According to recent data, only 21% of retail executives are more confident now than a year ago about their company’s ability to deliver omnichannel services, while 45% said their efforts are not advancing fast enough.

What’s more, an analysis of some of the world’s largest omni-channel retailers, such as Walmart, Target and Gap, Inc., reveals that most major retailers saw flat or decreasing revenues from 2015 to 2016. So, why are  omni-channel retailers struggling and what can we possibly do to address these challenges?

Before we can answer this trillion dollar question, we need to get to the root of the problem. It is easy to blame problems on traditional retail issues, such as increased competition and weakened demand. However, I would like to present three different perspectives on what is truly threatening the retail industry today:

THREAT #1: The Inability to Influence End Customer Behavior. Almost all retail loyalty programs (97%) offer basic product recommendations based on previous purchases or mass promotions. However, this simple approach fails to provide any sort of control over the end customer behavior -- not all customers are equal, a promotion one customer responds to might go completely ignored by the next. As consumers engage with a retailer’s content they are creating new data points about themselves that can be used to inform retailers about their unique preferences. The data should be used to increase sales through personalized messaging and promotions, yet most retailers are not tapping into the opportunities this information provides.

THREAT #2: The Amazon Effect. Retailers are ill-prepared to compete with Amazon’s technology ecosystem, which is uniquely designed to provide immediacy, transparency, and convenience to a hyper-connected consumer base. What’s more, Amazon Prime is the largest and most active loyalty program in the U.S., something that traditional retailers have not been able to replicate.  In order to compete with Amazon, retailers should be using the data they collect to create Amazon-like personalized experiences. But due to a lack of resources and institutional knowledge, most retailers are unable to use their proprietary data in a productive and useful manner. Amazon has become the gold standard, and if retailers aren’t able to strategically use their information to create the level of personalization that Amazon delivers, they will not be able to compete with the e-commerce giant.

THREAT #3: Legacy Technology Systems and Cost Commitments. Traditional retailers are feeling pressure from big-name retailers and agile startups that are rapidly adopting new technology. As a result, they’re incurring significant debt in order to upgrade their technology systems. However, without the right systems in place, most of the information remains siloed and ineffective. Retailers need machine learning technology that can take complex customer data and simplify it in a useful and meaningful way. Doing it correctly the first time by making this necessary investment will pay off ten-fold.

At the end of the day, failure to make the necessary changes to overcome these three threats boils down to lost revenue. Advanced machine learning platforms exist for retailers to analyze complex data in order to offer highly personalized and effective promotions and prices to customers on a micro level, and those that choose to invest will put themselves in a position to maximize sales and remain competitive.

Kerry Liu is CEO of Rubikloud.