Why the future of retail is no longer about consumer segments, but states of mind

“You can’t box consumers anymore. Their choices depend on the moment, the occasion and the emotion. Sometimes they’re price-sensitive, and other times, they want indulgence. And it could all happen on the same day.”

Allen, who leads one of the world’s most influential consumer practice networks, was in India tracking the country’s evolving retail ecosystem. With global inflation, digital acceleration, and shifting values shaping how people buy, Allen points to three long-term shifts: the pressure on wallets, the rise of convenience-led digital consumption, and the need for brands to meet customers “where they are”, not just physically, but emotionally and culturally.

From demographics to dynamic mindsets

The conversation comes at a time when Indian retail is grappling with two seemingly contradictory trends: mass affordability and premiumization. Allen sees no contradiction. “Retailers need to be very clear on what they stand for. You can’t be everything to everyone,” she says. At the same time, she argues, a consumer is not just a socio-economic profile. “The same person might want a value purchase in the morning, and something indulgent in the evening. Behavioural data, cultural context, and even influencer choices matter more now than old segmentation models.”

KPMG’s global work now focuses on these evolving dimensions, exploring how identity, trust, and context influence brand preference. “It’s not just income or past purchases anymore. It’s what political or environmental cues you’re exposed to, and who you trust online. The influencer economy is not aligned with traditional segmentation either,” she adds.

The AI trap: move too fast, or too slow?

KPMG’s Intelligent Retail report argues that artificial intelligence (AI) is not a plug-and-play tool, but a trigger to rethink the business holistically. Allen warns that many retailers risk misfiring on AI adoption. “You need to decide what posture you want to take. Are you a first mover? A smart follower? What does your consumer expect from you?”

India ranks among the highest globally in AI trust and adoption, according to a long-running KPMG-University of Melbourne survey. But that enthusiasm is a double-edged sword. “If your organisation moves too fast without structure, pilots fail, employees lose trust, and you kill future momentum. Move too slow, and people use external tools on internal data, risking leaks and IP loss,” she cautions.

Instead, Allen calls for what she terms a “mindful transformation”, AI as a tool to enable, not dictate, retail strategy. From empowering shop-floor workers with intelligent tools to letting consumers control their experience flow, AI needs to fit the business, not the other way around.

Loyalty, redefined

Asked about loyalty in a cookie-less, zero-party data world, Allen says it’s not loyalty that’s declining, but how we define it. “Old KPIs (key performance indicators) don’t work anymore. The goal for many retailers is now zero per cent unknown consumers, whether in-store or online,” she says. Examples abound—from trolleys that guide shoppers based on saved preferences to stores with fast-track lanes for digitally-recognized customers.

“Loyalty today means knowing your consumer deeply enough to personalise the experience, whether they want speed, discovery, or indulgence at that moment,” she adds. “It’s no longer about points or redemptions. It’s about relevance, real-time.”

India: A Market, a Model, and a Messenger

Allen’s team has been meeting Indian consumer brands, retail platforms, and digital-first businesses. What stands out, she says, is the combination of scale, complexity, and innovation. “India is exciting for India, but it’s also exciting for the world. You have heritage-rich brands, hyper-digital businesses, and a government-led digital infrastructure push that many countries don’t,” she says, referring to India’s unified payments interface (UPI) ecosystem and digital trade frameworks.

She also believes Indian business models could offer cues to other markets, not necessarily as-is, but in spirit. “The speed at which Indian retail is adapting—both at the grassroots and tech layers—is worth watching. Whether it’s how small stores adopt digital payments or how local preferences shape modern retail formats, there’s a lot to learn,” she says.

Resilience, ESG and the trade-offs

KPMG’s Global Food System Resilience report highlights the rising strain on agricultural supply chains amid climate disruptions, geopolitical shocks and shifting trade flows. For India, Allen notes, this complexity is layered: with a large domestic demand base and traditional strength in food exports (such as tea and rice), companies may increasingly face tough choices between prioritising domestic supply and fulfilling export obligations in a constrained environment.

Improving last-mile food supply resilience, especially in the emerging markets, will require a combination of interventions. The KPMG team points to the growing role of EVs in last-mile delivery, particularly among quick commerce players, as a step forward on the sustainability front. Other innovations include partnerships between farmer producer organizations (FPOs) and direct-to-consumer (D2C) platforms to reduce storage time and improve food quality, and AI-led demand planning to cut inventory waste.

Meanwhile, balancing environmental, social and governance (ESG) goals with cost pressures is becoming a tightrope act for fast-moving consumer goods and packaged goods firms worldwide. Two trends are compounding the challenge: a global regulatory pause, with the US dialling back ESG mandates and the EU delaying its agenda, and a market reality where consumers facing inflation are often unwilling to pay a premium for sustainability-led products.

“The transition costs have turned out to be far higher than anticipated,” she said. “And investors are returning focus to financial performance after a period of sluggish growth and margin pressures from commodity, labour and energy prices.”

As a result, companies are now being urged to move from blanket ESG promises to more transparent transition strategies, being honest about what’s within their control, what can be influenced, and what depends on external factors. Clarity of purpose, both to consumers and investors, is now critical.

What will separate winners from laggards?

As boardrooms globally wrestle with risk, from reputational and geopolitical to climate and AI, Allen says that the next five years will come down to one thing: clarity on goal.

“Winners will be the ones with a sharply defined value proposition. If you’re about affordability, execute that ruthlessly,” she says. “If it’s premium, stay with that. If your story is rooted in heritage or purpose, let every action reflect that. Confused brands will confuse consumers, and pay for it.”