This chapter comprehensively examines the digital transformation in the retail sector, emphasizing the crucial role of data analytics in achieving competitive advantage. As retailers face unprecedented challenges and opportunities in an increasingly digital marketplace, understanding how data analytics can inform strategic decision-making is vital. The chapter follows a structured approach, beginning with an introduction to digital transformation in retail and its significance in today’s business landscape. It addresses the challenges and opportunities associated with digital transformation initiatives in the retail sector and explores emerging trends such as omnichannel integration, artificial intelligence, and data privacy considerations. Case studies from leading retailers offer practical illustrations of data-analytics-driven digital transformation strategies. This chapter contributes to the scholarly discourse on digital transformation and data analytics in the retail sector, offering valuable insights for academics, researchers, and industry professionals interested in leveraging data analytics for a competitive advantage in retail settings. The digital transformation of the retail sector is not merely an academic topic but a real-world phenomenon reshaping our economy and society. By understanding these changes, we can better anticipate the future and harness the power of digital technologies and data analytics to create more efficient, customer-centric, and successful retail businesses.