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Market Snapshot

Specialty Retail's New Reality: The Expertise Imperative

Q1, 2025

The specialty retail industry is undergoing a fundamental transformation as traditional business models face unprecedented challenges from digital-first brands, evolving supply chains, and shifting labor dynamics. Success now requires a complete rethinking of how retailers operate and compete. Digital-first brands are building billion-dollar businesses without stores, while smart sourcing has evolved from risk management into a competitive weapon. As expert talent becomes increasingly critical, with 79% of shoppers considering knowledgeable store associates as important to their shopping experience, retailers must find new ways to leverage and scale their expertise while maintaining their core strengths.

This report explores how leading specialty retailers are transforming these challenges into opportunities through five essential capabilities. It delves into how retailers can turn their deep category knowledge into a sustainable competitive advantage, scale personal service without losing authenticity, and build operations that enable innovation at scale. For retail executives seeking to thrive in this new reality, the report provides crucial insights into how winning retailers are systematizing their expertise while preserving the human touch that builds loyalty, turning traditional specialty stores into knowledge-powered destinations that convert shoppers into advocates.

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As consumers continue to reshape their expectations,

enterprises must contend with a uniquely challenging landscape.

The consumer technology landscape is forever changing.

From Pinterest to TikTok, WeChat to Instagram, new experiences can rapidly gain consumer adoption and relevance.

Consumer, Technology, Incisiv

From augmented reality to voice, smartwatches to chatbots, consumers are constantly embracing new interaction paradigms.

Commoditized convenience is eroding loyalty and margin.

Consumers expect convenience. If you can't deliver it, they'll go elsewhere - e.g. next day shipping becoming the new standard.

Walmart will reportedly lose USD 1 billion on eCommerce revenue of USD 21 billion this year as it faces challenges in its bid to complete against Amazon – from trouble integrating its DNVB acquisitions to impact on margin from its next-day delivery operations.

Consumers value experiences that are curated to fit their lives better.

They want to engage, be served, and transact at their time, their pace, their place. They have little patience, infinite choice and the freedom to swipe left at the slightest hint of friction.

Consumer, Experience, Incisiv

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