Retail Forecast 2025

Discover eight essential strategies to thrive in the retail

landscape over the next two years, from climate
preparedness to the emergence of tech-enabled
‘subconscious commerce’

Laura Saunter & Candice Medeiros

01.18.24 - 36 minutes

Google DeepMind
Executive summary
As inflation wanes and consumer confidence rises, navigating the next 24 months will hinge on retailers’
ability to increase profitability and improve business efficiencies, aided by emerging tech.
Opportunity
By 2025, retailers and brands will have fully come through the post-pandemic recovery
period. Nagging challenges around inflation, supply chain disruptions, and major
changes in how and where consumers shop will level out, making it easier to deliver
consistent growth.
But retail leaders will still have their work cut out. Every cost and decision must have its
longer-term value scrutinised. Threats to work will intensify from automation, and
optimised security solutions will be required as reliance on technology grows. Ongoing
macroeconomic challenges and the end of US student loan relief mean it won't quite be
business as usual, but confidence will return – mostly in spending on low-priced goods
and memorable experiences.
Opportunities will arise in creating more immersive and predictive interactions,
marking a breakthrough in AI-enabled hyper-personalisation. As the world heats up,
the indoor economy will accelerate, with retail outlets, malls and leisure venues
providing cool respite for warmer locales.
Need to know
Global e-commerce sales are forecast to reach $58.74tn by 2028
300 million global workers could be displaced by AI, with 63m jobs in APAC
expected to be lost to automation by 2040
9.1 million sq-ft of new entertainment space is slated to open in the US and Canada
in the next two years
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Key strategies
Differentiate in the perma-discount era: minimise the impact that constant
discounting has on brand perception while still maintaining profitability.
Use subconscious commerce to anticipate and meet demand: data and AI will be key
tools for understanding, anticipating and meeting the changing needs of shoppers.
Compete in experiential battlegrounds: with spending on leisure and entertainment
growing, invest in experience-driven strategies.
Prepare for extreme weather: shifting weather patterns and climate volatility will
create issues with inventory management. Avoid the bullwhip effect by building
flexibility into business models.
Combat fraud head-on: consumer fraud and global counterfeit culture are both rising.
Adopt services that authenticate the retailer and/or product offer without interrupting
the path to purchase.
Take a human-centric approach to AI services: complementary relationships between
people and automated systems will be required as AI shapes the retail landscape.
Rekindle kindness: the coming year will be polarising, with four billion people casting
votes in worldwide elections in 2024, so focus on altruism in 2025. Consumers will look
to retailers to be 'good citizens' amid growing divisiveness.
Redesign product discovery through image commerce: use advancements in visual
search technology to surprise and delight shoppers.
Macro drivers
Five drivers of change and progress that will impact the retail landscape through to 2025.
Li Ning China Sporting Goods
Retail renaissance
Global retail vacancy rates have
dropped to pre-pandemic levels
in EMEA, and are at an all-time
low in the US, strengthening
investment for bigger and better
stores. 2025 will be a key time for
retailers to secure new space in
prime locations and test
extensions of the ‘experiential
brandship’.
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Google DeepMind
Gen AI comes of age
AI promises to shape the future
of retail, but brands must
innovate beyond the hype,
outlining specific goals, not just
buzzwords. New regulations
from governments around the
world will require retailers to
navigate their own intellectual
property as well as deal with job
losses from increased
automation.
Deathtostock
Polarisation paradox
A bifurcation of retail is growing,
as wealth disparities widen
between the haves and have-
nots. Luxury and value retail will
be sustained, putting pressure on
the unremarkable middle. As
economic and political divisions
grow, people will increasingly
spend based on their values.
Deathtostock
Eco-accountability
As we approach the end of
abundance, retailers must
challenge extractive business
models and address climate
change. Luxury brands will shift
to archive-building, while value
players will be forced to face
overconsumption head-on,
investing in product swaps and
repair services.
Celine Lityo/unsplash
Rise of heartland retail
Population shifts, rising urban
temperatures and growing
recognition of the value of
community are giving rise to the
era of heartland retail. As more
people set down roots in rural
regions, retailers should rethink
their footprints and optimise
store networks.
Differentiate in the perma-discount era
Promotions and sales can alter shopper behaviour, devalue brand image and hurt
profits. As consumers become accustomed to scoring deals, and retailers feel
forced into longer, heavier markdowns, how can brands preserve their margins
and still stand out?

Strategy 1 – Lead with value, not price: compete through meaningful moments,
focusing on shopper-centric initiatives that increase the value the customer receives
versus reducing the cost of goods. Discounting means slashing prices and hacking into
margins, while value-centred promotions offer customers something they wouldn’t
otherwise get.
Introduce free expedited shipping, bundle deals, referral discounts, birthday extras,
complimentary gifts with purchase or post-purchase rewards. These will increase
customer lifetime value: those who feel appreciated are more likely to stick around
and spend more over time
Optimise the shopper journey and provide excellent service to increase sales in a
way that's less reliant on discounting
Ensure that loyalty programmes consistently deliver with a continuous cycle of
rewards. This will keep shoppers happy and train them to get out of the cycle of
waiting for sale periods to purchase

In action
Customers can request price adjustments up to 15 days after purchase under the
price-matching policy at US electronics retailer Best Buy. This reassures shoppers Temu
that they will get the best deal on a product
Chinese ultra-value sites such as Temu and Shein offer thousands of low-cost SKUs and huge
Retailers are using Black Friday to test new strategies that don’t involve discounts. discounts, creating downward pressure on prices
Swiss bag company Freitag closed its stores for Singles Day and Black Friday, instead
offering customers the chance to borrow a bag for free for two weeks. Sweden's IKEA
used Cyber Weekend to promote its free assembly parts service, where customers
can repair or upgrade existing products for free

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Strategy 2 – Be intentional about sale periods: constant discounting frames a behaviour
and sets consumer expectations, which are hard to break. It also trains customers to
wait for sales and only buy at reduced prices. The minimum discount global shoppers
now expect of a “good deal" is at least 30% off according to a global survey. This can
significantly impact brand equity and profits, and can attract conditional shoppers –
those looking for the cheapest price – rather than loyal regulars.
Release coupons and discount codes infrequently to stop consumers from becoming
desensitised to the thrill of a deal
Have the confidence to hold a once-yearly, direct-to-consumer sale. Make
markdowns the exception rather than the norm: look to Apple, which rarely does
discounts
Integrate targeted discounting initiatives and personalised promotions into email
marketing. Because these deals aren’t communicated as conventional discounts,
there’s no adverse effect on brand perception
Consider the flash sale to create a sense of urgency and FOMO. These time-sensitive
promotions are less likely to drive sales fatigue. Use them sparingly to maintain
excitement and exclusivity
Keep brand integrity in mind; if it makes sense to opt out of consumerist sales events
such as Black Friday, then do so. Look to UK fashion label Rixo, which said it was
"excited" to skip Black Friday for 2023
Adopt a more conservative approach to ordering products in order to have less
overstock at the end of a season, meaning discounting isn't as necessary Chloé and Amélie

In action Surprise and delight shoppers who are disillusioned with discounting through year-round
exceptional customer service and value-led propositions instead of sales
UK luxury e-tailer MatchesFashion has launched Matches Outlet, a year-round
feature on the site where it can offload inventory without diluting its reputation or
the perception of the brands it sells. Other luxury brands are containing off-price
sales to outlet destinations, where customers are already primed to spend money at
discounted rates
US online clothing boutique Grey Bandit adds a buffer of 15-20% to the retail price of
its seasonal collections (which will later go on sale) to cover subsequent lower
promotional prices, baking in future discounts to protect margins
US demi-fine jewellery brand Maison Miru focuses on a seasonless assortment with
a selection of core bestsellers consistently offered at full price. This gives it a natural
4 advantage over trend-driven brands for whom discounting may be inevitable
Context: promotions often feel vital, as
shoppers grapple with rising costs, and because
big sales periods boost revenue. Cyber Week
2023 drove $38bn in US online spending (up
7.8% YoY), while Shopify shoppers spent $4.2m
per minute at their peak during the same week.
In APAC, sales festivals such as Singles' Day
continue to break records.
But discount fatigue is rising as consumers
become numb to over-extended sales periods
(think Cyber Month or Black November), and
viral TikTok hashtags like #BlackFridayIsAScam
point to growing disillusionment. Amazon
customers found that merchants inflated their
prices ahead of Black Friday 2023 to promote
steeper discounts, driving down trust.

Jones Road

Rather than deep discounts, US beauty retailer Jones Road offered just 10% off a limited-edition promotion of its Miracle Balm hero product in a
special miniature size – doubling its Black Friday sales numbers from 2022

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Use subconscious commerce to anticipate and meet demand
Understanding if the right products are at the right place and time for the right
consumer has been an age-old pain point for retailers. By 2025, AI and
advancements in data analytics will predict, anticipate and satisfy consumers’
desires – before they're even aware of them.

Strategy 1 – Leverage data alongside tech to anticipate needs: retailers have become
subservient to an accelerated trend cycle, but as consumers push back against the rapid
pace of consumption, brands will be forced to work harder to connect on a deeper, more
personalised level. Data analytics and AI will be integral in aiding this, opening a
window into shifting consumer priorities and demands, personalising the journey, and
allowing brands to better anticipate future trends. In the pre-Gen AI era, only 0.5% of
customer data was used and analysed: what happens if brands started using 100%?
Leverage AI in tandem with shopper data to generate personalised product
recommendations, implement dynamic pricing strategies and streamline inventory
management
Use AI to hack decision fatigue by creating solutions to everyday, real-time problems
– think household tasks, errands and seasonal needs
Adjust the in-store environment intuitively to create locally edited concepts. Use
customer data to understand the needs of each neighbourhood and design spaces
and products accordingly

In action
In Saudi Arabia, Wunderman Thompson worked with online food order and delivery Pinterest
company HungerStation on the Find My Craving campaign, which included a
'Subconscious Order' feature on HungerStation's app. The feature uses the device's As AI and tech developments push expectations around convenience into overdrive, every effort
must be made to understand the needs of consumers better, and to limit the designing of
camera and an in-app eye calibration and vision AI (which tracks where the eyes go)
irrelevant, badly priced products offered to consumers at the wrong time
to organise food options and present an instant report of what users lingered on
longest to identify their subconscious cravings
Walmart plans to start offering AI-aided replenishment through its InHome delivery
service. The goal is to automatically add groceries to customers' online orders using
a schedule based on what they consume and how quickly they consume it to
determine the perfect timing for restocking essentials

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Strategy 2 – Optimise demand forecasting: with inflation making consumer spending
less predictable, retailers must work faster and more intuitively to keep pace with
changing needs.
Use data analytics, machine learning and AI to create a more sustainable
manufacturing model that matches supply to demand. Apply blockchain technology
and AI to accelerate supply chain optimisation, which can reduce errors by 20-50%

In action
Sparkbox.ai is a UK-based SaaS platform with a hyperlocal approach to AI-based
inventory management. Leveraging AI and machine learning, it aggregates daily
data from retailers to understand how each product in each region or community
will continue to perform, helping businesses hedge how much inventory they will
need and where best to sell it
Shein analyses its customers’ clicks: along with AI tools, this allows the retailer to
predict shopper demand using real-time data
UK-based ASOS's demand forecasting model is trained on past sales, returns data,
product popularity and trends. It produces a forecast of weekly demand for each
product in every size at each warehouse for the next two seasons

3. Double down on dynamic pricing: move away from traditional pricing software –
which typically correlates price with consumer demand – as disrupted supply chains
and geopolitical events now require more dynamic and responsive models. We'll see a
shift towards AI demand forecasting, which analyses more complex types of data such as Google DeepMind
former sales patterns and weather conditions to develop more accurate pricing
strategies. Arm fashion merchandisers with AI for pricing and promotional strategies, Use AI to improve logistic inconsistencies and reduce improper handling of goods by identifying
inefficiencies in transportation routes, delivery schedules and warehouse operations
testing basic ranges first.
In action
Proprietary AI technology optimises the global pricing strategy at US brand Levi's,
informed by historical prices, weather, economic outlooks, consumer sentiment and
social media trends. This has led to higher full-price DTC sales

Context: Harvard Business School professor Gerald Zaltman says only 5% of buying
decisions are rational, while 95% are made by the subconscious, emotional part of the
brain. Neuro-selling is the practice of using science to sell products by understanding
how the brain is wired to buy. By 2025, AI and data analytics will help this method to
7become more established. Use tech to help consumers connect with their subconscious
minds and find the answers they’re looking for.
Compete in experiential battlegrounds
New competitive battlegrounds are emerging in non-traditional retail verticals,
and “things over stuff” will be a key mantra for the years ahead. The experience
economy took a backseat to Covid-19 for several years, but by 2025, experiential
retail will return decisively, as shoppers prioritise entertainment and fun.

Strategy 1 – Piggyback on the renaissance of the experience economy: diversifying

into beyond-retail opportunities could represent up to 40% of retailer profits by 2027.
Win customers beyond the traditional realm of shopping with physical retail, such as
experience-led activations, branded popups and in-store exclusive events.
Double down on integrating hospitality, food and entertainment verticals into retail
portfolios. As consumers look to live the brand and not just buy the product, these
immersive concepts will become more than just a branding exercise, providing rich,
multi-narrative opportunities for fun alongside sales
Branch into useful, interesting services that go beyond your core proposition,
embedding your brand into people’s lives
Gen Z has elevated food trends to cult status. Use high-low food and beverage
collaborations to quickly and affordably capitalise on food hype while spreading
brand awareness in specific local regions, as seen in Fendi’s partnership with Gen Z-
favourite Chinese tea chain Heytea for its co-branded drink and tearoom

In action
US menswear brand Todd Snyderʼs new store in New York features a cafe,
barbershop, men's tailor and gym Rixo

Swiss watchmaker Richard Mille has opened a mega-store in Singapore complete

Revenue-driving cross-category collaborations between retailers and food, music, and hospitality
with a sports bar and dining room; Pantry by Madhappy is the in-house cafe in the brands will explode by 2025, while the US economy is projected to add around 351,000 jobs in the
brand's new LA flagship leisure and hospitality sector between now and 2032

A bone broth and juice bar and a spa offering facials and body treatments have been
included in the New York flagship of US brand Sporty & Rich, as part of its efforts to
expand beyond streetwear

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Strategy 2 – Create soft-selling environments: the true value of the retail environment
isn't tied to direct financial profit – that's what e-commerce is for. It’s in the less tangible
but crucial value of emotional and experiential engagement that only physical retail can
offer. This will be fundamental to establishing long-term loyalty and differentiation: the
novelty of a new handbag will wear off, but a memorable experience will stay with
consumers.
To successfully compete in new segments and verticals, the experience must feel
authentic. Consumer trust is required, and this trust needs to be earned. Ensure
customer service, loyalty schemes and product availability perform well before
branching into new areas
Create branded dining and leisure experiences that are aesthetically pleasing and
built for social, upping dwell time
Reach consumers on a cultural and emotional level in a way that feels relevant and
true to your brand. A fine-dining restaurant could work for a luxury fashion
conglomerate, but to reach the masses, a movie-themed retail activation or live
music at an in-store pop-up would work well

In action
A fluffy store facade emulates Jacquemus' Bambimou bag at its latest popup, which
also has a flower shop and cafe inside
Muji has branched out into hospitality with the opening of its first guest house, just
outside Tokyo. It's fully stocked with Muji lifestyle products and can be booked
Tommy Bahama
through Airbnb
On Xiaohongshu, the hashtag #MargielaCafe has amassed over 3.4m views as visitors Capitalise on the travel boom by using resort destinations to launch new initiatives or hospitality-
flock to the in-store cafe at Maison Margiela's new store in China’s Hunan province led services. US lifestyle brand Tommy Bahama has opened its first destination resort in Palm
Springs, California

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Context: despite inflationary pressures, 2023 saw record-setting consumer spending on
some experiences and live events. In China, concerts and festivals brought in 2.5bn yuan
($350m) in sales by July 2023, while blockbuster films such as Barbie led to a predicted
12% rise in global cinema ticket sales. Pent-up travel demand saw almost a third (32.8%)
of all US households take a vacation in summer 2023. Disney theme parks pulled in
strong revenue, and UK entertainment venue the O2 Arena reported a record-breaking
year of trade.
This YOLO (you only live once) attitude amid rising debt spotlights consumer desire for
immediate gratification over long-term financial security. There has been a shift in how
shoppers allocate disposable income, spending less on physical goods and prioritising
experiences, even as costs rise – this is especially so in Brazil (52%); in APAC, 79% say
they love trying new experiences. In the US, 63% of Gen Z and Millennials prefer
spending money on life experiences compared with investing in their retirement, while
35% of Gen Z in a US survey said they would go into debt to afford entertainment.

AMI Paris

French contemporary fashion brand AMI Paris has opened the first-ever Le Café AMI in Beijing

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Prepare for extreme weather
Extreme weather is one of the greatest risks businesses will face by 2025.
Retailers must learn to adjust and react more quickly to fast-changing
conditions, with flexible merchandising strategies, weather-relevant products,
and a robust supply chain to mitigate risk.

Strategy 1 – Build flexibility into business models: by 2030, extreme weather could
jeopardise $65bn worth of apparel exports and eliminate nearly 1m jobs in four
economies central to the fashion industry. Retailers must be agile when it comes to
factoring erratic weather into all aspects of the value chain, from production and supply
to merchandising schemes.
Replenishment will increasingly play a bigger role for fashion buyers as climate
volatility skews demand. Be quick to ascertain what is selling well and add or cut off
orders accordingly. Manage closer to the moment by buying, stocking and
replenishing inventory at a local level
Develop more transparent and collaborative relationships with suppliers to
overcome challenges caused by fluctuations in demand. Ensure supply routes are
managed during extreme weather events and adjust sourcing procedures during
such times
Have more comprehensive backup plans, such as storing extra inventory in diverse
locations and finding alternative distribution methods

In action
In response to the 2023 California wildfires, The Vitamin Shoppe sent out marketing bareLUXE Skincare
materials with information about supplements that can support lung health and
fight against air pollution. The US brand is quick to promote relevant products Anti-pollution skincare is predicted to be valued at $15.2bn globally by 2033
during extra-hot weather too, with $1 deals on hydration drinks
New tech-enabled services that help improve inventory planning are emerging.
Planalytics, a US predictive demand analytics company focused on weather, uses big
data to understand how customers have reacted to weather in the past. It feeds this
into retailers’ systems so they can react accordingly and make intelligent choices
about what to produce or when and where to stock certain items

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Strategy 2 – Protect workers: extreme weather should be treated as a serious health
hazard, with paid leave and the right to suspend work.
Modify stores to cope with rising temperatures, offering water and ice to shoppers,
and allow staff to go without jackets and take frequent breaks
In the long term, take steps to mitigate climate issues in retail supply chains,
supporting farmers and growers to adopt regenerative agriculture practices.
Safeguard factory workers in areas that are vulnerable to climate change through
community development programmes. Aim to cut greenhouse gas emissions by
shifting to lower-impact materials and less polluting production processes

In action
Associates can wear shorts from April to November at US chain the Vitamin Shoppe,
as part of its new dress code policy

Strategy 3 – Create needs-based products: hotter temperatures and heightened

pollution will increase demand for niche, seasonal products such as UV-resistant
clothing and climate-adaptive beauty. Consumers will require transitional items or those
with advanced fabric technology to accommodate extreme weather patterns.
Move towards personal cooling and climate control efforts, such as moisture-
wicking fabrics and airflow-maximising weaves
Extreme heat can break down preservatives, rendering ingredients such as retinoids
and vitamin C ineffective. Skincare brands should explore changing formulations so
that products stay intact Pour Moi

Ensure you have a product or brand that can be versatile and adaptive. Tailor website Pour Moi bills itself as the world's first climate-minded skincare brand, with products that are
homepages to the territory to ensure they are appropriate to the season or current tailored to specific US geographies and their corresponding climates, and by weather options such
climate fluctuations as rain, alpine, pollution or desert

In action
Create smart layering and modular design, as seen at US brand Marfa Stance. Its
build-your-own jacket allows customers to “climate-control their wardrobe” with
detachable hoods, collars and liners
Vollebak designs “clothes for the apocalypse,” including UV-resistant Equator Shorts
and the “fireproof” Apocalypse Jacket, made from polybenzimidazole, which can
withstand the same temperature as black lava
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Context: 2023 was the hottest year on record, with scorching temperatures causing
global droughts, wildfires, rising sea levels and deaths. Extreme heat will become a new
normal for many territories and disrupt the retail sector – closing stores, skewing
consumer demand, delaying deliveries and wreaking havoc on supply chains.
High temperatures hurt economic growth: labour and productivity slow, foot traffic
patterns change and crop yields reduce, impacting raw material production. Oxford
Economics predicts that if global warming reaches 2.2°C above pre-industrial levels by
2050, global GDP could fall by 20%, while a 5°C rise by 2100 would lead to economic
annihilation. The era of global boiling has begun, meaning businesses must adapt now
to survive tomorrow.

Claudent

Mass-market UPF (sun-protective) clothing is currently limited primarily to swimwear and

activewear. There are opportunities to expand into more categories, especially in China, where
demand for sun-repellent clothing is growing

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Combat fraud head-on
Crisis levels of shoplifting and inventory-shrink were seen in 2023. By 2025,
retailers must prepare for a new wave of retail crime centred around policy abuse
and fraud, as growing cybercrime, counterfeits and sophisticated bots threaten
to cost them millions.

Strategy 1 – Combat policy abuse: consumer policy misuse is a growing issue for 90% of
global e-tailers. In the US, return fraud alone contributed to $101bn in losses in 2023: for
every $100 in returned merchandise, retailers will lose $13.70 to fraud. Retailers must
tackle this "friendly fraud" as people take advantage of consumer-friendly policies such
as returnless refunds. If not, businesses will be forced to raise prices to absorb losses,
removing privileges such as free returns or eliminating discount codes that can be
abused. Failing to prevent fraud costs more than just profits; it increases operational
costs and harms reputations.
Limit the flexibility of hassle-free online refunds, shorten return windows, and
incentivise exchanges over refunds
Communicate clearly. Review customer terms and conditions to identify and close
potential loopholes. State to customers exactly what was purchased, when it will
arrive, and returns and final purchase policies
The impersonal nature of e-commerce is one possible cause for spikes in immoral
behaviour, as people feel more disconnected from faceless brands. Improve service
and personalisation to strengthen emotional bonds, making shoppers less likely to
engage in harmful activity
Returns centres should use X-ray or other scanning technology to identify what’s in a TikTok
returned package and see whether it's a real item or something fraudulent weighted
down to feel like one. This will prevent people from taking advantage of the lag We are increasingly operating in a fraud economy, driven by inflation, the e-commerce boom, and
the widespread availability of easily counterfeited products, putting a huge strain on the retail
between the refund being paid and the returned item being unpacked sector at a time when the industry cannot afford it

In action
US fast-fashion brand Cider offers returnless refunds only via store credit. There’s
also a 48-hour period before customers can make another return
Zara has begun charging customers for online returns, while H&M offers free
returns only to those who are signed up to its loyalty scheme
Cracking down on fake reviews, Yelp is publishing an index of businesses that violate
14 its reviews policy and flagging their pages with alerts. It's also banning businesses
from offering payment in exchange for good reviews
Strategy 2 – Invest in innovative technology: AI and machine-learning tools that
pinpoint suspicious behaviour and identify potential fraudsters via algorithmic analysis
are emerging. Ramp up investment in cybersecurity and e-commerce fraud defences to
stop bad actors, and smooth the path to purchase.
Adjust e-commerce fraud defences in line with peak purchasing times, such as
holiday and sale seasons
Use digital ID capabilities for authentication, and to track products beyond the point
of sale
The cybersecurity skills gap will widen as new talent is required to prevent more
sophisticated attacks. Hire experts in emerging fields such as zero-trust architecture
and the conversion of legacy solutions to the cloud to get ahead

In action
Israeli haircare brand Moroccanoil has hidden digital codes on its labels that
distributors and retailers must scan before they sell
US online shopping tech company Bloomreach can track serial returners and ensure
they aren't rewarded with discounts and deals
Streetwear and sneaker brands that release items in coveted drops should look to
external tech providers such as Australian startup EQL, which can patch into e-
commerce platforms like Shopify or host sales through its own web domain. It
evaluates and scores users based on their web browsing activity, characteristics and
IP address to determine if they're a real person or a reseller bot. The platform can
Beauty of Joseon
then give preference to groups such as loyal customers or locals
Smart labelling technology will make it easier to distinguish between fake and genuine products.
Korean brand Beauty of Joseon has launched an app that lets users verify the authenticity of
products by scanning a barcode

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Strategy 3 – Fight the social media onslaught: a spike in fraudulent returns is being
driven by nihilistic consumers encouraging policy abuse via TikTok. The retagging
clothing movement sees customers purchasing an item to relabel it at a higher price,
then returning it for a refund. Others share techniques via #RefundMethod (12.1m
views) to falsely manipulate brands into refunds and replacements.
Ensure watertight customer service and create custom shipping labels that can't be
tampered with
Work with key opinion leaders to spread awareness about counterfeits. Influencers
have a reputation to protect, so it’s mutually beneficial for them not to accidentally
link to fake items

In action
TikTok has partnered with product authentication specialist Entrupy in an attempt
to prevent the sale of counterfeits on its new e-commerce platform, TikTok Shop.
Alongside authentication, Entrupy’s proprietary “fingerprinting” system uses
microscopy and imagery to make items traceable and ensure that an item being
returned is the same product that was purchased
TikTok creator @zoe.rammie offers tips on spotting K-beauty fakes

Context: more than 40% of adult online shoppers surveyed in Europe admitted to
committing fraud in the year between November 2022 and 2023 , while 42% of US Gen Z
openly admit to engaging in credit card fraud. Fake e-comm retailer sites and
counterfeit goods are rising globally: $2tn worth of counterfeit goods are sold every year Certilogo
in the US. Bad bots are also a growing issue – bots in general accounted for 48% of global
internet traffic in H1 2023. Increasingly advanced bots can impersonate real shoppers, eBay has been ramping up its authentication investments. It has acquired Certilogo, a provider of
AI-powered apparel authentication, and introduced the Certified by Brand luxury resale
snatching up sought-after inventory and forcing consumers to pay a premium on resale
programme, through which brands can authenticate secondhand sales of their items
sites, leading to reputational damage and frustration.

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Take a human-centric approach to AI services
The hype around AI will shift from excitement to deployment, with a new focus on
intentional tech and AI for good. Be mindful of consumers' desire for human
interactions, using AI experiences to create more authentic and empathetic
services that enrich consumers’ lives.

Strategy 1 – Use technology to enhance retail service, not replace it: the best way to
reach customers still involves a human element, which is intrinsic in a post-pandemic
world where community and experiential selling remain paramount. Around a quarter
of US shoppers say they worry AI will negatively affect their shopping experience; 86%
would prefer to interact with a human. Allow staff to focus on high-touch tasks, using AI
to streamline the online experience via styling or product queries.
Use AI to offset the talent gap at seasonal juncture points when employees are
stretched thin, such as busy holidays and sales seasons
Automation and robotics can assist retail warehouse workers with menial, repetitive
tasks, while AI can smooth fulfilment demands, analyse inventory allocation to
stores, and examine sales trends. This will enable human workers to be more
productive, adding value where better suited
Be mindful of the great tech divide in the years ahead. A rise in mistrust and lack of
confidence in AI’s abilities will drive some consumers to seek out AI-free brands and
interactions

In action
US womenswear brand Ruti has adjusted its customer service strategy to blend Deathtostock
human interaction with AI. Customers can talk to a real-life stylist in an
appointment-based video session, and since 2023, the video associates have been Digital experiences should be a tool, not a replacement: success will lie in identifying the right use-
cases that align with your brand
assisted by ChatGPT: the video assistant answers style queries, while the AI tool
suggests relevant clothing items
Reducing resolution time by two to three hours, global beauty brand Kitsch
employed Siena AI (which understands context and responds with empathy) to
automate over 68% of its customer service. By using Siena, Kitsch generated $46k in
a 90-day period
AI and computer vision-based tech will verify that customers have paid for all the
items in their shopping cart at US membership-only retail chain Sam's Club. This
17 will eliminate the need for an associate to scan receipts at the exit
Strategy 2 – Humanise technology: customers build relationships with brands that
know them well, so personalised human interactions will remain essential, even in
digital spaces. 81% of US consumers go online to find information about a product or
service before heading to a physical store to make a purchase, proving that online
shoppers still desire a human connection and want to interact with others across
touchpoints.
After years of frustrating customer service bots and clunky shopping assistants,
enhanced AI services should be warm, dynamic and customer-facing. Invest in
natural language processing and machine-learning tools to create sophisticated
customer/chatbot interactions
Take a hybrid approach; if a chatbot cannot resolve the issue, escalate to a human
agent and give the customer an estimated wait time. Use AI to analyse the bot
interaction, then according to the customer sentiment detected (ie mild
dissatisfaction versus anger), assign the ticket to the right agent to help
Use affective computing – systems that can recognise, process, interpret and
simulate emotion – to address and predict online customer concerns

In action
Real-time monitoring of customer sentiment and feedback allows Estée Lauder to
address customer concerns quickly, identify external trends, and improve its
service. The global beauty conglomerate has partnered with Google Cloud’s
generative AI systems to power the process
Meta
Retail giants including Carrefour (France), Instacart (US), Mercari (Japan) and
Zalando (Germany) have begun to incorporate Reinforcement Learning from
Meta created 28 AI character chatbots replicating familiar faces across TV and movies. The
Human Feedback (RLHF), a tester programme that can give human feedback to the chatbots assisted on everything from planning a trip with friends to answering questions you’d
AI about whether the machine’s outputs are realistic, safe and relevant to the prompt normally ask a search engine
or question
An AI-enabled chatbot provides personalised clothing product recommendations
based on shoppers’ prompts via WhatsApp at Indian e-tailer The Man Company. This
has tripled conversion rates in six months

Context: generative AI is predicted to have a financial impact of $9.2tn on the retail

sector through to 2029, heralding a new era of optimisation and efficiency. To resonate
beyond the hype, businesses will need to maintain a human-centric approach to make
the purchasing journey more fulfilling and retain consumer trust.
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Rekindle kindness
Reconnecting a polarised world and a tech-driven landscape through humanised,
personal touches will win out in 2025, as consumers seek solace in kindness
following a year of key global elections.

Strategy 1 – Offer micro-moments of happiness: brain scans on humans show that

being generous activates the same parts of the brain as eating dessert – otherwise
known as the ‘helperʼs high’. Emotionally connected shoppers will have a higher lifetime
value and be more brand loyal, especially younger consumers: 79% of global Gen Z say it
is more important than ever to trust the brands they buy from.
Stand out by becoming an emotional default in your consumers' lives. This is much
richer territory than competing on price or convenience alone, delivering on
purpose, shared values, and joy
Consider how your products or services can spark a moment of personal reflection.
Offer online and IRL experiences that connect with people on an emotional level
Retailers that offer opportunities for generosity will benefit both the recipient and
the giver. Create free, brand-backed initiatives that give back and allow others to do
the same

In action
Sellers can share personal memories about the items they’ve listed on Chinese resale
platform Xianyu, as well as provenance and backstories, adding emotional value to
pre-loved items
IKEA has partnered with other organisations to create 3,000 long-term employment Kurt Geiger

opportunities for refugees and asylum seekers in Poland and Romania

Offering free places on a seven-month educational business course, the Kindness Foundation from
Pampers' online Diaper Stash allows friends and family to gift nappies and wipes to UK fashion accessories brand Kurt Geiger helps young people from underrepresented backgrounds
new parents in the US get ahead in work. The scheme begins this month

UK department store Selfridges' new Unlocked loyalty scheme helps customers to

give back, donating to a homelessness charity every time they shop

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Strategy 2 – Amplify narratives of care: building with equity will become crucial as
wealth and societal disparities increase globally. In the face of unprecedented
migration, brands must stand out and be a force for good.
Embed strategies that lighten the load of those in need, such as the growing number
of single households bearing the brunt of solo living expenses. While governments
need to adapt, brands can also step up
Find ways to keep employees and shoppers satisfied. Bake rewards or donations into
business models to retain talent and show you care. Think less one-off donations,
more democratised corporate care strategies
Regularly communicate about partnerships and donations to ensure transparency
with funds and resources. UK fashion brand T-Label has a page on its website where
it lists exactly how much it has raised so far, and for which charities

In action
Democratising access to essential healthcare, Peruvian supermarket chain Tottus
sold mammograms for PEN99 ($26/€24) for breast cancer awareness month 2023.
This significantly undercut the fees charged by national private clinics
In collaboration with the Olympic Refuge Foundation, Nike is creating opportunities
for displaced athletes to find community in the world of sports
Migrants and refugees without a formal credit history can now get credit cards from
HSBC – a first for UK banks
Renters can swap skills in return for housing via UK website Kindroom, and Lola
Commune provides co-living for single-parent families
Eight brands selling period products in the US have formed a coalition to reimburse their customers
IKEA has shared its new anti-toppling patent for heavy furniture with competitors, for the sales tax they pay, also known as the ‘tampon tax’
encouraging others to adopt the safety feature. Open-source sharing like this sees
innovative brands breaking away from the conventions of patenting
Womenswear brand Ninety Percent distributes 90% of its profits to the workers who
make its collections, while US menswear label Buck Mason offers shares in the
company to all full-time staff

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Strategy 3 – Become a cost-of-living ally: look for opportunities to side with consumers
during difficult times, building goodwill and loyalty for the future.
Implement loyalty-building exercises such as price freezes and lowering taxes to
resonate with value-seeking shoppers
Communicate price changes clearly, leaving customers enough time to adjust
budgets. Where possible, share reasons for price hikes and communicate when they
will next be reviewed

In action
Shrinkflation labels – warning shoppers which products have been made lighter or
smaller by brands without a corresponding price decrease – have been rolled out in
Carrefour stores. The French supermarket chain will also stop selling products from
PepsiCo brands in protest at its pricing strategy, which the retailer has deemed
unfair
In a bid to close the suncare poverty gap, UK health and beauty retailer Superdrug
has subsidised VAT in its own-brand Solait SPF range, reducing the price by 20%
US brand Old Navy offers a one-year guarantee for back-to-school uniforms. It will
give a full refund if products don’t last through the school year
Own-brand period products at US pharmacy chain CVS have been reduced by 25% to
combat the effects of the pink tax (the tendency for women's products to be priced
higher than men's products)

Amazon Pharmacy
Context: years of crisis and division have taken a mental toll, and people will want to
find daily doses of happiness to brighten their worlds. 2025 will mark the emergence of Coupons to reduce customer costs for insulin to $35 a month are being rolled out by Amazon
neo-altruism, a concept rooted in pure altruism (defined as helping someone with the Pharmacy in the US
knowledge that you will see no benefit) but with the addition of empathetic joy (an
emotion that a person feels when seeing another person experience relief). This will be
needed more than ever as incivility worsens: 76% of frontline workers around the world
experience anger, insults and rudeness at work at least once a month, and online hate is
rising too. 52% of Americans said they had experienced online harassment in 2023, up
from 40% in the survey's previous year.

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Redesign product discovery with image commerce
Prioritise image commerce, where users search by image, as adoption grows and
image search capabilities expand. This will build on the rise of voice and
conversational commerce as shoppers demand more seamless ways to shop and
connect via their phones.

Strategy 1 – Become a destination for creativity and inspiration: the inspiration-led

lens of visual search will be a differentiator in today’s competitive online retail,
resonating with chronically online youth who demand more from visual channels – they
want to feel part of the creative process and have a say in the result.
Make tools compatible with social media platforms to make it easy for users to
source, co-create and layer style inspirations
Create sensory-driven experiences that pause the scroll and mimic the tactile nature
of physical shopping, going beyond just speed and convenience
Offer a seamless path-to-search experience by partnering with tech leaders or using
AI to streamline discovery

In action
Shoppers can use a photo to search for secondhand items with the new Posh Lens
visual search tool from US resale site Poshmark. It partnered with South Korean tech
leader Naver to scale the initiative
A new AI image-search tool by Sweden's Klarna helps shoppers identify and
purchase items by taking photos
Pinterest
ChatGPT has added a new feature that enables the chatbot to analyse and respond to
images Pinterest's user base is receptive to products on the platform, seeing them as helpful additions
rather than intrusive selling. This shift from inspiration to conversion helps reframe the platform as a
Shoppers looking to replace a bra they currently own can upload a photo of it and
new shopping destination for its 482 million monthly users
receive a list of options with similar fit and style on the Victoria's Secret website

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Strategy 2 – Have a mobile-first strategy: digitally native Gen Z demand a more
dynamic and interactive image search experience, pursuing visual inspiration on their
phones. Optimise your visual search for mobile to allow for better engagement with a
growing mobile-first society: 62% of all e-commerce sales are forecast to come from m-
commerce by 2027.
Use visual search tools to make the most of smartphone capabilities and
interactivity, allowing shoppers to use their cameras to search for items more
dynamically
Don’t use this technology for the sake of it; integrate it into m-commerce platforms
in a way that adds value for users

In action
H&Mʼs app enables shoppers to check stock availability in-store or browse the racks
using visual search. Users can take a photo on their phone and use the app to search
for a similar product and find that item in-store
The Amazon Camera Search app lets people use the camera on their devices to
create a digital image of visual information. They can use the tool to scan barcodes,
identify items and get suggestions based on that visual data
Shoppers conducted 175m visual searches during October 2023's festive sales in
India – 30% higher than the previous year. And at Indian e-commerce giant Flipkart,
users can upload an image of what they're looking for on their phone and find
similar products on the Flipkart platform, using the company's Search by Image
@poshmark
feature
Image commerce enables fast, frictionless product discovery, and reflects the behaviours of
mobile-focused shoppers who live for taking pictures

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Strategy 3 – Deepen ‘point-and-know’ capabilities: QR codes have revolutionised point-
and-know technology over the past few years, helping retailers educate and inform
consumers with one click. This concept can be taken one step further with the help of
advancements in visual search technology.
Smooth or eliminate predictive errors – when an unexpected change happens in a
daily routine; for example, a shopper goes to purchase eggs, but they are sold out.
Create solutions or recommend products if something is unavailable online

In action
Google has added new features to Google Images. People now use its Lens capability
for 12bn visual searches a month – a four-fold increase in two years
Visual point-and-know technology can help shoppers identify processed and ultra-
processed foods on supermarket shelves, thanks to a database created by French
food and drink platform Open Food Facts

Context: 62% of US and UK Gen Z and Millennials prefer visual search technologies over
other shopping features. This points to the growth in popularity of Pinterest among Gen
Z: the demographic represents its fastest-growing and largest user base, making up 40%
of users and growing 20% YoY. Visual search is projected to have a market value of nearly
$32.98bn globally by 2028.

Amazon

Shoppers can catalogue and create ideas online using visual search tools at forward-thinking
retailers such as Amazon

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Related reports

Future Consumer 2026 The Future of Retail The Future of Supply The Future of Hyperlocal The Future of Loyalty
Service Chains Retail

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