Retail tech investments pay dividends

Perspectives from BofA Global Research’s Leading Analysts

July 21, 2026

A key theme in retail that has emerged is the consumer’s preference for value. Retailers across grocery, home improvement and general merchandise are focused on remaining competitive on price to help drive volumes after several years of inflation across many retail categories. While a focus on low pricing has been crucial for many retailers for a long time, particularly broadline retailers such as Walmart, Costco and Target, the focus on value is starting to pick up in other retail verticals like home improvement. 

Retailers are starting to receive tariff refunds and using some of the funds to lower prices. This raises the question “What will happen after all the refunds have been received and deployed?” The answer to this is “To be determined,” but we think certain retailers will be better positioned than others. Retailers with the ability to tap into high-growth, margin-rich businesses like advertising and membership to help fund pricing investments are well positioned, in our view.

Another key area of focus for retailers outside of offering the best value for the consumer is delivery speed and service. Big box retailers including Walmart and Target continue to raise the bar for the industry by increasing delivery speeds, partly due to their ability to utilize stores as hubs to deliver online orders to customers. Earlier this year, Walmart rolled out 30-minutes-or-less delivery in 33 markets. We expect delivery speeds to only get faster over time with the deployment of AI in supply chains. Moreover, we are seeing retailers expand marketplace offerings, i.e., selling third-party products that are not held on the balance sheet. This has not only improved inventory risk but also has allowed retailers to expand the depth of product offerings to the consumer.