Retailers poised to embrace AI-enabled tools could see a breakthrough year in 2025. Deloitte’s latest U.S. retail industry outlook predicts that leveraging AI will not only drive efficiencies but also significantly enhance sales. With consumer spending expected to grow, retail leaders who invest in digital transformation stand to gain a competitive edge in a rapidly evolving landscape.
Deloitte forecasts a 3.1% increase in consumer spending this year, with durable goods seeing an even stronger 4.7% rise. More importantly, 2025 could serve as a launchpad for a more digitised retail future, particularly for businesses that implement AI-driven solutions effectively. An impressive seven out of ten retail executives surveyed expect to integrate AI within the year to deliver personalised shopping experiences.
The impact of AI on retail performance is already visible. According to Salesforce data highlighted by Deloitte, retailers that deployed GenAI chatbots over the Black Friday weekend saw a 15% uplift in conversion rates. From marketing and merchandising to supply chain management and employee scheduling, AI adoption is accelerating across the industry, fueling cautious optimism for the year ahead. Holiday retail sales in November and December grew by 4%, surpassing forecasts and reflecting a return to pre-pandemic growth levels.
However, despite robust spending, consumers remain budget-conscious, shifting their buying behaviours in response to economic pressures. Price sensitivity is driving shoppers towards promotions over brand loyalty. Deloitte’s research indicates that nearly six out of ten retail executives expect price to outweigh brand affinity in 2025. To retain and attract value-driven consumers, retailers are doubling down on loyalty programmes, personalised discounts, and enhanced shopping experiences.
AI and machine learning will play a pivotal role in this transformation. Forty percent of retail executives plan to leverage AI to enhance customer engagement through interactive tools such as voice-assisted shopping guidance and personalised in-store digital displays. Meanwhile, shoppable media and social commerce are expected to gain further traction, particularly among Gen Z consumers. Retailers are expanding beyond traditional social media platforms, forming strategic collaborations like the Netflix-Google Lens partnership, which enables viewers to shop items featured in popular shows.
Retailers are also prioritising in-store experiences, with over one-third of executives citing physical store enhancements as a key growth driver. Immersive technologies such as virtual reality, augmented reality, and interactive displays are set to redefine the in-store shopping journey. Nearly half of retailers plan to invest significantly in store remodels or new locations in 2025 to align with evolving consumer expectations.
Workforce investment remains a crucial focus, with two-thirds of executives planning moderate to major investments in hiring, retention, and employee training. AI-driven workforce management tools are being deployed to streamline operations, improve efficiency, and address ongoing labour challenges.
With AI at the forefront, 2025 is shaping up to be a transformative year for the retail industry. Businesses that harness the power of AI to enhance customer experiences, optimise operations, and drive innovation will be best positioned for success in this dynamic environment.
Deloitte’s insights underscore a clear message: embracing AI is no longer optional—it is essential for retailers looking to thrive in an increasingly digital world.
itim Group plc (LON:ITIM) is a SaaS-based technology company that enables store-based retailers to optimise their businesses to improve financial performance and effectively compete with online competitors. Itim adds retail value by helping multi-channel retailers optimise their business and their stores to improve financial performance and compete more effectively with the “Amazons”.
