Retail outlook for 2025

On an economic scale, easing inflation is expected to give retailers a welcome boost, though consumer confidence is expected to moderate as economies rebuild from a tumultuous few years. Interest rates look likely to drop and 2025 should see lower bills for your operation and more customers ready to fill their carts as their pockets bulge in a way they didn’t in 2024.

What changing trends can those of us in the retail industry expect for 2025? For many years now, shoppers and retailers alike have been watching the rising influence of technology over the shopping experience. But for the tech-lovers in retail, 2025 is bringing a lot of excitement as the AI revolution starts to exact its influence, automation improvements offer cuts to payroll, and platforms like social media sales become more and more popular. It looks like those bold enough to take advantage of these new opportunities are set to have a great 2025!

The 2025 trends you can read about today:

• Sustainability and transparency in supply chains. With more and more eco-conscious and health-conscious shoppers, retailers are responding with ethical practices and greater transparency
• Automation and AI advancement. From self-service checkouts to fully automated commerce and the implementation of AI assistants, the face of retail is changing at speed. 
• Cost-cutting and efficiency-boosts. Stock and supplies are becoming more expensive, leading to a variety of cost-cutting responses to keep prices competitive.
• Increased personalisation. Loyal shoppers want to feel known, so the stores that get ahead are implementing more sophisticated data analytics to make better deals with customers.
• Social media sales platforms. While ecommerce has long since established itself as key, 2025 looks set to be the year social media sales really start to take off!

Sustainability and transparency in supply chains

You may have seen sustainability on previous prediction lists, and I can promise you it’s going to appear on many others because it’s a natural concern of the future. This is particularly relevant for clothing retailers and any store that sells food. Forbes cites statistics that show 72% of Americans consider sustainability an urgent priority for the food industry and an 18.2% rise in consumer interest over the last two years^[1].

The overlap between sustainability and ethical production meets when retailers start demonstrating increasingly transparent supply chains, explaining clearly to consumers how their purchases arrived on the shelf. Whether that’s a short journey from a nearby producer or neighbouring county, or a cross-country journey from a well-respected farmer or factory, endorsed by organisations such as Fairtrade.

These concerns aren’t limited to ethics, either. 2025 shoppers are becoming increasingly health-conscious and are building better health IQs. They’ll be checking ingredients lists, looking out for ultra-processed products, and ready to sign up to retailers offering wellness programs and a little extra help when it comes to their health.

In short, if you maintain transparency with your customers, you’ll be a step ahead in 2025, gaining the trust of your customers and removing any trace of doubt they have when putting a product in their basket.

Automation and AI advancement

In 2024, we’ve seen cashier-less stores becoming more commonplace, and with shortages of labor, rising wages, and retailers struggling to keep expenses down, 2025 is likely to be a year self-service checkouts and fully-autonomous stores hit the high-street in earnest.

This sophisticated technology may have a higher cost to implement, but when it can cut your payroll as drastically as self-service kiosks, business leaders are itching to invest and to start seeing those savings. 

But kiosks aren’t the only way technology is going to change the retail landscape in 2025. AI technology is becoming more sophisticated by the day, and the retail sector is now using it to create more personalized shopping experiences that consumers and shops love, as they pinpoint products that meet individual preferences.

The application of this technology, for those businesses that can afford it, will help them grab a larger slice of the market in 2025. Just think, recognized returning customers get targeted ads based on their purchasing history, whether that’s in-store or online, creating the sense that the business really knows who they are. Then there’s unstaffed support systems, an AI program that resolves customer issues that doesn’t need a wage, saving on payroll. The potential of AI is becoming a reality, and 2025 will be another year more shoppers experience it.

Cost-cutting and efficiency-boosts

The delicate balance between the cost-effective appeal of ecommerce and the more personal brick-and-mortar experience has left both shoppers and retailers fluctuating between the two. After a difficult year for under-staffed brick and mortar stores, the lower-staff requirements of ecommerce could have a stronger appeal, allowing them to cut back on staff and utilities.

For those businesses unable to take advantage of the web, cost-cutting and built-in efficiency is on order for 2025. As cost of living puts pressure on business and customer pockets, retailers are reluctant to raise prices and risk pricing themselves out of the market. This leaves them needed to keep expenses low and maintain the margins they need to stay afloat.

Increased personalisation

One of the avenues retailers now compete with each other is personalisation. By creating a more personal service that recognises repeat customers, anticipates products those customers will like, and provides a more attentive service, stores are creating a loyal base, securing dozens of repeat sales, or even subscriptions.

Data analytics through AI, POS systems, and website reporting: there are an ever-growing number of ways businesses can access data on public engagement with the business. Using that data to tailor marketing and the customer journey, not just to match overall trends, but the specific trends of that individual based on their own history, gives a store the greatest chance to retain the customer, boost their spending, and all while improving their satisfaction.

As with sustainability and transparency, increased personalisation is likely to continue in 2025 and the years after, as both large and small businesses find new ways to improve their service.

Social media sales platforms

Social commerce is not new, but its significance in the retail sector is rising rapidly. Five years ago, platforms like Facebook Marketplace were largely used for user-to-user second-hand purchases. Now, TikTok and Instagram are essential sales channels for thousands upon thousands of businesses, with large portions of their sales (and in some cases, all of their sales) coming through their social media channels.

Next year, the growing familiarity of social commerce, with its all-around convenience, streaming capabilities, and easily-accessible social-proof, should see this retail channel on the rise. However, this could be tempered with the ever-looming US ban on TikTok (with TikTok’s appeal rejected and a new emergency pause, this will-they won’t-they affair is approaching its resolution one way or the other).

A further question retailers will be asking is which of their other sales channels will be affected. Is it that shoppers who would have used websites are simply switching apps to make their purchases? Or will mobile shoppers on Instagram save themselves a trip to the store? Or some combination of the two? Only 2025 will reveal the answer to these questions.

2025: a year of tech-induced change

From automation to social commerce, the key theme of 2025 seems to be technology. Whether your business invests in self-service, AI, or a new sales platform or not, some of your competition will be trying each of these, changing the landscape.

Greater personalisation and transparency are becoming the new normal, so 2025 could also be the year to open up about your sustainable practices and your supply chain. This could also mean changing suppliers or seeking out local options that reduces your carbon footprint.

On the whole, 2025 seems to be another year full of opportunities. With lower inflation, the 2025 shoppers should have a little more in their pockets (once they’ve recovered from their Christmas splurge), and will be prepared to spend a little more than this year, meaning you’ll be in the fight to win their custom and boost your sales. Good luck!