Titled "Boost in Retail Outlook for 2025: Anticipated Spending Surge Reaches 3%"
This could be a transformative year for retailers who harness the right AI-driven tools to boost efficiency and sales, as suggested by Deloitte in their 2025 U.S. retail industry outlook, released recently.
The Deloitte forecast aligns with the optimistic sentiments expressed at the National Retail Federation's annual event last week in New York. Economists and analysts believe that 2025 will witness continued growth in consumer spending, provided tariff-induced price hikes don't halt the momentum.
Deloitte's forecast predicts a 3.1% spike in consumer spending this year, and an even more significant 4.7% increase in spending on durable goods. Furthermore, with AI technology like GenAI, 2025 might serve as a stepping stone into a digitalized future for retailers, making their operations more efficient.
Surveys conducted by Deloitte reveal that around 70% of retail executives anticipate having AI capabilities in place by the end of the year to deliver a more personalized shopping experience. According to Salesforce's data, retailers that used AI chatbots over the Black Friday weekend experienced a 15% improvement in conversion rates.
These AI advancements, combined with the solid sales growth during the holiday season, have left retail economists somewhat hopeful for the upcoming year. In fact, retail sales rocketed by 4% in November and December, surpassing the anticipated holiday growth proportion of 2.5% to 3.5%.
NRF Chief Economist Jack Kleinhenz commends this growth, expressing that it mirrors the pre-pandemic growth pace and serves as an auspicious beginning for the year ahead. However, Kleinhenz also emphasizes that cost-conscious consumers remain prevalent, with notable increases in spending but still shop with budget constraints in mind.
One of the consequences of this price sensitivity is consumers pursuing promotional offers instead of favoring brand loyalty. In fact, around 60% of retail executives expect price considerations to outweigh brand loyalty in 2025.
To attract these value-seeking customers, retailers aim to leverage loyalty programs, discounts, promotions, and engaging experiences that offer convenience. Moreover, retailers plan to employ AI and machine learning to improve shopping experiences, offering features like an interactive voice questionnaire to aid in jean selection or personalized recommendations and product information using interactive store displays.
Deloitte's report sheds light on other noteworthy trends. For instance, shoppable media and social commerce are projected to surge in 2025, having already proven successful in reaching the Gen Z market.
Additionally, over a third of retail executives perceive enhancing in-store experiences as a primary growth opportunity, with retailers incorporating immersive experiences and digital technologies like touchscreens, virtual reality, and augmented reality.
Lastly, two-thirds of executives anticipate investing moderately to significantly in workforce development as a means to tackle high labor costs and turnover rates. AI tools that simplify tasks and provide prompt responses to employee queries aim to enhance employee efficiency.
In summary, AI is poised to revolutionize the retail industry in 2025, with retailers embracing AI to streamline processes, enhance personalization, and optimize the overall customer experience.
The National Retail Federation agrees with Deloitte's 2025 retail forecast, highlighting a potential 4.7% increase in consumer spending on durable goods. Deloitte's report also predicts that retailers will significantly leverage AI technologies, such as GenAI, to become more digitalized by 2025, leading to more efficient operations.
