How many times in the last few months have you thought, “Wow, I didn’t have that on my bingo card!”
Predictions about the elections didn’t hold up. Not many forecasters expected Nvidia stock to post a triple-digit percentage gain. And even the savviest seers didn’t predict that the price of Bitcoin would top $100,000 for the first time in 2024.
Plainly, trying to figure out what’s ahead in the coming year can be tough. And predictions for the retail industry are especially challenging now, given the climate of uncertainty that prevails.
It’s fair to say that 2025 will be a balancing act. Retail companies will need to balance uncertainty about the new administration’s policies with the desire to stay the course in sourcing, and try not to overreact on the issue of tariffs.
Marketers need to weigh how aggressively to invest in retail media when advertising has never been more wide-ranging — and less likely to reach the customer.
And tech leaders must calculate how deeply to invest in AI innovation amid concerns about data privacy, the accuracy of AI recommendations, and a lack of transparency about how artificial intelligence is used.
Yet if the most recent holiday season is an indicator, there are bright spots ahead. AI agents are primed to scale, live shopping and streaming has the potential for significant growth in ecommerce, and online marketplaces will thrive as shoppers seek more intuitive, conversation-driven shopping experiences.
What does the team at NRF foresee for 2025? We asked internal subject matter experts to share their ideas, tapped our “Retail Voices” partners for some input, and did a deep dive into reams of research gathered over the last few months. The result: 25 predictions for the retail industry in 2025.
2025 is the year of the AI agent. Right now, digitally influenced sales exceed 60%. That percentage will only grow as AI agents personalize recommendations, streamline decision-making and handle auto replenishment tasks.
Jason Goldberg, chief commerce strategy officer at Publicis, recently wrote, “AI shopping assistants are poised to embed artificial intelligence into the heart of our shopping experiences, forever changing the retail landscape. AI agents … are becoming reality as industry giants … pour resources into this burgeoning space. These companies envision a future where the friction of shopping — endless comparisons, scrolling and decision-making — is replaced by seamless, personalized assistance.”
It’s important to note, however, that while technology is advancing, widespread adoption may take longer due to costs and data concerns.
Generative AI will continue to revolutionize retail in 2025 by enabling hyper-personalized shopping experiences, dynamic content creation and AI-powered virtual assistants that engage customers in real-time.
Using AI, retailers can gain a better understanding of consumer behavior, analyze past purchases and interpret social signals. AI’s predictive proficiency allows retailers to anticipate what shoppers need before they start shopping, improving satisfaction and loyalty. Retailers will also use AI to streamline operations, optimize inventory and accelerate product design based on consumer preferences and trends.
As AI becomes more integrated, ensuring transparency and ethical data use will be critical to maintaining consumer trust while driving innovation and efficiency.
Google CEO Sundar Pichai believes the easy wins in artificial intelligence are over. Most agree. While AI continues to be at the forefront of innovation in 2025, progress faces obstacles including complex integration with existing systems and concerns around data privacy.
This working group convenes retail leaders to facilitate policy and stakeholder engagement on AI issues and the development of practices and guidelines for the use of AI within retail.
The linchpin for all things AI is enormous amounts of accurate, clean data. Sadly, too many retailers continue to wrestle with fragmented data across different channels, thus making it difficult to train and optimize AI models.
Live shopping has been smoldering for years; in 2025 it will catch fire. There’s been lots of talk about shoppers wanting experiences and entertainment. Live shopping blends the two, allowing retailers and brands the chance to connect with customers on a more personal level.
This approach to selling, inspired by QVC and HSN, cultivates a sense of immediacy and exclusivity, and fosters connections between brands and products. In a multichannel retail environment where every touchpoint is a powerful tool for gathering insights, live shopping can provide valuable data.
That said, broader adoption of live shopping may depend on overcoming logistical challenges and its ability to deliver a compelling return on investment for retailers.
Shein, Temu, TikTok and Amazon are often called the biggest retail disruptors in the industry. What do they all have in common? They’re all marketplaces.
Prognosticators expect more rapid growth in this space and more retailers to toss their hats into the ring. Kroger, Macy’s, Nordstrom and Michael’s are already making moves in the marketplace arena as shoppers look to these offshoots for diverse product offerings, competitive pricing and convenience. The cost of entry is not formidable for retailers and allows them a different option that may keep shoppers from clicking to another website.
Just Walk Out technology and autonomous retail operations are not new, but as the year progresses, expect cashier-less stores, inventory robots, self-driving delivery vehicles — even drones — to proliferate.
Part of the uptick is simple logic; the more this technology is adopted, the faster the rollout. Plus, shoppers gravitate toward expedited experiences. And don’t underestimate the role this technology will play given the dearth of labor the retail industry is facing and higher costs: At least 23 states are slated to increase their minimum wage requirements for businesses in 2025.
Retail technology will transform by prioritizing the employee experience, making it central to innovation.
As AI and automation streamline operations, the focus will be on empowering employees with tools for creativity, engagement and growth. By enhancing the work environment and fostering a culture of continuous learning, retailers will boost productivity and reduce employee turnover. This shift will drive business success, ensuring that the human element remains at the heart of retail as technology evolves.
Physical retail stores will continue their rebirth in 2025. Fundamental for boosting retention, customer acquisition, brand identity and loyalty, today’s physical shops must offer immersive experiences that can’t be replicated online and showcase brands’ unique identities.
These spaces create trust and loyalty through authentic interactions, foster personal connections and create a community around the brand. As consumers seek meaningful connections, physical stores provide the perfect environment.
Look for more mainstream brands to take a cue from boutique and luxury shops and invest more heavily in in-store services and experiences. These services are not just a nice add-on; they’re a revenue driver, as proven in Sephora and Rituals stores around the world.
And, most importantly, in-store services are the clearest way of differentiating online and offline.
Retail media has officially begun to mature, but much like a teenager, that development will play out in opposing ways over the next 12 months. Some will improve their offerings with programming that’s relevant to the customer journey.
Still, plenty of retailers will expand their retail media landscape without being attentive to customer interest and perception. In short, in-store retail media will get better and worse simultaneously.
Bottom line: Look for mixed results here, with some retailers excelling and others struggling with customer engagement.
Generation Z and Millennials will continue to flex their spending muscles in 2025. For retailers, that translates into more digital engagement.
Sure, younger shoppers are returning to physical stores, but their expectations for seamless online-to-offline shopping experiences are now table stakes. 2025 will raise the bar on creative product discovery and tailored product recommendations — and challenge retail companies to keep their business practices, ingredients and sourcing transparent.
The digitally native Generation Alpha cohort will continue to challenge brands and marketers. While they have demonstrated an inclination toward in-person experiences and their demand for ecommerce is not as robust as their parents, they’re a tough group to figure out.
Sure, some brands are eager to work directly with Gen A creators, but managing a 10-year-old — and their parent — is a whole new world. With privacy experts and social media critics already raising eyebrows and questions, the next 12 months will yield important shifts.
Retailers and brands will need to hone their marketing mojo in 2025, as each generational cohort will require a nuanced approach that recognizes diverse preferences and values.
Gen Z will seek authenticity and social responsibility, favoring brands that align with their ethical standards. Millennials will prioritize experiences and personalization, looking for brands that engage them meaningfully across platforms. Gen X will value convenience and efficiency, responding well to straightforward, hassle-free interactions. Baby Boomers will appreciate clarity and trust, gravitating toward brands that demonstrate reliability and customer care.
Marketers’ jobs will get tougher in the months ahead. There appears to be growing mistrust in advertising — partially due to overexposure and exacerbated by privacy jitters.
Linear marketing is history, leaving marketers to decipher how many touchpoints it takes to convince shoppers to pony up for a purchase — and it’s different for every product. And, adding insult to injury, there are so many products competing for space in consumers’ homes that shoppers are taking longer to evaluate the options.
In 2025, seamless commerce will be defined by a frictionless, integrated shopping experience across all channels. Customers will expect brands to deliver consistent and personalized interactions, quick, hassle-free transactions with real-time inventory visibility, and flexible delivery options.
Brands that excel will use data intelligently to anticipate needs and tailor experiences, enhancing convenience and satisfaction. As technology bridges the gap between digital and physical worlds, customer loyalty will hinge on a brand’s ability to provide seamless, cohesive and memorable interactions.
Social commerce will thrive in 2025 as platforms become more integrated into shopping experiences and evolve into dynamic shopping destinations where discovery, engagement and purchase seamlessly intersect.
Influencer partnerships and marketing remain critical and the role of AI in personalizing recommendations reflects ongoing trends in how brands engage with consumers.
These tenets are especially true for Gen Z and Millennials: A survey from Forbes Advisor and Talker Research found that 46% of Generation Z and 35% of Millennials prefer social media over traditional search engines. Forty-four percent of Gen Z discover new brands on social media daily, with TikTok favored for searches on topics like hair, makeup and gift ideas.
2025 will mark an inflection point in cashless payments, with mobile and contactless payments expected to grow by 12.4% each year from 2025 to 2034, according to IntelliPay.
Driven by a customer that craves a seamless digital shopping experience, one-click checkout options will continue to surge. Still, navigating data privacy concerns and leveraging technology to battle increasingly sophisticated cyber threats is necessary. And despite all the revolutionary options, a portion of unbanked consumers continue to use cash.
All indicators point to a shift in accessing retailers’ financial performance. Experts believe the industry will begin moving from conventional methods of evaluating financial performance, such as profit and loss statements, to the “fifth wall” and beyond.
The fifth wall suggests considering additional factors including customer experience, brand loyalty, social media engagement, sustainability practices and other qualitative aspects not captured in traditional profit and loss statements. It’s a balancing act for each retailer, but the shift toward looking at a business more holistically is afoot.
Retailers will continue their fight against high levels of theft, violence and organized retail crime in the coming year. Increased support and partnerships with law enforcement and community leaders will bear greater success in identifying, detecting and disrupting ORC groups.
Customer experience will require a frictionless asset protection strategy, relying on innovative technologies like RFID for end-to-end inventory management and security measures that prevent theft but provide customers with self-serving capabilities.
In the food policy arena, 2025 is likely to feature robust discussions among policymakers about ultra-processed foods, food colorings and additives, and the healthfulness of Americans’ diets and food generally.
Driving these conversations will be the incoming administration of President-elect Trump, whose supporters included influencers in the “Make American Healthy Again” movement that has focused on the role of food and diet in chronic disease.
The possibility of Robert F. Kennedy, Jr., as Secretary of the Department of Health and Human Services, as well as nominees for other departments and agencies, could result in changes to longstanding agriculture and food policy.
Health and wellness will continue to be top priorities for U.S. consumers. According to McKinsey research, the U.S. wellness market is growing about 10% each year and is now worth $480 billion.
Where and how shoppers are spending is shifting to products and services backed by science. At-home diagnostic tests, wearables such as biometric rings and other devices paired with mobile apps like continuous glucose monitors are gaining traction. And look for the dialogue around menopause products, preventive medicine aimed at healthy longevity, and GLP-1 drugs for weight loss to amplify.
U.S. online grocery sales grew by $1.5 billion year over year in November 2024, according to data from the Brick Meets Click / Mercatus Grocery Shopping Survey. It’s a big percentage with the potential to get a lot bigger.
Look for Walmart, Target and Kroger to invest in technology and leverage fulfillment options to feed the demand. Shoppers still can’t squeeze a melon online, but if they’re filling their carts with the items predicted to be among the trendiest — hydration enhancers, protein-forward snacks, so-called “functional foods” and dumplings — that probably doesn’t matter.
Three words can describe supply chains in 2025: adaptable, efficient and resilient. Several risks loom large for retailers, including the potential for an East Coast port strike in January and uncertainty surrounding tariffs on China and Mexico.
Nonetheless, companies are more prepared, having deployed AI and machine learning not just to track inventory but to predict and adapt to disruptions before they become crises. Two trends worth tracking: the adoption of robotics and automation in warehouses and distribution centers, and the application of enhanced tracking technologies like blockchain.
Circularity is the future of retail and companies will make notable strides toward that goal in 2025.
The NRF Sustainability Council provides members the opportunity to discuss best practices and spotlight key CSR, ESG and sustainability issues.
Driven by consumers’ interest in saving money and being more sustainable — and supported by new regulatory frameworks in both Europe and the United States — circular business strategies extend retail profit margins beyond the initial point of purchase, enhance brand loyalty and create environmental and social benefits.
The trend toward circularity and sustainability is gaining momentum, especially with younger consumers who value eco-friendly practices. However, it remains to be seen whether retailers can scale circular models effectively while maintaining profitability.
The ever-evolving cybersecurity landscape is primed for change in 2025 as advancement in technology and shifts in regulatory policies loom large. Cyber experts predict part of the focus will be on the security of AI applications, especially as they become embedded across the retail enterprise.
Importantly, 2025 will likely see stronger privacy regulations, more consumer control over data, and a growing emphasis on secure and ethical data usage. Retailers will need to balance their need for data to personalize experiences with their responsibility to protect consumer privacy. Transparency, security and privacy-first strategies will be key to maintaining consumer trust in the evolving retail landscape.
The 2025 iteration of NRF’s annual predictions was created using feedback from numerous “Retail Voices” experts and several of our subject matter experts. Very special thanks are in order for Jack Stratten, Director, Insider Trends; Ron Thurston, Co-founder, OSSY; Rebecca Fitts, Senior Vice President, Business Strategy, Alvarez & Marsal Property Solutions; and Jason Goldberg, Chief Commerce Strategy Officer, Publicis.
Sincere appreciation to NRF subject matter experts Jill Dvorak, Senior Vice President, Content; David Johnston, Vice President, Asset Protection and Retail Operations; Scot Case, Vice President, Corporate Social Responsibility and Sustainability; Scott Vinson, Vice President, Government Relations, Food and Energy Policy; Jonathan Gold, Vice President, Supply Chain and Customs Policy; and Christian Beckner, Vice President, Retail Technology and Cybersecurity.