Retail competition drives push into higher margins from non-product sales

Media can become a profit engine for physical stores.

Media and allied services like ads and financing can become a profit engine for retail companies, including physical stores.

However, physical stores remain important because they help build trust, local fulfilment, as well as impact customer experience/service.

“Retail should not just be seen as the last step of commerce but be viewed as the ‘feedback system' linking consumer demand, inventory, payments and fulfilment,” Sanjay Singh, SVP for the Investor Transformation group at Frost & Sullivan Asia Pacific, said.

He added that retailers will increasingly earn margins from sources other than selling goods as competition intensifies, according to Sanjay Singh, SVP for the Investor Transformation group at Frost & Sullivan Asia Pacific.

Speaking at the Retail Asia Summit 2026 in Singapore, Singh said retail media can become an important profit engine for physical stores, spanning content, commerce and livestreaming.

“Global retail is worth about $30 trillion in economic impact… growing at about 5.5% per annum. AI spending in retail is growing almost 6 times faster than the sector.”

He expects AI spending to rise significantly but cautioned that the market is yet to see significant impact. Retailers expect impact on margins, conversions and inventory productivity in addition to sales.
In ASEAN, the retail sector differs substantially. Platform concentration is high, he noted.

Three regional platforms capture almost 95% to 97% of gross merchandise value, and he expects growth in double digits.

Moreover, he forecast consolidation around larger AI-orchestrated platforms, though he flagged the risk of regulatory intervention.

Payments are converging across Asia, but goods flow is not. “Regulations will be fragmented across key ASEAN markets, so the cost of compliance will go up.”

Further, skills and data gaps persist, and the value will come largely from workflow. “It's not about access to information, it’s about whether staff are ready to work with AI.”  

He added that 40 million-plus gig workers are a key area for stakeholders to consider.

Singh advised technology providers to build tools that help small and medium-sized firms, which dominate the sector and face the biggest adoption challenges.

He concluded that retailers, platforms, regulators and workers should shape this window, build for regulatory fragmentation, and treat the workforce transition as a design requirement.