Retailers must overhaul organisational

Retailers are investing heavily in digital tools but continue to struggle with execution due to outdated organisational structures. A report by Inside Retail Asia argues that the core challenge is no longer strategy or technology, but an organisational model built for distinct channels in a world where customers shop seamlessly across them.

This structural mismatch is becoming one of the biggest barriers to growth in modern retail. For decades, companies were organised around separate channels and functions like stores, e-commerce, and marketing, each with its own processes and leadership. That model is breaking down as customer journeys become fluid and dynamic.

The outdated channel model

A modern shopper might discover a product on social media, research it using AI, check a retailer's website for availability, verify local store inventory, and finally purchase via curbside pickup. Returns could happen through another channel entirely. Customers do not see internal departmental boundaries; they simply expect a seamless experience.

However, most retail organisations remain structured around channel ownership. Store teams focus on store performance, e-commerce teams on digital revenue, and marketing on traffic campaigns. When these functions operate independently, friction emerges. A digital promotion can create demand stores cannot meet. A merchandising decision might affect digital visibility without coordination. The report states, 'Customers don't see these internal boundaries. They simply expect seamless execution.'

Why the problem is accelerating

The organisational mismatch is becoming more pronounced as key retail trends demand tighter coordination. Artificial intelligence influences product discovery. Retail-media networks reshape promotional strategies. Omnichannel fulfilment blends store and digital inventory. Data-driven merchandising is central to growth.

Retailers like Walmart, Target, and Best Buy have made progress by integrating store and digital operations to enable services like buy online, pick up in store. Similarly, companies such as Sephora and Nike have aligned digital merchandising, content, and marketing to deliver cohesive experiences. These examples highlight that as retail becomes more integrated, organisations must follow suit.

Steps toward a digital-first structure

Leading retailers are restructuring to align around customer journeys and shared outcomes rather than channels. This shift does not eliminate channel expertise but changes how teams collaborate. Organisations are aligning around key journey stages like discovery, digital merchandising, conversion, fulfilment, and customer loyalty.

To move toward this model, companies are taking practical steps. They are establishing cross-functional teams aligned to customer journey stages and creating shared KPIs across store and digital channels. Other steps include integrating inventory visibility across all touchpoints, aligning planning cycles for merchandising and marketing, and using unified analytics for faster decision-making.

Building versus partnering for capabilities

As retailers evolve, leaders must decide which capabilities to build internally and which to source from partners. Most adopt a hybrid approach. Capabilities often built internally include merchandising strategy, customer insights, data governance, and digital experience leadership, as these are seen as core to differentiation.

Other capabilities are frequently supported through external partnerships. The report notes that AI platforms, retail-media optimisation tools, advanced analytics, and customer data platforms are often implemented with partners due to their rapid evolution and need for specialised expertise. Execution-heavy functions like content production or campaign execution are also commonly outsourced.

However, these decisions are not permanent. Retailers must continuously reassess which functions to bring in-house as technologies mature and internal capabilities grow. Companies like Walmart and Target build core data and omnichannel capabilities internally while selectively partnering for specialised AI and retail-media solutions.

Leadership must drive change

New roles are emerging, such as digital merchandising leaders and retail-media specialists. Yet adding roles is insufficient if incentives remain tied to channel performance. Store teams measured solely on store sales or e-commerce teams on digital revenue creates internal competition, not collaboration.

To address this, the report suggests leaders must align incentives across store and digital teams. Performance should be measured on customer outcomes, not channel ownership. Shared metrics like customer lifetime value and omnichannel growth are essential. Retailers like Walmart and Best Buy have taken steps to align store teams with digital fulfilment performance, reinforcing shared accountability. In a digital-first world, growth hinges on this organisational evolution.