In an insightful discussion hosted by Retail TouchPoints, key trends projected to shape the retail landscape by 2025 were explored, focusing particularly on the role of artificial intelligence (AI) automation in business practices. This analysis comes ahead of a significant event hosted by PAN at KYMA in Hudson Yards on January 13, where retail executives will converge to discuss emerging industry challenges and innovations.
Juan Cardelino, a representative from Ulta Beauty, highlighted a notable utilisation of generative AI in the retail sector. The company has employed AI technology from Nvidia to enhance its GLAMlab Hair Try On solution, enabling customers to visualise new hairstyles and colours. “For our hairstyle try-on use case, we had to license the model for commercial use, retrain it and put guardrails around it to ensure the AI was only modifying pixels related to hair — not distorting any feature of the user’s face,” Cardelino explained. This showcases not only the potential of generative AI but also the extensive preparatory work necessary to implement such innovations effectively.
The increasing prevalence of AI applications in retail is expected to persist, with many consumers unaware of AI's role in improving product recommendations or logistics processes such as expediting delivery routes. As businesses further incorporate AI into their workflows, it is anticipated that consumer acceptance will rise, paving the way for a more integrated approach to AI in 2025.
Conversely, the looming potential for tariffs and trade disruptions has emerged as a concern for both B2B and B2C retailers, especially following recent changes in the U.S. political landscape. Adam Blair noted that while precise forecasts regarding tariffs remain elusive, it seems likely that China will be a primary focus for the incoming administration. Moreover, complications such as global conflicts — highlighted by the 2024 shipping disruptions caused by Houthi rebels — also pose challenges for supply chains. The shift towards nearshoring and seeking alternative suppliers since the onset of COVID-19 could mitigate some adverse effects from anticipated tariffs.
Another significant trend discussed was the rise of social commerce. With platforms like TikTok in a state of uncertainty, the impact of social media on retail sales continues to burgeon. Blair remarked on how brands are tasked with maintaining a consistent image amidst the proliferation of channels and influences. The challenge is compounded by the presence of counterfeit products, often referred to as 'dupes'. The potential dilution of brand image due to this phenomenon has led brands to consider leveraging influential voices in the marketplace while educating consumers on authenticity and counterfeiting.
Sustainability also remains a vital topic within the retail industry. Notable brands have taken strides toward sustainable practices and circular commerce, which are expected to persist as consumer awareness and demand for eco-friendly practices rise. In 2024, many companies, including Patagonia and Ikea, initiated resale programmes aimed at prolonging product life cycles and making them accessible to more consumers. Although there appears to be a slight decline in some retailers’ commitment to sustainability and DEI (diversity, equity, and inclusion) initiatives, major players such as Starbucks and Amazon's investments in sustainable practices indicate a continued push in this area.
The discussion underscores the dynamic nature of the retail landscape and presents a roadmap of the expected trends and challenges awaiting the industry as it evolves towards 2025. Retailers are navigating through a multifaceted environment enriched by technological advancements while addressing the pressing issues of sustainability and brand integrity.
Source: Noah Wire Services