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Business

2026 Trends: Legacy Business Models Break – Karen Webster

by Priya Shah – Business Editor January 14, 2026
written by Priya Shah – Business Editor

Jeff Bezos famously declared “your margin is my prospect,”⁢ encapsulating​ Amazon’s strategy of leveraging technology, scale, and customer obsession to disrupt incumbents and pass savings onto consumers. In the ⁤emerging Prompt Economy, this principle is becoming systemic. Instead of ⁢a single company actively seeking out margins⁢ to exploit, AI agents, acting on behalf ‍of‌ millions of⁣ consumers and businesses, are continuously hunting ‍for ⁢margins across ⁤all sectors.

PYMNTS Intelligence research demonstrates just how rapidly this shift is ⁢unfolding.Nearly 70% of consumers express⁣ interest in utilizing⁢ AI agents to streamline shopping, ⁢with ⁤over half desiring an autonomous agent to manage their weekly ⁢groceries or even identify thoughtful gifts based on⁤ personal connections . ‌PYMNTS estimates that approximately 30 million “Pro” consumers are​ already ‌relying on generative‍ AI and agentic⁢ techniques to handle the‌ majority of 54 everyday tasks, from ‌shopping and bill payments‌ to ‌travel⁤ arrangements. These consumers are essentially instructing software to identify and reclaim margins from others.

In this new landscape, the “opportunity” inherent in‌ a​ margin‌ no⁣ longer ⁤primarily resides ⁢with a platform, but rather with the agent representing the end user. The onus is ⁣now on the‌ ecosystem to demonstrate to that agent that any retained margin is justified by⁣ tangible value – be it price,convenience,security,or insightful details ​– or risk having that⁣ margin redirected ⁣elsewhere.

Autonomy​ vs. Drivers: The Uber and Waymo Paradigm Shift

The clash between⁣ human-driven ride-hailing services and autonomous fleets vividly⁢ illustrates‍ this ⁣dynamic. ⁣Uber’s initial success was built on transforming underutilized assets – human labor and privately owned‌ vehicles – into a fluid ​network. However, this model shifted risk⁤ and costs (like driver⁤ compensation)​ onto the drivers themselves. The largest cost within​ that system is the driver’s time.

Robotaxis‍ represent a fundamental‍ inversion of ⁤this ‍logic.A recent analysis revealed that Waymo’s driverless rides in⁣ San⁤ Francisco average $20,‍ compared to $16 for UberX and $14 for Lyft – a 31% and 41% premium, respectively. Despite‌ the higher cost, demand ​for​ Waymo is surging. trip ⁤volumes have exploded from just over 12,000 paid rides ⁢in August 2023 ‍to over 700,000 monthly by early ⁤2025,⁣ accumulating over ⁣10 million paid rides across multiple⁣ cities. Surveys indicate that approximately 70% of Waymo riders prefer the driverless experience,with over 40% willing to pay a premium ⁣of up to $10 ⁤for it .

This ​demonstrates a clear shift ⁢in value perception. Today, the higher cost of⁢ a​ Waymo ​fare reflects the⁣ initial ⁢capital and operational expenses of an emerging ‌autonomous ​network. Though, as fleets scale ⁣and ‌technology matures, the elimination of driver costs will unlock critically important efficiencies.The ⁢platform’s role is evolving ⁢from simply matching riders ⁢with drivers to orchestrating demand across a mix⁢ of human ⁢and autonomous ‍fleets, and increasingly, becoming a direct endpoint for consumer agents‍ and agentic mobility‍ protocols.

Essentially,the driver’s share of the revenue is⁣ becoming an opportunity for those who control the autonomous infrastructure,the dispatch algorithms,and the ⁣financing behind them.

Consumer ⁢Rails:‍ The Battle for Payment Margins

The payments industry is‍ another​ arena where this margin-hunting dynamic is playing out. for decades,⁢ card economics have been​ built on interchange fees, breakage, ⁣and a complex ⁤system of ‍incentives between issuers, networks, acquirers, and merchants. Interchange funds consumer rewards and fraud protection, while merchants⁣ view‌ fees as a necessary cost of doing business.

PYMNTS Intelligence ⁢research‍ reveals‌ the strong consumer attachment ⁣to this model. Roughly⁣ 72% of cardholders cite rewards as a key factor in their card selection, with over half strategically choosing cards to ​maximize those rewards and⁣ a quarter rotating⁤ cards⁢ across categories. ⁣Consumers‌ are ‍already‌ actively seeking ⁤value, albeit through conventional means.

Open banking and ⁢pay-by-bank solutions are often positioned as a merchant-amiable choice to card fees, offering instant account-to-account ⁣payments with lower costs and richer data. However, adoption rates remain⁣ modest, currently representing only a ⁣ low single-digit percentage of total consumer payments. Nevertheless, interest‌ is growing, ⁣with around 40% of U.S. consumers indicating they would‌ consider pay by‌ bank,‍ particularly younger demographics, for routine debit card purchases.

The key hurdle ⁤is‌ replicating the rewards and protections consumers have come to expect from cards. ‌ AI agents are poised to change this equation. ⁣Instead of ⁢merchants unilaterally dictating payment rails, consumers (through their agents) will‍ define‌ the rules, optimizing for net benefits considering rewards, cash flow flexibility, security, and ‍price. This will‍ create ‌a⁤ competitive showdown⁤ among merchants, issuers, consumers, and⁢ networks, as agents calculate⁣ the⁤ true⁣ value of each option.

Retail⁢ and Media: The Rise of agent-Driven Discovery

On the merchant⁤ side,​ retail media and promotional spending represent another ⁤significant⁤ margin pool at ⁤risk. ⁢Retailers and platforms ‍have built lucrative advertising networks on top of low-margin product sales, ​monetizing search placement and digital ​shelf space using first-party data. analysts ⁣predict that retail media​ will surpass traditional TV ad spend, reaching over $100 billion in global revenue by the ⁣end ⁤of the ⁤decade.

In the Prompt Economy, product discovery will increasingly occur within the agent layer. Rather of browsing retailer websites, consumers‌ will provide agents ⁤with specific goals – “new⁣ running shoes,” “a ‌four-slice toaster”⁤ –​ along with their preferences⁢ and​ constraints.‍ The agent⁤ will then conduct the⁣ search, ‌compare prices,⁣ check reviews, and ​vet merchants across multiple platforms .

This shift renders paid ⁤placements, co-op promotions, and on-site banners vulnerable. An agent analyzing structured product data, net prices (including fees⁣ and promotions), shipping terms, seller reliability, and user preferences will‍ disregard the visual hierarchy⁢ imposed‌ by retailers. Any promotional spending⁤ that⁢ doesn’t ‌demonstrably deliver value ⁢will become invisible, transforming the “retail ⁤media tax” into an opportunity for agents to secure savings for consumers or ​demand outcome-based fees from brands and ‍retailers.

B2B and Treasury: AI-Driven Efficiency Gains

this dynamic ⁤extends beyond consumer ⁣markets. In the B2B realm,AI is ⁤disrupting logistics,procurement,trade finance,and treasury ​management. The margin ‌pools in these areas are even⁢ larger, encompassing FX spreads, correspondent banking fees, supply chain financing costs, ⁤and inefficiencies in inventory ​and working capital.

AI-driven planning and optimization are enhancing supply chain predictability and reducing ​tolerance for inefficiency. Enterprises are leveraging demand forecasting,‍ network optimization, and dynamic routing to minimize ‌inventory and transportation‍ costs.

Agents integrated into ERP and procurement ‌systems can continuously ⁢benchmark suppliers based ⁣on price, performance,⁢ ESG metrics, and risk, automatically‍ reallocating spending when ⁣a supplier’s⁢ margin is no longer justified by service levels.In trade and treasury, stablecoins⁣ and blockchain networks are challenging traditional banking margins, offering near-instant settlement, transparent fees, ⁢and programmability.

Banks ⁤are responding​ with tokenized ⁣deposits, on-chain⁤ cash management, and AI-enhanced trade finance tools, aiming to provide similar speed and programmability with the security and​ regulatory compliance of traditional banking. This sets the stage for a showdown between non-bank issuers,banks,and corporations,where AI agents become the margin ⁢hunters on behalf of businesses.

AI ⁢Exposes the True Cost ⁢of ⁢Value

Consumers ⁤and businesses already except​ certain⁢ costs​ in exchange ​for convenience,‌ rewards, and efficiency.⁢ Consumers​ pay interest on credit cards, overdraft fees, and delivery charges. Businesses incur FX spreads,slow settlement times,and compliance costs.‌ These ⁢are often viewed as the ​cost of doing business.

Though, the​ key difference in 2026 ​and beyond is that‍ AI agents will present consumers and ‍businesses with alternatives, revealing the true, full cost of⁣ each option. This​ openness ‍will transform every hidden or sticky⁣ margin ⁤into an opportunity ‍for someone else. ‍

Ultimately, the Prompt Economy signals a ‌fundamental ‌shift: business models ⁢will be continuously repriced by agents. The Bezos ‌quote remains relevant – but​ the ⁣players have⁢ changed. The 2010s saw platforms⁢ leveraging data and scale to ⁢capture margins. In 2026,‍ agents, intelligent rails, ‍and secure ​credentials will‌ contest every margin, empowering consumers and businesses to determine⁣ who deserves ⁤what.

Find more observations⁣ and insights from Karen Webster about what may lie ahead:

What 2026 Will Make Obvious

January 14, 2026 0 comments
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Business

Online Breaks Brick and Mortar

by Priya Shah – Business Editor January 9, 2026
written by Priya Shah – Business Editor

The collapse ⁢of department stores didn’t signal the end of retail aggregation or product‌ discovery; it simply shifted their ‌location. What once ‍occured within the walls of physical stores now⁤ happens online, increasingly ⁢shaped by ⁣algorithms and AI agents that organize consumer choice at an unprecedented ⁤scale.‌ as⁤ we move further into 2026, this shift is no longer a prediction,‌ but a demonstrable reality.

The‌ Long-foreseen Shift

The signals of this conversion ‍have been⁤ visible‍ for⁤ over a decade.As ⁣early as⁢ 2014,⁣ when eCommerce accounted⁢ for roughly⁢ 6% of ⁢U.S. retail​ sales,the writing was on the wall. ⁤ A growing concern​ was that physical‌ retail wasn’t adapting quickly enough to survive the coming changes [[2]]. At the time, this ⁤perspective​ was often dismissed as alarmist, but the underlying trend proved to be remarkably accurate.

Back then, retail giants ‍like Macy’s ‍and Sears still held​ dominant positions [[1]], [[1]]. Malls were struggling, but ‍hadn’t yet reached the‌ point of widespread collapse. ⁢The prevailing ‍belief was that⁤ consumers​ would always value the⁢ tactile ​experience of ⁢physically interacting with products before purchasing.

Though, ‌this ⁤assessment⁣ missed a crucial element: the‌ fundamental shift in how ⁢consumers ⁣sought and‍ found products. It wasn’t⁤ a rejection of ‌the in-person ‍experience, but a⁣ growing preference for convenience and efficiency.

Data Reveals‍ the True Crossover

As we​ enter 2026, a significant milestone has been reached. Excluding categories like automobiles, gasoline, and a substantial portion of‍ groceries – where in-person shopping remains largely driven by necessity – online and⁤ digitally influenced transactions ⁤now surpass purely physical sales for the first time. ‍This crossover ​feels abrupt because the industry has⁣ been relying on misleading metrics.

For ​years, headline ‍figures from the U.S. Census Bureau have ​placed⁤ eCommerce penetration‍ at around 16-17% of total retail sales in 2025 [[1]]. This​ figure has often been used to downplay the impact of online retail. ⁣Though, this statistic is misleading as it‍ uses a denominator that obscures‍ the true‌ extent of digital influence.

The real story emerges when focusing‌ on discretionary spending categories –⁢ apparel, ⁣electronics, home goods, beauty products, and general merchandise. In these areas, online sales ⁣already account for 30-50% of total revenue. These⁢ are the categories that historically sustained ⁤malls and⁤ department stores.⁣ Even grocery, long considered a bastion of physical retail, is experiencing a gradual but⁢ steady migration online through‌ the increasing ‍popularity of pickup and delivery services [[1]]. The convenience of online ordering has ​transformed the physical aisle from a place of discovery to ⁤a source of friction⁣ for⁢ many consumers.

The Department Store: The First Domino

This shift‍ didn’t begin with the rise of Amazon or the decline of malls. It started when department stores lost their core ⁤purpose. In 1990, department ‍stores ⁢controlled approximately 14.5% of U.S. retail sales. ⁢By 2024,that share ⁢had plummeted to just 0.5% [[1]]. Dollar sales peaked in 2001 and‌ have been‌ in steady decline ever​ as.

This decline was notably‌ significant because department ​stores weren’t⁣ simply another retail format. They were the foundational infrastructure of physical retail, ⁤aggregating ⁢demand, curating product selections, ​and subsidizing the viability of shopping malls.Specialty retailers relied heavily on the foot traffic generated by these anchor stores. As department stores ⁣weakened, the entire ecosystem around them became ⁢unstable.

By late⁤ 2024, ⁣the consequences were undeniable. ⁢Approximately 1,100 U.S.⁤ malls remained ⁣operational [[1]],‌ with vacancy rates nearing 9%, ​more ‍than double the overall retail average.Class⁤ C malls faced even more severe challenges, with vacancy rates exceeding ⁣13% [[1]]. ‌Anchor store closures led to decreased foot traffic, ⁣which in ​turn⁣ forced smaller retailers to close⁤ their doors.

Even the luxury retail sector​ wasn’t immune. ⁢The 2024 merger of Saks ​and Neiman Marcus⁢ was⁣ presented as a digital-era reinvention, ⁢but increasingly appears ⁢to be ​a​ consolidation ​effort driven by pressure. The potential bankruptcy of‍ Saks‍ Global at the end of 2025 [[1]] threatens to put dozens⁣ of Class A⁣ properties at risk,⁤ with​ further store closures and ⁤ripple effects throughout the mall landscape.

The​ failure ⁣of department stores wasn’t ​due to⁣ a ​lack of ⁢innovation; it‍ was because their core⁣ function –‌ the physical ⁢aggregation and curation⁣ of products ‍–​ became obsolete.

Aggregation Reimagined: The Rise of​ Digital Platforms‌ and AI

The function that department⁤ stores once provided hasn’t disappeared; it has simply ‌migrated online.⁢ The new​ anchors are no longer ⁢physical buildings, but‌ search engines, marketplaces,⁣ social media feeds, recommendation ‌algorithms, and ‌increasingly, AI agents that dynamically and personally organize commerce. ⁣​ This ⁤happens in seconds [[1]].

For ​over a century, department ‍stores solved the “paradox of choice” by curating assortments that consumers‌ trusted. Digital platforms⁤ took over this​ role⁣ by making search inexpensive and⁢ selection limitless. ⁢Now,‌ AI ⁤agents are‌ taking it‌ a step‍ further by ‌proactively ‍acting on behalf ⁣of the⁤ consumer, finding, comparing, and‌ deciding without requiring the consumer to actively browse [[1]].

This is the fundamental reason ‍why physical retail lost its competitive advantage.⁣ Once aggregation and⁤ discovery could ‌happen digitally, continuously, and⁤ at scale,​ the economics of maintaining a physical inventory under one roof no longer provided value to consumers.

The ⁣Significance of the 2026 ‍Crossover

The ⁤2026 crossover isn’t‌ just ‌about online sales surpassing brick-and-mortar ​in key ⁣categories. It represents ⁣the ‍breaking ⁣point of⁣ the economic logic behind physical ⁢aggregation. Department stores were built to address the⁤ problems of “too much choice”⁢ and “too much friction,” but that logic only held provided that discovery required ⁢a physical presence and selection ⁢was limited by shelf space.

Digital technology eliminated both of these constraints.​ Search has dramatically reduced the cost of finding desired products.Marketplaces have expanded selection ⁢without the risks associated with inventory. Social media and algorithms have reshaped consumer influence. And now, AI agents are ⁢compressing the ‍entire process ‌of discovery, comparison, and decision-making⁣ into a⁣ single, continuous⁤ process that doesn’t require a‍ store ‍visit at all [[1]].

Physical retail ‌isn’t disappearing, but it’s losing its central role as the ‍primary⁣ location for product discovery and decision-making. Omnichannel strategies, where consumers seamlessly move between online and offline channels,​ will become essential for retailers to thrive. ​Stores are ​evolving into execution points – fulfillment centers, pickup locations, and⁤ showrooms –​ rather than⁤ the anchors of the ⁢retail ecosystem.

The department store didn’t fail because consumers stopped shopping; ⁣it failed because the function it performed moved elsewhere. That same shift is now defining⁣ the entire retail landscape.

In‍ 2026,​ online ⁤doesn’t ⁣“win”‌ simply​ because it’s bigger. It wins⁣ because ​it has ‌become the central hub ‌for aggregation, discovery, and decision-making. This year marks the point where the full extent of ‍that ⁣shift becomes undeniably ‍visible.

Find⁤ more observations and​ insights from Karen webster about what may⁤ lie ahead:

Online Breaks Brick and Mortar

What 2026 ⁣Will Make Obvious

January 9, 2026 0 comments
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