All signs point to a positive year ahead for retailers, according to Deloitte’s annual retail industry outlook report.
In its 2025 iteration, called “The Promise of Intelligent Interaction: Monetizing Mass to Micro,” Deloitte’s research team surveyed 75 retail industry executives (80 percent from companies with annual revenue of $10 billion or more), interviewed industry experts and analyzed a financial analysis. The report found expectations for consumer spending to grow at a pace of 3.1 percent in 2025 with spending growth on durable goods remaining high at 4.7 percent in 2025, before relaxing over the next few years.
The report spotlighted key highlights from the survey including consumer priorities, which found U.S. retail executives believe that consumers will prefer to spend on experience over goods (80 percent), higher use of Gen AI for shopping (71 percent), product purchases increasing on social media (68 percent), more frequent shopping trips with smaller basket sizes (67 percent) and valuing lower prices over brand loyalty (56 percent). Additionally, the executives see growth opportunities from strengthening loyalty programs (46 percent), strengthening digital commerce offerings (45 percent) and enhancing omnichannel experiences (44 percent).
The executives reported that they expect challenges from increasing business costs due to climate change (81 percent), increasing price wars (80 percent), rising cases of retail theft (76 percent) and strained consumer trust due to next-gen technology (69 percent).
Three key trends highlighted in the report include appealing to the value-seeking consumer, focusing on omnichannel opportunities and investing in efficiency.
Pointing to Deloitte’s prediction for spending in 2025, Lupine Skelly, retail research leader at Deloitte, told WWD that even with the pace to grow “retailers may need to find the right mix of strategies to engage consumers who continue to show value-seeking behavior, such as trading to more affordable and private label brands, seeking out discount retailers and waiting for deep discounts to purchase.”
Survey results from Deloitte’s research found that nearly six in 10 retail executives expect consumers to value price over loyalty in the next 12 months. Eight in 10 also expect “an escalation of price wars in the year ahead” with 75 percent counting on AI to assist with dynamic pricing based on demand and competition along with other factors.
“As consumers seek more ‘value’ from every purchase, the retailer with the lowest ‘cost to serve’ most often wins the business,” Skelly said. “This behavior has created a loyalty crisis of sorts.”
Moreover, Deloitte’s researchers said that retailers must understand that “value can mean different things to different demographics” with consumers showing various priorities from convenience or experience to quality and price.
“To address the challenge, retailers will need to move from ‘mass to micro’ — offering hyper-personalized value and conveniences,” Skelly said. “Winning in this environment will entail strengthening loyalty programs, providing improved shopping experiences through AI and machine learning, focusing on shopper convenience, and ensuring retailers have the right mix of discounts and promotions to attract and retain the value-seeking consumer.”
Almost all of the surveyed retail executives said that they see loyalty programs as a top growth opportunity — especially investing in programs that lead to transactions through personalization, tiering or co-branding. Forty percent also said they have plans to engage customers through shopping experiences with AI and machine learning representing opportunities for enhancements.
Investing in a digitized future and digital-first strategies was a key theme throughout the report as retailers look to seize consumer spend and further efficiency. The authors of the report noted retailers feeling the “need to do more with less” adding that automation and technology are promising with Gen AI being at the top of this hype having shown successes. Seventy percent of surveyed retail executives said they expect to have AI capabilities to help personalize experiences in 2025 and 80 percent expect to increase social commerce.
In terms of investing in technology for efficiencies, retail executives told Deloitte that plans were moderate to major and aimed to optimize costs rather than cut them. Technology that would further efficiency for workforce hiring, retention and future readiness was top of mind for two-thirds of respondents, while another 90 percent said they plan to modernize supply chains and more than 50 percent reported that they plan to invest in M&A. Three-fourths also said that they plan to invest in alternative revenue streams.
