8 top trends shaping innovation in the retail industry in 2025

As retailers worldwide seek innovative ways to expand their customer base, drive sales, and differentiate their brands, challenges like supply chain disruptions, cybersecurity threats (as retailers increasingly rely on digital technologies), rising labor costs, intense competition from digital giants, and stricter data privacy regulations strain resources, requiring retailers to rethink old strategies, adopt new technologies, and prioritize customer-centric practices.

This is validated by a PwC survey, which revealed that nearly 40% of global CEOs believe their companies won't survive the next 10 years if they maintain their current strategies.

2025 will drive retailers to prioritize emerging technologies to meet customer demands for personalized services and affordability without compromising profitability.

According to a ResearchandMarkets study, the global smart retail technology market is anticipated to reach $68.8B by 2026, and while omnichannel retail remains the king of retail transformation, offering a seamless consumer experience, brands should consider other trends and practices in the sector, including digitalization, the adoption of artificial intelligence (AI), and the rise of small format stores.

Retail innovation refers to the adoption of new technologies, strategies, and business models to improve customer experience and operational efficiency. Examples include omnichannel platforms, AI-driven recommendations, and contactless checkout. Retail innovation helps businesses adapt to market trends and stay competitive.

In 2025 and beyond, embracing advancements like data-driven customer experience personalization, streamlined inventory tracking, process automation, and the enhancement of in-store customer interaction will be essential for retailers aiming for long-term success, and retailers that fail to adapt will fall behind.

In this article, we explore 8 major retail technology trends for 2025:

1. Invisible experiences

An invisible customer experience is the “end game” of personalization, where brands leverage AI, IoT, and data-driven insights to create a seamless, frictionless customer journey, where customer needs are anticipated and fulfilled, often before the customer recognizes them.

Invisible experiences involve the adoption and deployment of solutions like cashier-less technology, which enables shoppers to simply select items and leave, and IoT-based proximity marketing, which allows for hyper-personalized engagement, delivery of targeted offers or product information based on real-time customer positioning.

These reduce friction across touchpoints – automating suggestions, updates, or support without requiring active customer input, minimizing effort, and delivering timely, contextually relevant solutions.

2. Phygital retail

Phygital retail, also called “hybrid shopping,” bridges the physical and digital gap, transforming stores into dynamic environments that integrate digital tools with physical interactions by connecting online and offline shopping experiences to deliver a cohesive customer journey.

This includes features like in-store virtual try-ons, AI-powered personalized promotions, and mobile checkouts. As consumer demand for fluid, cross-channel engagement grows, retailers that adopt a phygital approach can drive customer loyalty, reduce friction, and capture more accurate insights to refine operations and personalize offerings.

In 2025, more small-medium retailers are anticipated to integrate their physical and digital channels to offer customers a cohesive experience through advanced inventory management systems, CRM tools, and advanced analytics, which will enable the synchronization of operations across online and offline touchpoints.

3. Adoption of artificial intelligence & machine learning

Even though AI adoption in retail is still considered to be in its early stages, it continues to gain traction, and retailers face the choice to either leverage it to unlock strategic opportunities and improve performance or risk being left behind.

To stay on top of industry best practices, retailers will need to implement AI and ML powered algorithms across key operational areas, like supply chain and logistics, where AI enables precise demand forecasting and streamlined distribution, product improvement with data-driven insights, and customer in-store guides through virtual assistance.

Additionally, AI plays a role in analyzing payments and pricing to drive profitability, managing inventory efficiently, and enriching CRM by tailoring interactions that boost customer satisfaction and loyalty.

Many retailers have already jumped the wagon and started to plan their investment in AI, and by 2025, 80% of retail executives expect their organizations to adopt AI automation.

4. In-store automation and smart checkout solutions

Implementing in-store automation tools is a trend that will continue to grow through 2025 as retailers adapt to the growing expectations for a seamless and efficient shopping experience. (especially with the advancement of eCommerce technologies, customers now expect the same convenience and personalization in physical stores).

retailers that are quick to implement automated solutions and technologies like self-checkout kiosks, sensor-based checkout, virtual showrooms, and autonomous inventory robots, will insure a faster, safer, and more engaging in-store experience, while reducing labor costs, and streamlining operations to ensure competitiveness in a market where customer loyalty hinges on exceptional service and efficiency.

5. Buy now, pay later (BNPL)

Research suggests that customers are more likely to complete purchases when they have multiple payment options, so it's no surprise that BNPL has now become a core offering in innovative retail strategies.

As flexible payment options are reshaping how customers approach high-ticket purchases, allowing consumers to make payments over time rather than upfront, BNPL provides greater flexibility and aligns with shifting consumer expectations.

The BNPL market is projected to reach $576 billion by 2026. In the US alone, the BNPL market was valued at $70 billion in 2023 and is expected to grow at a CAGR of 27.5%. In the upcoming year, we will see more retailers offering this payment method.

6. B2E (Business-to-Employee) experience

B2E (Business to Employee) apps provide retailers with the tools and resources to enhance the productivity and engagement of store staff.

By streamlining workflows, enabling smoother collaboration, and allowing effective communication among team members, and with features such as task management, real-time data sharing, and access to critical information, B2E apps, like Priority MyBranch support a more connected and efficient environment while empowering staff to deliver consistent service, ultimately leading to improved retail staff satisfaction and performance.

7. Datafication: Data analytics and predictive modeling

The “datafication” trend emphasizes turning vast amounts of data into actionable insights that drive strategy and innovation in the retail industry and data analytics and predictive modeling will drive retail technology by enabling deeper, real-time insights into customer preferences, operational efficiencies, and market trends.

With increasingly larger amounts and types of data, 2025 will drive more retailers to employ predictive analytics tools to forecast demand and streamline inventory and supply chain management to reduce overstocking and understocking scenarios while ensuring product availability.

8. Omnichannel POS systems

Today's retail customers expect effortless synchronization across shopping channels – online, in-store, and via mobile, making Omnichannel POS systems a growing retail trend for 2025.

As we approach 2025, the adoption of Omnichannel POS systems is set to become a leading trend in the retail industry, allowing businesses to effectively manage inventory, enhance customer service, and ultimately drive sales across various shopping environments.

The future of retail innovation

In 2025, the retail industry will continue experiencing notable shifts as innovative technologies redefine traditional business models and pave the way for tech enabled business environments. As such, retailers that will embrace these upcoming advancements and leverage them to enhance customer satisfaction will secure their position in a competitive market.

In 2025, these trends will continue to drive the shift towards more agile, data-informed, and customer-centric retail practices, establishing new benchmarks for success in the industry.