Retail will delve deeper into a more personalized digitized future in 2025, according to the 2025 U.S. Retail Industry Outlook from Deloitte. Deloitte expects a shift from a supply-driven model based on matching goods and mass market movements to a data-driven approach to individual consumers, described by the business services firm as a move from mass to micro.
Still, given the high transitional costs and headwinds of legacy systems and business models, the transformation is easier said than done. The fragmentation of consumer trends, falling volumes, supply chain issues, increased costs and tech debt are elements in transitional difficulties.
Retail has faced near stagnation the past few years, with a compound annual growth rate of 1.5% to 3.5% depending on the sector and a margin squeeze from increased competition and consumer demands for convenient omnichannel experiences. Digital adoption costs have created a state of urgency as retailers look for innovative ways to address efficiency, build partnerships, and develop alternative revenue streams, Deloitte maintained.
Circumstances have pushed retailers to do more with less, but automation and technology appear to promise some relief. Generative artificial intelligence, in particular, seems to be moving beyond hype and generating successes in application. Retailers that offered GenAI tools such as chatbots during the Black Friday weekend had a 15% better conversation rate than other retailers, Deloitte noted, and, in the firm’s research, six in 10 retail buyers said that AI-enabled tools improved demand forecasting and inventory management in 2024.
With digital efficiency arriving, 2025 could be a breakthrough year and include advancements in strategic arenas of merchandising, supply chain and marketing, Deloitte asserted. To help them personalize experiences, about seven in 10 retail executives expect to have AI capabilities in place within the year, Deloitte pointed out
The tech potential has spurred a more positive retail outlook. Retail executives in a recent survey said they expect the industry to grow by mid–single digits on average in 2025. They indicated that reconfiguring loyalty programs, strengthening digital commerce and enhancing the omnichannel experience are growth opportunities that can produce a more holistic, frictionless and personalized experience for the consumer.
Delotte stated that, as the move from mass to micro in 2025, retailers should engage the value-seeking, boost omnichannel capabilities and master micro functions such as personalization.
Deloitte economist, Akrur Barua stated that, given current trends, a strong economy should boost retail sales barring significant change. He noted that the United States has outpaced its advanced-economy peers in post-pandemic recovery, which Barua expects to continue, with real GDP rising by 2.8% in 2024 and by 2.4% in 2025. Expectations are growth will moderate a bit in 2026 but still is likely to hover around 2% until 2029. Consumers will be a key driver of growth momentum, as inflation has been easing steadily. At 2.3% in October 2024, personal consumption expenditure inflation is much lower than the peak of 7.2% in June 2022.
The decline in inflation should boost consumer purchasing power. Real average hourly earnings grew 1.2% in the year through November 2024, up from 0.8% over the same timeframe in 2023. Inflation should ease further in the 2025-to-2029 time frame, Barua maintained, and consumers should benefit from a healthy labor market and a gradual easing of interest rates by the U.S. Federal Reserve. The Deloitte outlook for consumer spending growth in 2025 is 3.1% in 2025, with durable goods gaining 4.7% before easing over the following years.
Still, a sharp hike in tariffs could dampen the retail outlook as part of a broader economic slowdown, and growth in prices may encourage the Fed to hike interest rates in 2026, with consumer spending and GDP likely contracting as a result.
