2025 retail trends and predictions
By Tom Summerfield on January 3, 2025As we step into 2025, Tom Summerfield, Global Customer Development Director at Peak, shares his reflections on key 2024 learnings and predictions for the next twelve months in the retail industry. Here’s a snapshot of his insights for the year ahead…
1. Interest rate impact
The downward rate cycle has started and will take consumers to a slightly less stressful place, offering some much-needed relief and easing the pressure on consumer spending. This means the retail sector will benefit in terms of trade, but often when the going gets tough, transformation efforts can slow down.
Retailers must resist the temptation to solely focus on short-term trading and ensure they’re still prioritizing their transformation initiatives — addressing important long-term challenges that need tackling if they’re to stay ahead in the future.
2. Putting the ‘E’ in ESG
Retailers are under more pressure than ever before when it comes to their environmental impact. The rise of ‘conscious commerce’ means that consumers are increasingly aware of where their products come from and their impact. Additionally, money flow from private equity and pension funds is increasingly being filtered through ESG criteria.
In terms of ESG, all meaningful roads here point to supply chain transformation. Businesses can save money while doing it, aligning cost-saving measures with sustainability goals. However, patience and vision are essential to realizing these long-term value propositions.
In terms of ESG, all meaningful roads point to supply chain transformation. Businesses can save money while doing it, aligning cost-saving measures with sustainability goals.
Tom Summerfield
Global Customer Development Director at Peak
3. More investment in brick and mortar stores
There’s already been a number of high-profile examples of retailers investing more time and money into transforming their physical presence — Aldi, for example, is planning to invest almost £100m into improving the in-store experience for its shoppers.
Another hot topic when it comes to physical retail in 2025 is digital shelf-edge labels, which could potentially become the new RFID — lots of people are talking about it, but very few will actually bite the bullet and invest in this kind of future-facing technology.
However, those that do — the more progressive retailers with both efficiency goals and ambitious technology goals — are starting to make moves in these kind of spaces already. These retailers will see the most success in 2025.
4. Addressing the AI misconception
Over the past couple of years there’s been a significant increase in retailers claiming that they’re now “doing some artificial intelligence (AI)” — but they’re not really, it’s something else. The term ‘AI’ has become something of a catch-all in the industry for a wide range of technologies; machine learning, generative, IoT, robotic process automation, chatbots and more.
According to Gartner, when it comes to AI, many retailers are still in “the trough of disillusionment.” However, in 2025 we’ll see more move up towards “the slope of enlightenment,” educating themselves on what AI actually is and moving forwards.
5. Embracing the marketplace model
Marketplaces are becoming more and more of a cornerstone in an effective retail strategy, and are one of the quickest ways that businesses can increase their return on capital employed (ROCE).
This rise has been on the cards for a while, and a number of big players are in the process of retro-fitting the marketplace operating model into their businesses. This will only continue; brands like it, retailers like it, consumers like it. Everyone wins, at least for now.
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