Make Every Tech Dollar Count

Forrester’s just-released US Tech Forecast 2026: What It Means For Retail research shows that US retailers will increase their technology budgets to $113 billion in 2026 — up 6.6% year over year. The industry’s needs to modernize infrastructure, adopt AI at scale, and support omnichannel experiences are driving this increase. With these investments comes a clear mandate for retail leaders: Ensure that every investment improves profitability, business resilience, and/or customer value.

Retailers Continue The Shift To AI, Software, And Omnichannel Foundations

In 2026, software will account for 46% of total retail tech budgets in the US. This is more than double what retailers will spend on hardware categories such as communications equipment and computer equipment. Retailers are pouring these dollars into AI‑enabled systems, data platforms, and cloud‑based applications that improve forecasting, fulfillment, and personalization.

Tech priorities reflect this strategic push. Approximately three out of five retail IT organizations rank data and analytics technology, AI‑enabled software development, and industry cloud adoption as top initiatives for 2026. They are also investing heavily in improving in‑store technology, self‑service experiences, and associate‑facing tools. These shifts signal the enduring role of stores as a priority for customers’ omnichannel journeys.

AI Becomes An Engine For Growth And Efficiency

Retailers increasingly use automation and machine learning to optimize forecasting, inventory visibility, fulfillment operations, and content workflows. For example, Walmart is deploying AI “super agents” to improve operational productivity and fuel e‑commerce growth. Gap has tapped generative AI, robotics, and intelligent automation to boost efficiency and engagement. And Best Buy is applying AI to streamline interactions and offer more self-serve content and options, which reduce costly customer contacts.

But the maturity gap remains wide. Only about half of AI decision‑makers in retail sponsor technical staff for formal AI training and/or offer training to nontechnical employees. While Forrester doesn’t expect it to replace (most) employees, AI presents efficiency and workflow improvement opportunities for roles well beyond technical functions. Savvy retailers pair genAI experimentation with strong governance frameworks, employee education, and clear measurement of outcomes.

Economic Pressure Elevates Profitability As Retail’s 2026 North Star

Margin pressure from inflation, high interest rates, intensified competition, and overall market volatility mean that every technology decision that retailers make must tie back to profit impact. What that means: Digital and tech leaders must adopt “always on” scenario planning, and in that light, continually scrutinize both investments and cuts. Some immediate low‑hanging opportunities to reclaim and reallocate budget include removing underutilized tools and overlapping systems and renegotiating or canceling inflexible contracts.

What Retail Tech And Business Leaders Should Do In 2026

Double Down On Efficiency Gains With AI And Automation

Prioritize platforms that enhance forecasting, fulfillment, content management, and supply chain execution. As software spending dominates tech spend in retail in 2026, ensure that each AI use case proves value rather than adding incremental complexity or cost. Look for ways to modernize legacy systems with modular or specialty solutions that deliver faster ROI.

Invest In Associate‑Facing Tools To Elevate In‑Store Experiences

Digital retail sales will keep growing, but most US retail sales will continue to occur offline (mainly in stores) through 2028. Retailers must equip store teams with unified inventory visibility, consistent omnichannel policies, and real‑time product information, including availability. Investments in point-of-service modernization, checkout innovation, and associate productivity tools will improve operational efficiency as well as both employee and customer experiences.

Tighten Returns Policies And Modernize Fulfillment Strategies

Returns remain a major cost center. Use data and machine learning to selectively offer generous policies to high‑value shoppers while reducing exposure to abuse. This year, we expect more retailers to explore outsourcing fulfillment to control both fixed and variable costs as they scale geographically.

Modernize Payments To Improve Security, Speed, And CX

Payment technologies — especially tokenization, authentication, and related innovations such as passkeys — will play a bigger role in omnichannel performance and fraud prevention. Avoid chasing every new payment “darling” and instead focus on optimization and modernizing core payment infrastructure to better support new AI-driven interactions.

Experiment Strategically With Emerging Technologies

AI agents, synthetic data, and advanced automation are already helping organizations gain improved insights, conduct faster testing, and produce resilient modeling. Reserve part of your 2026 budget to experiment with these emerging technologies, but set realistic expectations. For example, AI agents today require guided oversight. Most remain semi‑ or minimally autonomous, if they are autonomous at all (most are still assistive).

Want to learn more? Forrester clients, please schedule a guidance session or inquiry with us!