Dive Brief:
- If the economy remains healthy this year, Deloitte anticipates consumer spending will grow 3.1% year over year, according to its 2025 U.S. Retail Industry Outlook report shared with Retail Dive.
- Nearly six in 10 retail executives anticipate consumers to value price over loyalty this year, per the report.
- The retailers that deployed generative AI during the Black Friday weekend saw a 15% jump in their conversion rates. Six in 10 retail buyers said they adopted AI-powered tools to generate more precise demand forecasting and inventory management last year, per the report.
Dive Insight:
2025 could be a “breakthrough year” where retailers will integrate more generative AI tools into their operations to enhance shopping and delivery experiences for customers.
Deloitte noted that almost half of retail executives said convenience, particularly last-minute deliveries and inventory visibility, are critical to consumers. Seven in 10 respondents said they anticipate retailers using more generative AI tools this year to boost efficiency for customers, especially in areas of product recommendations and price comparisons, per the report.
“Economic pressures and a fragmented consumer necessitate the modernization of business models and the adoption of digital-first strategies,” Deloitte said in its report. “Retailers on the sidelines could lose out to competitors that already embrace mass to micro strategies and the technology needed to create the convenience, inspiration, and hyper-personalized experiences that many consumers have come to expect.”
As retailers increasingly use generative AI, the National Retail Federation has tried to provide a framework for responsibly using the technology to improve their businesses. During the NRF’s Big Show earlier this month, retail executives discussed using AI to improve their supply chain and personalization features.
Meanwhile, those people seeking to stretch their budgets have sought more value for their money, meaning that they want well-made goods for a reasonable price. Consumers across income levels are switching to affordable brands and retailers, shopping private label and dupes and waiting until promotional periods, according to Deloitte. “As consumers seek more ‘value’ from every purchase, the retailer with the lowest ‘cost to serve’ most often wins the business,” Deloitte said in its report.
