The retail landscape is on the cusp of a third dramatic transformation in just the last couple of decades, and 2025 will begin to reveal the true impact that's ahead.
Following the introduction of e-commerce and integration of robotics, the broad implementation of AI technologies will allow retailers to redefine the shopping experience with an increasing focus on personalization, efficiency and convenience.
This will be particularly true for brick-and-mortar retailers, who have been significantly impacted by the explosion in online shopping — especially since the pandemic - but who remain central to the retail ecosystem. Consider that in-store shopping is still projected to comprise 77% of global retail sales in 2027, according to eMarketer. But pressure on retailers is increasing. Rising costs and economic instability while investing in innovation. Increased regulation. Employee satisfaction. Event customer fatigue in the loyalty programs that are designed to retain those relationships.
Some of this evolution will be visible to consumers, some of it won't, but it promises to deliver what they desire and continue to elevate brick-and-mortar as an essential element of the retail ecosystem.
As our recent survey of U.S. and U.K. shoppers demonstrated, half of consumers prefer in-store shopping, largely due to immediate gratification. But these consumers also have increasing expectations given the ease, speed and access of online shopping. They expect more than just products — they want experiences that are relevant, engaging and tailored to their unique preferences. Within that, they expect clean and safe environments, available stock and information and insight from retailers' staff.
As AI continues to evolve, the future of in-store retail holds immense promise. By embracing these innovative technologies, retailers can create immersive, personalized and efficient shopping experiences that captivate customers and drive sales. Here's how:
Enhanced customer experiences
The importance of a distinctive in-store experience cannot be understated. AI technology can transform brick-and-mortar stores into smart stores, where interactive displays, virtual fitting rooms and automated checkouts provide a seamless and engaging shopping experience.
For instance, smart mirrors can provide personalized recommendations, style advice and even virtual try-on experiences. Augmented reality, which Gartner expects to surpass 100 million users in '25, enables customers to visualize products — from furniture to clothing — in their own environment. Smart retail headsets, like the one from x-hoppers, can empower retail staff with immediate and valuable insights that build trust and provide exceptional customer service. And expect retailers to invest in more live experiences, in order to drive attraction, create differentiation and deliver memorable moments — while experimenting with sentiment analysis and emotional engagement strategies to create more personalized atmospheres.
While they are not specific to the in-store experience, expect customer-loyalty programs to continue to evolve and become more sophisticated. Ubiquity will be replaced perhaps by subscription-based models that drive revenue for brands but also return to an element of exclusivity - that also connect digital and physical stores.
Streamlining supply chain and logistics
One of the most significant challenges resale and brick-and-mortar stores face is managing and optimizing inventory. And this is critical - as our survey showed that 26% of consumers cite product availability as central to loyalty and nearly half have stopped at stores with limited inventory.
AI-driven tools can be used to better understand consumer trends and seasonal preferences and optimize operations for a more efficient supply chain. This predictive capability allows businesses to stock precisely what is needed, reducing overstock and stockouts and ensuring a diverse and appealing inventory that meets consumer demand.
Security: Protecting assets, customers
AI-powered security systems are enhancing store security by detecting and deterring theft. By analyzing video footage and identifying suspicious behavior, these systems can alert security personnel to potential threats. Additionally, AI can optimize staffing levels and improve loss prevention strategies.
This is critical to customer trust, as nearly half of shoppers say that safety is "very important" when choosing a store.
Expect 2025 to usher in the next wave of retail's vast transformation. Those who invest in and implement the right technologies - such as generative AI, Unified Communications strategies, biometric-driven customer insights - are poised to capitalize on evolving consumer expectations.