Dividing deep across in-store, e-commerce, and operations, Coresight Research’s Retail 2025: 10 Trends in Retail Technology report explores the innovations and foundational restructures in the sector for the year ahead.
Coresight Research predicted the following developments for the year ahead:
Pushing the retail sector forward are continued economic growth, successful returns on investment with AI applications and a high-margin revenue from retail media, licensing technology, and selling data. US retail sales increased by 53% from 2016 to 2023, with in-store retail representing about 77% of US retail sales. Meanwhile McKinsey reports that GenAI could boost the global economy by $9 billion to $10 billion through application in the beauty sector alone. Robeco Global reports that retail media advertising revenues grew from $43 billion in 2019 to $124 billion in 2023. Advertising agency MAGNA reports that retail media revenues will increase by 13% in 2025. For example, since its inception five years ago, DOUGLAS Group's Retail Media division, DOUGLAS Marketing Solutions, has expanded across nine markets and achieved a CAGR of over 60% in sales. As for licensing, in 2023, the health and beauty category was up by 6.3%, but still only accounts for 3.7% of all global licensing revenue.
Computer vision, driven by computing power and AI, is performing many in-store functions like customer behavior and data collection. However, there are also points of friction when it comes to these in-store adoptions. Walgreens was sued by Cooler Screens for breach of contract in June 2023 because the retailer was aiming to remove the start-up’s 10,000 internet-connected fridge panels from their stores due to glitchy hardware and software. The units, which had door-sized computer screens activated by customers walking by, would play video ads or prompt them to check out with Apple Pay alongside showing virtual rows of the goods inside. In reality, these screens would show the wrong products, flicker, crash (sometimes hundreds simultaneously), even catch fire. While Cooler Screens proclaimed the use of their fridges would cause a 5% sales boost, Walgreens stated each smart door only brought in $215 annually or 59 cents a day—a small consolation prize for the $50 million worth of unusable fridges they were stuck with.
When it comes to employees of the nondigital variety, mobile devices can offer not only improved inventory visibility and order accuracy but also serve as a training device. Given the 60% annual staff turnover rate in the retail sector, any improvements are sure to be more than welcome. Approximately 79% of associates stated that they feel stressed due to the complexity of day-to-day work, and 70% of consumers stated that it is hard to find an associate to help them while shopping in a store “these days,” indicating a need to overhaul in-store processes. Furthermore, with drugstores needing to put many items behind a lock and key to counteract the rising rates of theft, it creates additional tension and pressure between the employee and shopper interaction. Many are preferring to shop online since the in-store experience has become cumbersome with needing to call employees to retrieve most items on their shopping list. Chief Executive of Indyme Joe Budano, who is also the creator of customer assist buttons, tells the Los Angeles Times, that waiting for locked merchandise reduces sales by 10% to 25%.
As for retail media networks, a category expected to grow to $166 billion by 2025, smart shopping carts from vendors such as Amazon and Shopic could be highly personalized to the customer’s shopping history in order to determine the best advertisements to display. Furthermore, the shopper’s final checkout could be referenced against those advertisements to determine if they were effective in leading to a final purchase. As of November 2024, there are over 200 RMNs (retail media networks) in operation, with room for growth. In May 2022, Ulta Beauty launched its retail media network UB Media, it has since secured 300 brand partners and witnessed a 35% annual boost in brand investment. “2024 was a huge year for Sephora Media Network! We crushed our revenue targets, became way more profitable, grew our team HC [head count] by 40%,” Marco Steinsieck, Head of Retail Media at Sephora, reported on LinkedIn.
But it’s also a channel with budgetary constraints. As Jacob St John, CEO of Navigo Marketing, told BeautyMatter in August 2024, “UB Media and Sephora Media allow you to leverage their first-party data, who shops where, what they buy, and when. They charge tens of thousands of dollars to run ad campaigns for a few weeks across Meta and other sites. These are great for building awareness and generating traffic but are hard to measure and are typically reserved for brands with large budgets.”
On the e-commerce front, image recognition and generation, voice recognition, and natural-language understanding are converging to provide new levels of search abilities, customer service, and live shopping from the comfort of one’s own home through smart glasses. One recent example of this technology in action is Walmart’s GenAI-powered customer support assistant which was announced in November 2024, which creates a unique homepage for each shopper based on their shopping history. “A standard search bar is no longer the fastest path to purchase; rather we must use technology to adapt to customers’ individual preferences and needs,” stated Suresh Kumar, Global Chief Technology Officer and Chief Development Officer, Walmart Inc., at the time of the announcement.
For supply chains, AI/ML (machine learning) can automatically handle nonurgent issues and alert operators about issues requiring human intervention, triaging all issues by level of urgency. Global supply chain waste in the beauty industry results in $4.8 billion in losses annually, and the beauty industry has a loss rate of 6.2%. Service-driven supply chain planning software company ToolsGroup reports that early adopters of its Inventory.io engines increased profit by 12% and turns by 20%, as well as reduced stockouts by 25%.
In conclusion, Coresight Reports recommended retailers bring back computing capabilities to their own premises or the edge (the point of interaction) to boost CV and AI functions of their stores, as well as tap into the new marketing opportunities of GenAI and voice-recognition-driven experiences. Outside of customer service, AI is also helping to analyze and interpret enterprise data more efficiently, enabling faster and more cost-effective systems. In 2025, these aforementioned technologies will not only drive efficiency but also elevate customer experiences through more personalized and convenient shopping experiences. On an infrastructural level, retailers that embrace these innovations will be better equipped to handle the ever-quickening and complex demands of the retail landscape, online and in-store. However, there are bumps in the adoption curve that companies need to account for, showing that at least in the beginning, AI and CV need a helping human hand (and mind) as well.
