Retail tech squeezes margins as rivals catch up

Near-instant retail can deliver orders in roughly 26 to 28 minutes.

Retail technology can accelerate growth but also erode margins when competitors replicate the same capabilities, according to Mário Braz de Matos, founder of Flying Fish Lab.

“Tech accelerates the competition,” de Matos told the Retail Asia Summit 2026 in Singapore. “It just made the race to the bottom go faster and faster and faster. But strategy [is] needed to give the business [a] stronger basis for beating and going beyond the best practices.”

He cited China’s near-instant retail market, where delivery can take roughly 26 to 28 minutes, with technology reducing average delivery times by 21%.

However, once a company achieves this kind of operational improvement, competitors can quickly follow suit, turning what was once a differentiator into a basic expectation.

Growth does not necessarily translate into healthier economics, de Matos said, citing an example in China where revenue rose 12% in June 2025 whilst selling and marketing costs increased 52%.

“Your operational objective was to get more orders but there was a critical commercial question behind it. What's left after incentives and fulfilment? Because you want more orders but at what cost?” he said.

Discounts and subsidies can encourage consumers to try or switch between platforms, but do not necessarily create lasting preference once the incentives disappear.

De Matos said retailers therefore need a “compelling difference” that gives customers a reason to return, beyond “brilliant basics” such as availability, reliability, speed and fulfilment.

“These are the tickets to be in the game,” he said, adding that a compelling difference instead comes from a particular product, experience or value proposition that customers want to return to.

Strategy must therefore determine whose choice a retailer wants to earn, what those customers will value and what the business must commit to as a result.

Such commitments require trade-offs, including what the business will fund, change, stop or constrain to make its proposition visible to customers.

Whilst technology can identify patterns, improve forecasting, match capacity, optimise routes, and make a proposition operationally possible, management owns the strategic choice, de Matos said.

Breaking conventional retail assumptions can create differentiation, with de Matos citing Sam’s Club and Don Don Donki as examples.

Sam’s Club uses membership as a barrier to entry whilst offering a curated assortment that gives members a reason to return, he said.

The constraint means the retailer does not need to carry every brand, pack size or shopping mission, allowing it to concentrate on products valued by its customers.

Don Don Donki, meanwhile, treats time spent shopping as an opportunity for discovery rather than simply friction, building unfamiliar and surprising products into the store experience.

De Matos also cited a retailer that has limited itself to 14 stores, arguing that restricting expansion can help protect product quality, attentive service, and consistency when these are central to the customer proposition.

The examples show how strategic choices can change what a retailer optimises for, with technology then supporting rather than determining the proposition, he said.