Retail Pulse Report: 2025 Forecasts, In-Store Disconnects and the Rise of Consumer Agents
Past results will definitely not predict 2025’s future, especially after a whipsaw week in AI and tariffs. So besides disintermediating shopping agents, what can we expect?
Adobe Photostock: An army of disintermediating consumer shopping agents?
I’m writing this article while listening to the news about Trump’s tariffs on Canada and Mexico, which up until this weekend was a “will he or won’t he” moment, and I feel like a lot of the economist and analyst assessments that I share below would get a hard revision now that it’s a “he will” moment. It’s very difficult to predict that things will go on much as they did in 2024 when you’ve got wild cards like tariff wars in the mix. It does not look like 2025 will be a back-to-normal year at all. [Note: I didn’t finish this in time to publish it on Monday, and even by then things had changed again. We’re really still in “will he or won’t he,” but the net effect is still the same: wild uncertainty.]
But the news is the news. If nothing else, take the assessments below in the spirit of just how tempting it is to try to predict the future based on what’s happening right now – which is never a good idea.
In the meantime, especially after enduring an NRF where I was asked about agentic AI five hundred times, it occurs to me thanks in part to Ben Evans’ musings, that retailers rushing to embrace GenAI can easily be disintermediated by an agentic AI future where consumers use their own shopping agents to pit retailers against each other, forcing competition based on price and availability alone, a retailer’s worst nightmare. Hoo boy! Let’s dive in.
Retail Economic Indicators
We’re in this weird transitionary place when it comes to economic indicators where news about how 2024 went is running right into the back of a bunch of predictions for 2025. I’ll start with 2024 first, though it’s a shallow dip – retailer fiscal years close in January or February and we’ll get the real picture of holidays went in February or March.
In the meantime, retail theft losses totaled over GBP 2 billion in the UK for 2023-2024. The rise in theft was attributed to organized gangs. The stat that stood out to me, however, was that this was despite the industry investing GBP 1.88 billion on security measures like CCTV, security personnel, and body-worn cameras. My snarkier side wants to ask, “how much would retail crime have risen if retailers had invested in more store associates?” I know, I know – organized retail crime is a bit more of a thing and requires more than just security measures in stores. But it wasn’t organized retail crime alone that drove a 50% increase in retail violence and abuse to reach 2,000 incidents per day. Just saying.
US consumer confidence took a nosedive, according to The Conference Board. Overall it fell 5.4 points in January to hit 104.1. But it was the present situation that took the big hit, falling 9.7 points to 134.3. The future expectations index fell by 2.6 points, but at 83.9 did manage to stay above TCB’s threshold for looking for a recession (80).
Back to the UK, January sales showed a deflation hit of 0.7%, a larger decrease than December (-0.1%), and most likely reflecting discounting to clear inventory. Digging into the numbers is interesting – non-food deflation was -1.8% and food actually is still experiencing inflation of 1.6% (which was down versus 1.8% increase in December). The British Retail Consortium expects that once the Fall Budget hits (which mandates increases in wages and in company contributions to health care, for example), retailers’ room to discount will get tighter.
So while holiday spending came in slightly better than expected, January looks like it is going to reflect more of a holiday hangover. But 2025 is far more than just January. What should we expect for the rest of the year?
The US Census Bureau December results showed more signs of weakness hidden in the topline numbers – like a decline in dining out for the first time in 9 months. Overall, economists are predicting more of the same from consumers– strong-ish labor markets, and also uneven spending reflecting persistent inflation to eat away those labor market gains. Some went so far as to predict “an ordinary year” – something we haven’t seen since before the pandemic.
Several analysts pointed out that wealthy households continue to drive the most discretionary spending, and lower-income households continue to struggle. Talk Business covered a Colliers forecast that offered up modest growth, but with home retail and mass merchants still more pessimistic. Neil Saunders of GlobalData summed it up best: “The outlook is solid but there are a lot of wildcards"
Bain & Co came in a bit stronger, projecting a sales increase of 4% in 2025, which would be stronger growth than 2024 (NRF says that came in at 3.6% on 2.9% inflation), on top of expected persistent – but hopefully not growing – inflation.
Deloitte released a survey report that looked at how US retail execs expect 2025 to play out. 81% expect increased costs due to climate change – the highest rated among challenges cited. Price wars came in close behind at 80%, 76% said rising retail theft, and 69% cited strained consumer trust due to next-gen tech (I wonder what next-gen tech they were thinking of? Oh wait, just keep reading.)
As far as consumer behavior, 80% of retail execs expect to see consumers continue to prefer spending on experiences over goods. 71% say they expect to see consumer use of GenAI for shopping, 68% say consumers will purchase from social media. And 67% expect consumers to make more frequent shopping trips with smaller basket sizes. Notable among investment priorities, 75% say they will increase their investments in theft prevention. I assume this will yield a similar result to what happened in the UK, above.
Retail Tech & Research Data
Because it’s that time of year, Wells Fargo used Neilsen data to analyze the typical Super Bowl spread. They found that in general snacks won’t cost but 0.1% more this year over last year. However, if you want to keep it healthy, that will apparently still cost you more, but who wants to do that?
A study commissioned by Relex found a disconnect between products that go viral on social media and their availability in stores. This one is a particular sore point for me. It really underscores the gap in so-called omnichannel retailers. 84% of consumers purchase trending products they discover on social platforms, but only 11% do so within the first 24 hours of discovery – 55% take up to a month. That’s a lot of opportunities for touchpoints beyond social media to reinforce that discovery.
However, it all falls apart in the store – 68% of consumers report needing to check 2-4 stores before finding a trending item in stock at all. Only 12% say they find it on the first try, and 19% end up giving up. It’s a very long way from the social team seeing a post light up to coordinating action in stores to take advantage of that viral moment. When retailers can make those connections on the regular, then I might agree that we have truly achieved unified commerce.
Red Ant research did a 10-year comparative study on the state of the store associate. They found some interesting changes over the last 10 years. Store associate confidence in product knowledge went from 53% in 2015 to 97% in 2025. In 2015, 66% of store associates reported that consumers expected them to find stock vs 77% in 2025. In 2015, 45% said consumers expect them to provide more product info vs 65% in 2025. In 2015, 47% said consumers expect them to make product recommendations vs 63% in 2025. Consistently nearly 3/4 of respondents said tech has a positive effect on their role across the 10-year span, and 58% said they got less than 1/2 day of training in 2015 - 63% said the same in 2025. Choice quote from the study: "Store associates are expected to do more but their level of training has not changed in a decade."
Finally, last research study to cover, a Socure survey found well-off Americans are more likely to steal from online merchants than those that are less well-off. 55% of Gen Z making more than $100k per year said they have stolen from online merchants in the last year, with Millennials not far behind at 49%. As far as how they’re stealing? Reporting that a package was not delivered when it was, or disputing the charge through the credit card company.
Why are they stealing? 46% of survey respondents who said they have stolen said they saw it as “consumer advocacy”. Younger generations believe their actions are justified in the current economic environment. They also see the hacks online on how to do it, which makes it seem more acceptable and a “victimless” crime.
AI & Retail
Per the Deloitte study above, why are execs worried about a lack of consumer trust due to ‘next-gen’ tech? Apparently because consumers feel “emotionally manipulated” by AI shopping assistants. In a survey of 3,500 US adults commissioned by SEO platform Chadix, 70% of consumers reported feeling emotionally manipulated. That’s a weighted phrase – sometimes the chatbots generated feelings of excitement, but consumers also reported that chatbot interactions evoked guilt and fear of missing out (FOMO) to drive purchases., which does bring some ethical questions into play. 20% of consumers said they were “very aware” they were being manipulated, and 55% said they knew they were being guilted into a purchase.
I’m not going to cover DeepSeek – that rise and fall happened so fast it never even got to a retail impact – but last week Ben Evans wrote about some of the other new developments, like ChatGPT’s Operator. The comment that struck me the most was “the GUI is the new API”, just as English is becoming the new programming language.
But will it be? Yeah, it’s pretty sucky so far – someone likened it to watching your grandparent navigate the internet – but that will get better. Evans himself points out that a lot of companies are going to be interested in blocking this. I wrote a while ago about Grinchbots that slam websites with orders of scarce items in the hopes of arbitraging a better price on eBay or wherever. Evans said, “[Companies] didn’t make an API (or only made a limited one) on purpose, because they want to steer the flow and manage your interactions (and upsell you), and because they themselves want to be the place where you do the whole thing: no-one in tech wants to be someone else’s dumb API call.”
This is back to the idea that AI might be a great tool of productivity internally at companies, but it could be a massive disintermediation externally - all those retailers firing CSR's for chatbots might find all their branding and advertising replaced by a race to the bottom on an offer being demanded by an army of chatbot agents working on behalf of consumers. All it takes is someone to create a personal shopping agent for the masses and the next thing you know the bot is using your bot to get your best offer, but then comparing it to the offers it collects from every other retailer. The consumer no longer even cares what they are buying – as long as it’s the “best” as recommended by AI – let alone who they are buying it from.
Store Innovations
Last story of the week: Alo Yoga has upped its game with Roblox through in-store integration. The company had launched its Roblox experience in 2021, and then upgraded it last year to add in-game running challenges, cold plunge therapy (virtually might be the only way I’d be willing to try that!), interactive gym equipment, and yoga and meditation content tied in from their Alo Moves exercise content. But the in-store part is a sticker with an NFC chip that users can scan in stores to unlock exclusives like a jacket for their Roblox avatar. Alo Yoga reports that they have had 117 million visits to their Roblox experience since 2021.
What Did We Learn This Week?
If you’re going to predict 2025 on the basis of how 2024 closed, I have a feeling you’ll be mighty wrong about what’s going to happen. Between the rise and fall of DeepSeek and the threat and rise and fall and delay of tariffs, it’s clear already that 2025 is not going to be anything at all like 2024.
One thing that looks like it will continue is retailers doing everything they can to avoid investing in labor in part as of increasing their loss prevention stance. A well-staffed store can do far more than locked cases or body cams. And Red Ant’s 10-year comparative study shows just how much things have changed – especially a very interesting way to quantify increased expectations that consumers have on store associates. But is also shows how much things have stayed the same, with store associates just as likely to say tech is valuable to their role, while seeing no change at all in the amount of training and support they get to meet consumer expectations.
And finally, I have to put together the Relex study findings, which showed a complete lack of coordination between products in viral posts and their positioning and availability in stores, and Alo Yoga’s latest attempt to tie the online world of Roblox to the in-store experience. I mean, yeah, it’s great that you get a virtual reward that you can use in Roblox, but is that the best we all can do here? It’s clear the two groups – social, and store – barely even know each other exists. Which means disjointed experiences for customers persist.