connection to the brand
• They experience poor customer service
• Competitors offer better prices or products
• Their expectations for convenience aren’t met
• They don’t feel rewarded for their loyalty

To keep customers, retailers must focus on building real relationships. Showing customers they matter makes all the difference. When customers feel valued, they stay.

Using loyalty programs and data to build trust

Loyalty programs can be game changers. They reward customers and encourage repeat visits. But generic rewards aren’t enough anymore. Customers want personalized offers that fit their needs. That’s where customer data helps. Using data smartly lets retailers tailor rewards and messages. This builds trust and shows customers they’re more than just a sale, and when loyalty programs connect with real customer preferences, they boost retention and grow business.

5. Operational inefficiency

Operational inefficiency is a major challenge in the retail industry today.

Many retailers still use manual processes. What do we mean by manual processes? Things like writing down inventory counts on paper, or entering sales data by hand. Sometimes, even managing customer orders and payments without automated tools.

These old-school tasks slow your whole operation down. They create delays in the retail supply chain and cause mistakes. Mistakes lead to lost sales opportunities and hurt profit margins.

Manual processes that slow you down

When business processes depend on manual work, everything moves slower. Staff spend too much time on routine tasks instead of helping customers.

Manual inventory management means stock counts might be wrong. This can lead to running out of popular products—or having too much of the wrong items. Both are bad for business growth.

Slow or inaccurate data also impacts customer service. Today’s customers expect fast answers and seamless experiences while poor customer service drives shoppers away and damages customer loyalty.

In the competitive retail sector, with direct-to-consumer brands and online platforms growing fast, retailers must work smarter to satisfy impatient customers.

Streamlining with cloud-based business solutions

The good news is there’s a fix to overcome these challenges. Cloud-based business solutions can take over those manual tasks.

For example, cloud POS software automatically tracks inventory in real time. They update sales data instantly across physical stores and online platforms and help communicate with international suppliers. This improves inventory management and supply chain optimization regardless of whether you're online or in shopping malls.

Cloud software also collects customer data. That helps retailers understand consumer behavior and meet customer expectations better. You can tailor marketing efforts and loyalty programs to keep customers coming back.

With operational efficiency, your business runs smoother. You reduce lost sales and build customer trust.

In a world full of impatient customers that demand seamless omnichannel retail strategies, this kind of innovation is vital to remain competitive and grow your business if you want repeat business.

6. Limited online presence

Here’s the truth: if customers can’t find you online, they might forget you exist.

A limited online presence is one of the biggest retail challenges today. In fact, it’s holding a lot of great businesses back from real growth, especially in the age of direct-to-consumer brands.

We’re no longer in a world where just having a physical store is enough. The modern consumer is shopping online, anytime, anywhere. Retailers must show up where their customers are looking. And that’s on websites, marketplaces, and social media platforms.

Omnichannel retail strategies that work

Omnichannel just means being everywhere your customer might shop.

Many retailers struggle to maintain a cohesive omnichannel experience for consumers, impacting customer satisfaction. A strong omnichannel retail strategy connects your physical store, online store, and every touchpoint in between. That includes mobile apps, online marketplaces like Amazon, and even your email marketing messages.

It’s all about making the customer experience seamless. They might browse on Instagram, check reviews on Google, then buy through your website or pick up in-store. It should all feel connected.

When this is done well, you not only increase customer engagement, you also build real customer trust. And that trust leads to repeat business.

Leveraging online platforms to boost visibility

So, how do you actually build that strong online presence?

Start by setting up a robust online store. Keep it fast, simple, and mobile-friendly. Use online platforms that integrate with your inventory data, so your stock is always up to date.

Then, get visible. That means showing up in search results, using social media to promote products, and encouraging customer reviews. This is how you get discovered by new customers and stay top-of-mind for the ones you already have.

Leverage consumer data to understand what your audience wants and what they’re searching for. Use that data to guide your content, your sales funnel, and your marketing efforts.

The goal is simple. Meet customers where they are. And if you're not online, you're missing out on more than just clicks—you're missing out on serious business growth.

7. Marketing and sales funnel gaps

Marketing is how you get people to notice you. The sales funnel is how you guide them to buy.But most retailers have gaps in both.

You might be getting attention. But not the right kind.

Or, you're spending time and money on marketing efforts that don’t lead to sales.

These are classic retail problems and solutions are within reach—if you know where to look in your business processes .

How poor targeting leads to lost sales

If you don’t know your customer, you can’t sell to them.

Let’s say you're running Facebook ads for baby clothes but your followers are mostly students and young professionals. That’s poor targeting. It’s a fast way to lose money and miss out on real customers.

Another big gap is not following up. A customer adds something to their cart and leaves, gone. That’s a lost sale. But with smarter targeting and reminders, that could’ve been a win.

Retailers must understand that poor marketing decisions can quickly lead to lost sales opportunities, reduced profit margins, and fewer returning customers.

Optimizing marketing efforts with consumer data

To fix this start with consumer data. It tells you who your customer is, what they like, when they shop, and what makes them leave. You don’t need to guess. Use what they’re already telling you through their clicks, purchases, and reviews.

With that insight, you can build smarter marketing campaigns, but it requires constant innovation . Show the right product to the right customer at the right time. You can also personalise your marketing messages so they feel more relevant.

Future trends: staying ahead of retail challenges

The retail industry never stands still. Just when you think you’ve figured it out -bam - a new trend, a new app, a new customer habit. It can feel like a lot. But the retailers who stay curious, stay flexible, and keep innovating? They’re the ones who win.

Constant innovation as a competitive advantage

Innovation is about making small changes that create a better experience. Better systems. Faster checkouts. Easier returns. Smarter stock control. These all count.

In today’s fast-moving retail sector, innovation is how you overcome retail challenges and stay in the game. Because customers expect more, and they expect it fast.

What retailers must do to remain competitive

So what can you actually do? Let’s break it down.

Retailers must:

• Invest in cloud-based business solutions to boost operational efficiency and simplify everyday tasks.
• Embrace omnichannel retail strategies making it easy for customers to shop anywhere, anytime.
• Improve inventory management to avoid stockouts or overstocking. Efficient inventory management is crucial for reducing costs and meeting consumer demand.
• Use consumer data to personalize marketing messages and tailor the sales funnel.
• Build customer loyalty with simple, smart loyalty programs.
• Stay active on online platforms to build a robust online presence and attract new audiences.
• Keep up with supply chain optimization to avoid delays
• Focus on customer engagement because trust drives repeat business.
• Watch future trends in consumer behavior and shopping online habits.

Conclusion: overcoming retail problems with smart tools

That's it from us. We hope that, as a small business owner, you're not having to deal with too many of these challenges at once. It’s a lot to take in, especially when you’re already wearing ten hats as a small business owner. But here’s the good news.

You’re not alone in this.

Every retailer (big or small) faces these challenges. Whether it's supply chain disruptions, manual processes, or struggling to build customer loyalty, these problems are so common in the retail industry.

And the even better news? There’s always a solution.

Smart tools exist to make things easier. POS systems that track your inventory in real time. Cloud software that cuts down on manual admin. Loyalty programs that build long-term customer trust. Data that helps you get your marketing right.

You don’t have to figure it out all at once. Start small. Pick one pain point. Solve it. Then move to the next. Because every step you take toward better tools and better systems is a step toward business growth and a more efficient retail operation.