What Middle-Market Leaders Should Expect
Retail, manufacturing, and distribution (RMD) companies entered 2026 with rising costs, uneven demand, and ongoing labor shortages. The manufacturing industry is adopting emerging technologies to improve margins. At the same time, retailers and distributors are adjusting to shifting customer expectations across the United States. These pressures are shaping the 2026 business trends that will influence operations and strategy.
New digital tools are also changing how companies work. Organizations are using them to modernize processes, strengthen workforce capabilities, and improve supply chain visibility. Businesses that invest in targeted improvements are seeing faster gains in efficiency and profitability as customers demand more speed and accuracy.
The themes below reflect what RMD leaders should prepare for this year.
1. Manufacturing: Smart Manufacturing and AI Adoption
AI and automation have moved from long-term ideas to practical tools. Companies now use AI-driven maintenance scheduling, automated inspections, and real-time production analytics to stabilize operations. These tools help create predictable output and support modern manufacturing environments.
What We’re Seeing
- 58% of manufacturers report actively investing in automation technologies like robotics and AI-driven systems to address labor shortages and improve efficiency. (Vertical IQ)
- Up significantly from prior years, 49% of manufacturing leaders are expanding AI-powered analytics for real-time production monitoring and decision-making. (Deloitte)
- Predictive maintenance powered by AI sensors reduces unplanned downtime by 30-50% while cutting maintenance costs by 10-40% across manufacturing plants. (Deloitte)
These improvements benefit companies facing tight margins or inconsistent labor availability.
What This Means for You
Targeted automation upgrades can reduce delays, improve quality, and strengthen forecasting. Start with areas that offer clear ROI such as maintenance, inspections, or materials planning.
LBMC Insight
“Cybersecurity assurance is becoming essential as manufacturers expand connected systems and supply chain integrations.” — Drew Hendrickson, LBMC Cybersecurity
2. Workforce Pressure Remains One of the Biggest Operational Constraints
Hiring and retaining qualified workers is still one of the largest challenges in RMD. In the manufacturing industry, roles that involve automation, analytics, or artificial intelligence require skills that are hard to find. Retailers and distributors also face pressure to balance customer experience with operational efficiency.
What We’re Seeing
- Skilled manufacturing roles face extended vacancies, with median time-to-fill exceeding 60 days and 25% of positions remaining open more than 90 days. (U.S. Bureau of Labor Statistics)
- Warehouse worker turnover remains very high at around 49%, meaning nearly half of the workforce must be replaced each year in transportation and warehousing operations. (KPI Solutions)
- 82% of manufacturers cite a lack of AI‑ready skills as their top workforce challenge as they integrate robotics, analytics, and digital systems into production. (The Manufacturing Institute)
What This Means for You
Improving workforce stability requires more than hiring. Redesign roles, automate repetitive tasks, and invest in training. Workforce technology can help reduce administrative workload and improve scheduling accuracy.
LBMC Insight
“Companies that invest in both people and technology simultaneously see stronger long-term performance.” — Bryan Wilton, LBMC Technology Solutions
3. Retail and Distribution Models Are Shifting Around Customer Experience
Customers expect consistent experiences across online and in-store channels. They want accurate information, easy navigation, and convenient fulfillment. These expectations continue to reshape retail strategies and distribution operations as social media and mobile activity influence buying habits.
What We’re Seeing
- U.S. e-commerce sales are projected to reach $1.2 trillion in 2025, representing more than 22% of total retail sales as omnichannel buying continues to expand. (Statista)
- Mobile drives most of the ecommerce activity, accounting for 57–60% of global sales and about 75% of traffic, while social and influencer content drives nearly half (49.5%) of social purchases. (Red Stag Fulfillment; EMARKETER)
- Buy Online, Pick-up In-Store (BOPIS) represents about 10% of North American ecommerce revenue, with 87% of merchants offering it and roughly two-thirds of in-store pickups generating additional purchases. (Electroiq)
What This Means for You
Small improvements in fulfillment, inventory accuracy, and checkout speed can boost margins and customer satisfaction. Reducing friction in returns, order updates, and delivery accuracy produces the fastest gains.
Distribution teams are also adopting automation, refining warehouse layouts, and using routing and visibility tools to improve delivery accuracy. These changes help meet rising expectations for reliability and speed.
4. Retail: Margin Pressure Remains a Central Challenge
Retail margins remain under pressure as operating expenses rise faster than revenue. Payment fees, shrink, returns, and labor costs continue to erode profitability. These pressures are forcing companies to adjust pricing strategies, product mix, and the overall business outlook for retail.
What We’re Seeing
- Credit card fees rank just behind labor, with U.S. merchants now paying an estimated $236.4 billion in card ‘swipe’ fees at average rates near 2.9% of each credit transaction, making these fees many retailers’ largest operating cost after labor. (Merchants Payments)
- Retail shrink and theft remain material margin risks heading into 2026, with annual losses commonly estimated at $100B+, and continued pressure from organized retail crime and supply-chain theft is expected to persist in the coming years. (NRF; Safe and Sound Security)
- Returns continue to strain profitability, with retailers processing roughly $890 Billion in returns in 2024 (about 17% of sales) and expected nearly $850 Billion in returns in 2025 (around 16%). (NRF; Digital Commerce 360)
What This Means for You
To improve profitability, strengthen cost visibility and reduce friction in core processes. Better inventory accuracy, smarter returns management, and optimized checkout can deliver immediate gains. Negotiated payment rates and forecasting tools can further relieve margin pressure.
LBMC Insight
LBMC supports retailers with cost analysis, margin modeling, inventory controls, and tax strategies.
5. Distribution: Modernization and Fulfillment Capacity
Distributors must increase accuracy, speed, and reliability as expectations rise across the supply chain. Many are investing in automation, routing analytics, and modern warehouse systems to improve throughput and reduce bottlenecks.
What We’re Seeing
- Warehouse automation investment continues to accelerate, with the global market estimated at roughly $30 billion in 2025 and projected to exceed $60 billion by 2030, reflecting mid-teens annual growth. (Omniful)
- Distribution centers continue to face acute labor shortages, with transportation and warehousing roles experiencing annual separation rates approaching 40%, driven by high churn in frontline fulfillment positions. (BLS)
- Last-mile delivery capacity remains constrained, with average driver vacancy rates around 12% and peaking near 15% during high-volume seasons, contributing to delays across roughly 30% of heavily utilized routes. (Cyngn)
What This Means for You
Even modest automation investments can boost throughput and reduce labor strain. Improved routing, warehouse layouts, and carrier evaluations can lower cost overruns and increase reliability.
LBMC Insight
LBMC helps distributors strengthen operational controls, evaluate technology investments, and improve financial and operational visibility.
6. Supply Chain Strategies Are Becoming More Intentional
Supply chain networks are still under pressure from raw material volatility, freight costs, and vendor risk. Many companies are shifting from reactive adjustments to long-term redesigns that reduce exposure and improve cost stability.
What We’re Seeing
- About 58% of manufacturers have added regional final-assembly nodes since 2023, and roughly half are shifting to multi-shoring strategies to balance resilience and cost. (AIM Congress; Procurement Tactics)
- U.S. reshoring and FDI job announcements have surged from about 11,000 in 2010 to over 300,000 in 2022, with another 180,000 in early 2023, as supply chains shift toward North America. (Consulting-Specifying Engineer)
- Real-time shipment tracking adoption rose to 53% in 2024 from roughly 25% the prior year, with 77% of firms now viewing visibility as essential to meeting customer expectations. (Yahoo Finance)
These actions reflect a broader trend toward building control into key supply routes and reducing single points of failure.
What This Means for You
Reassess your supplier base and logistics network if they have not changed in several years. Small shifts in sourcing or distribution strategy can improve service levels and reduce freight and carrying costs.
LBMC Insight
“The RMD sectors face distinct challenges, including supply chain complexity and fluctuating costs. LBMC’s audit services help reinforce operational confidence.” — Andrew J. Usery, LBMC Audit
7. Sustainability Expectations Are Increasing for Mid-Market Firms
Sustainability is now embedded across assembly lines, distribution networks, and retail operations. Circular economy efforts continue to grow, influencing purchasing decisions and long-term strategy.
What We’re Seeing
- About 40% of manufacturers now rank sustainability or ESG among their top three strategic priorities, up from the mid-20% range just a few years ago. (Procurement Tactics)
- Roughly two-thirds of consumers say sustainability influences purchasing decisions, and about 60–65% are willing to pay more or switch retailers for greener products and delivery options. (Blue Yonder; Reso)
- Energy-efficiency investments at manufacturing facilities are growing at more than 10% rates as federal and state incentives shorten payback periods through rebates and tax credits. (Procurement Tactics)
What This Means for You
Start by documenting existing practices. Many companies discover they already meet more sustainability standards than expected. This baseline helps secure incentives, improve contract positioning, and meet customer expectations.
LBMC Insight
“In manufacturing, sustainability projects often qualify for state and local tax credits — and those incentives can directly improve cash flow and profitability.” — Leigh Ann Vernich, LBMC SALT
Looking Ahead: Priorities for RMD Leaders in 2026
The most competitive companies will focus on targeted, incremental improvements. Priorities include:
- Strengthening operational visibility
- Improving workforce capability
- Enhancing manufacturing job design
- Investing in automation
- Increasing supply chain resilience
- Reducing friction in retail and distribution workflows
These actions support operational efficiency and align with the broader business outlook for 2026.
LBMC works with RMD companies across the region to evaluate opportunities, strengthen performance, and prepare for long-term resilience. We combine deep expertise with a personal, advisor-first approach. If you would like to work with a nationally recognized Top 50 accounting and advisory firm trusted by more than 11,000 businesses across the Southeast, contact us to talk to an advisor.