The New Omnichannel Reality: AI Is Requiredto Compete, Yet Hard to Implement IN PARTNERSHIP WITH INTRODUCTION Why did we do this research? Verizon and Cisco have partnered on this multi-year research study to understand the store's digital transformation. Over the past ve years, we have focused on understanding technologypriorities, challenges, and baselining in-store technology adoption. In the 2026 study, we have compared respondents across retail segments to understand: ••••What key challenges and priorities are driving technology investments?Are retailers making progress on personalization and AI adoption?How are mobile technologies transforming associate productivity?Are network infrastructures ready to support AI and IoT demands? Research overview 51%Specialty* 49%Grocery* KEY TAKEAWAYS Retailers' focus on accelerating personalization, mobility and AI is driving the need for upgradednetwork infrastructures. Mobile-first associatesare the new standard Artificial Intelligenceprogress is slow but deliberate Personalization at scaleremains a challenge Network infrastructurelags AI and IoT adoption 16% 68% 67% 2x are satis ed with their in-storepersonalization capabilities increase in mobile tools deployedfor associates vs. 2 years ago are exploring or planning their AIstrategy of network upgrades are driven byAI and ML applications 44% of retailers say in-storepersonalization is important, but only16% are satis ed with their capabilities. Push-to-talk, inventory apps, and Wi-Ficonnectivity are now table stakes. AI is everywhere in conversation butthere is not wide-spread adoption. AI, IoT, and computer vision are drivingnetwork modernization, but readinessremains uneven. With staf ng challenges persisting, thefocus has shifted from hiring morepeople to making each associate moreeffective. While 83% of retailers indicate that AI isnecessary to compete in the future, only6% rate their current AI is mature. While retailers are upgrading networks tosupport edge use cases, only 39% aresatis ed with edge computing supportand 49% with managing peak networktraf c. For omnichannel personalization,satisfaction drops to 12%. AI deployments are complicated by pooror siloed data (55%), system integrationchallenges (48%) and lack of specializedtalent (44%). Siloed data and disconnected systemscontinue to block progress towarddelivering relevant, individualizedexperiences at scale. As AI workloads move closer to stores anddistribution environments, networkperformance is emerging as a criticalconstraint on value realization. Section 1 Staffing and loss preventionare the top challenges. Finding and keeping store associates remains the mostpressing challenge facing grocery retailers. The labor market has shifted, expectations havechanged, and the competition for talent continues tochallenge grocers and mass merchants. Theft and loss prevention is a top challenge for specialtyretailers as they deal with organized retail crime andhigh-value merchandise. Inventory visibility andaccuracy rounds out the three top retail challenges,re ecting the operational complexity of running storesthat support both in-store shopping and omnichannelful llment. KEY TAKEAWAY What connects these challenges is the pressure to domore with fewer resources. Technology has become theprimary lever for addressing all three top challenges.Mobile tools, AI-powered scheduling, and real-timeinventory systems are no longer nice-to-haves. They areessential for keeping stores running when headcount isconstrained. Core operational efficiency continues to be a top focus asretailers recalibrate priorities amid margin pressure. Retailers across both segments share a common focus: gettingthe fundamentals right. Inventory accuracy and visibility, andimproving checkout speed lead grocery priorities, re ecting theoperational complexity of managing perishables and high-velocity SKUs. Specialty retailers, meanwhile, prioritize inventory accuracy andvisibility, and loss prevention—a response to rising shrink ratesand the need to protect margins. The emphasis on associate productivity and store ef ciencysignals a broader industry shift toward operational discipline.With labor costs rising and margins under pressure, retailers areextracting more value from existing resources rather thanadding new capabilities. Omnichannel investments inful llment and pickup remain steady but are not a high prioritybecause current processes are "good enough." KEY TAKEAWAY In a challenging economic environment, retailers are focused onimproving their core operating processes before deployinginnovative technology to enhance customer experiences andoperational ef ciency. Closing the personalization gap between ambition andexecution is a challenge across every touchpoint. Levels of importance and satisfaction with customer personalization for specificshopping channels Retailers realize that personalization drives loyalty, conversion,and basket