Retail is a dynamic industry, constantly evolving in response to new technologies. Based on recent statistics, investments in retail technology soared to an impressive $109B in 2021. It is no longer an option for retailers to remain competitive without embracing omnichannel strategies that bridge the gap between online and in-store shopping experiences. By staying ahead of technological advancements, retailers can cater to omnichannel customers, who spend 1.7 times more than single-channel shoppers, according to McKinsey & Company.
Retailers are investing heavily in technologies that enable personalization and a seamless customer journey. They are adopting a two-pronged approach to technology, utilizing both eye-catching innovations and discreet, behind-the-scenes technologies to enhance the customer experience. Moreover, technology allows companies to establish personalized connections at a large scale by using the data provided by customers. This means that mall retailers can begin treating their customers as unique individuals, while luxury retailers can extend their high-end services to a broader spectrum of shoppers.
Immersive technologies like virtual reality (VR) and augmented reality (AR) are captivating customers and drawing them into the "store of the future." These technologies create wonder and excitement, creating memorable experiences that set retailers apart from their competitors.
Equally crucial, however, is the unseen infrastructure that powers a frictionless customer journey. Tracking customers in-store (dwell sensing, RFID), data lake investments, and customer journey mapping logic operate discreetly in the background. Yet, they are pivotal in delivering a personalized and seamless shopping experience. Let’s look at the retail technology trends that will impact the industry in 2025.
Latest trends in retail technology
The growing preference for mobile-centric shopping experiences, the shift towards technology-enhanced in-store experiences, and the importance of cloud-based infrastructure for omnichannel retail operations underscore the importance of retailers embracing digital transformation and leveraging technology to enhance both online and in-store shopping experiences. By staying ahead of the curve and implementing these trends effectively, retailers can gain a competitive edge, improve customer satisfaction, and drive business growth.
1. AI, ML, and Generative AI
Artificial Intelligence (AI) and Machine Learning (ML) have become the bedrock of modern retail and one of the most prominent retail technology trends. From predicting customer preferences to optimizing supply chains, AI and ML empower retailers to make data-driven decisions. Furthermore, Generative AI is taking personalization to new heights by creating tailor-made content and product recommendations, enhancing the shopping experience. According to Forrester, 2025 will see heavy investments in building bespoke, enterprise-ready AI solutions based on clients’ first-party data and the brand’s standards. These customized brand language models will enable marketers to (finally) scale personalized marketing campaigns and brand experiences.
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2. Automation
Automation is revolutionizing inventory management. Buy-online-pickup-in-store (BOPIS), buy-online-return-in-store (BORIS), and buy-online-pickup-at-curbside (BOPAC) have become customer expectations, made possible through automation. Artificial Intelligence and advanced analytics allow complex inventory processes to be streamlined. Automated checkouts, automated emails, POS (point of sale) software, and inventory management software are typical examples of automation in the retail industry. As retailers improve store efficiency and labor productivity, store automation will accelerate. The number of retailers automating their stores is increasing across all formats. Among grocery and general merchandise retailers, the number of automated store tasks is expected to grow from 22% in 2022 to 71% in 2025. Similarly, specialty and department stores expect the number of automated tasks to increase from 34% in 2022 to 70% in 2025.
3. Augmented Reality (AR) and Virtual Reality (VR)
Augmented reality is one of the latest trends in retail technology, revolutionizing how customers interact with products and enhancing the shopping experience. AR offers immersive, interactive encounters with products, allowing shoppers to virtually "try before they buy" or visualize how items will fit into their lives. This technology eliminates the gap between online and physical shopping, creating engaging, memorable customer moments. Retailers expect an increase in the usage of AR and VR applications to create a more digitally engaged customer experience. 4% of retail and wholesale workers currently use AR or mixed reality tools at least weekly, but Forrester predicts they will double by 2025.
4. RFID, QR сodes, and smart store technologies
Retailers are harnessing the power of IoT-based tools, such as RFID and QR codes, for inventory management, traceability, and convenience. These smart store technologies ensure smoother, more transparent supply chains and help customers access product information effortlessly. Research has shown that around 70-75% of stockouts are caused by flawed ordering and replenishment practices. Besides customer retention, inventory management technologies help with retaining on-floor workers. Implementing merchandising technologies such as retail assortment management applications (RAMAs) and unified price, promotion, and markdown optimization (UPPMO) will result in waste reduction and margin optimization. Most importantly, with cloud-based platforms, retailers will be able to merge merchandising, inventory, and operations data, breaking down the traditional silos between them.
5. Mobile technology trends in retail
Mobile shopping apps have become essential for retailers. Mobile devices are the gateway to a seamless shopping experience, offering customers convenience, personalization, and instant access to product information. Mobile e-commerce sales in 2023 reached $2.2T, according to Statista's Market Insights, making up 60% of all e-commerce sales worldwide. With 6.4B people using mobiles in 2022, or 80.5% of the global population, the share of mobile commerce (shopping, banking, and payments) in all e-commerce has steadily climbed, up from just 56% in 2018 to an expected 62% in 2027. The increase in mobile sales has been even steeper as the whole sector keeps expanding globally. In 2027, Statista analysts expect $3.4T of mobile sales. Retailers riding the wave of the m-commerce boom are adopting AR, data-driven personalized communication, and voice shopping to improve user experience. One-click ordering and progressive web apps (PWAs) streamline the customer journey, making it seamless and effortless. Given that 4.9B people (60.49% of the global population) are active social media users, it’s clear that social media should also be incorporated into any m-commerce strategy.
6. Datafication trend in the retail industry
Turning data into actionable insights is critical for retailers in the face of evolving technology trends in the retail industry. Through datafication, retailers can better understand customer behavior and preferences, ultimately driving better decision-making and personalization. According to Forrester research, 73% of customers want their companies to delight them, but just 18% say they have done so. In Adobe's 2023 Digital Trends Retail survey, 92% of retail practitioners agree that they must deliver consistent, personalized content to more channels. However, at the same time, 71% report that the interplay between offline and online experiences makes their customers’ journeys harder to track. 45% of retailers juggle multiple technologies and vendors for customer experience management. Creating a unified platform, where back-end systems are connected to customer-facing channels to allow data to flow freely back and forth in real-time, is key for retailers to become market leaders.
Read more: Big Data in retail: Use cases that bring the most value
7. Frictionless retail and contactless store technologies
We are in the midst of a frictionless retail revolution. Cashierless store technologies, one of the most transformative trends in retail technology, are changing the shopping experience. Computer vision, AI-enabled cameras, RFID strips, and mobile apps work harmoniously to allow customers to walk in, grab what they need, and leave without traditional checkout processes. It’s an ongoing transformation, with over 133,000 patents filed and granted in the retail industry in the last three years, according to GlobalData’s report.
8. Algorithmic retail and immersive shopping
The use of algorithms is one of the most impactful retail technology trends. Predictive algorithms are helping retailers better understand customer behavior and preferences. Using algorithms to analyze big data collected from many sources, retailers can predict what customers will buy and in what order. They can then use AR, VR, and the metaverse to bring products to life and immerse shoppers in interactive, memorable encounters. With the physical store serving as the execution hub of unified retail commerce, it offers the greatest potential for strengthening the link between physical and digital retail. By investing in AR/VR/MR technologies, retailers can enhance the customer experience in-store and drive profitable growth. By 2027, immersive shopping technologies are expected to make up over 7% of sales interactions from less than 1% in 2022, Gartner predicts.
9. AI-enabled security and retail video analytics
AI-enabled security cameras ensure the safety of both customers and merchandise. Retail video analytics and demand planning are helping retailers optimize inventory management and store layouts. AI-powered cameras can be used to implement various features, including footfall analysis, heatmap analysis, queue management, and staff productivity monitoring. Additionally, they can be used for safety and security purposes, such as fire/smoke detection, hostile customer identification, safety gear, and hygiene protocol compliance verification. A recent market study concluded that the global AI camera market is growing at a CAGR of 24.0% and is projected to reach $33.3B by 2027.
10. Hybrid shopping and inventory management technologies
Hybrid hubs are emerging as a central strategy for retailers. Moving inventory into physical stores rather than warehouses enhances rapid delivery capabilities and reduces the risk of stockouts. Two-thirds of retailers now consider same-day or next-day delivery a standard expectation, and a similar proportion (62%) say the same about returns. The 'wow' moments that truly captivate customers now stem from their ability to seamlessly find and purchase the products they desire whenever and wherever they want, whether in-store, online, or through a combination of both channels. This shift in customer expectations drives many retailers to integrate their e-commerce operations with their physical stores, fostering hybrid “hub & store” models and increasing the use of mobile apps within physical retail environments. To meet the needs of today's consumers, retailers are redesigning their physical spaces. Using technologies such as AR to create try-before-you-buy experiences, creating interactive and educational store displays, and even designing stores that serve as community gathering places are just a few examples. Modern physical stores are not just places to buy but experience hubs.
Wrap-up
Retailers today are at the forefront of a technological revolution, adopting cutting-edge tools and strategies to remain competitive. The focus has shifted to four critical pillars of commerce tech: personalization, omnichannel, analytics, and digital store capabilities. Many retailers know they have the technology and data to improve their customer experience but struggle to integrate these two elements. To succeed in the future, retailers need to create a unified platform that gives them seamless access to critical data and allows them to use it to achieve specific goals. Retailers should also partner with digital partners to create forward-looking organizations that can embrace a unified commerce vision. This vision is to provide a superior CX that meets today's and tomorrow's needs.
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