What’s Ahead for Retail Trends in 2025

Catherine Erdly: Welcome to the Resilient Retail Game Plan. Episode number 230: what’s ahead for 2025. Hi, I’m your host, Catherine Erdly. I’m also the founder of the Resilient Retail Club. You can find out more about my services and offers by going to resilientretailclub.com. And today, what I wanted to talk you through is what is coming up, what retail trends that we’re going to see in 2025.

So I know it is the 26th of December. So we’ve just got through Christmas. If you have been busy all the way up to Christmas, you may be just about recovering your sanity, pulling yourself together. But I wanted to use this opportunity to have a think about what lies ahead.

Welcome to the Resilient Retail Game Plan, a podcast for anyone wanting to start, grow or scale a profitable creative product business with me, Catherine Erdly. The Resilient Retail Game Plan is a podcast dedicated to one thing, breaking down the concepts and tools that I’ve gathered from 20 years in the retail industry and showing you how you can use them in your business.

This is the real nuts and bolts of running a successful product business, broken down in an easy, accessible way. This is not a podcast about learning how to make your business look good. It’s the tools and techniques that will make you and your business feel good. Confidently plan, launch, and manage your products, and feel in control of your sales numbers and cash flow to help you build a resilient retail business.

Fun fact. When I first started my business, I called it Future Retail because I was so fascinated by all of the different things that were happening in the retail industry. And I wanted to really explore where their industry was going. Over time my focus in the business shifted and I started working with the small and independent retailers and brands, which has been my love for the last seven years.

But I also have a very soft spot for all things to do with retail trends and it is absolutely fabulous to be able to contribute to Forbes.com and be able to really get my hands on loads of great research, talk to lots of amazing experts, and be a part of the conversation about what happens next in the retail industry.

So I’m super excited to bring you today’s episode. If you’re interested in reading more about retail trends, do Google “Catherine Erdley Forbes” and you will see my contributor page pop up and you’ll be able to take a look. 

But I wanted to talk you through four key trends that I see ahead for 2025 and more importantly, what they mean for your business.

The shift towards younger consumers

Catherine Erdly: So the first thing that I wanted to highlight is this shift towards younger consumers. So Gen Z, which broadly speaking, is sort of mid to late teens to about 24 year olds. That is a group that is growing hugely in their spending power. We’re basically seeing a sort of transfer of spending power going from Boomers to Gen Z, depending on how you want to say it.

The research suggests that by 2030, 39 percent of all shopping will be coming from Millennials and Gen Z, so the younger generations, with then Gen Alpha coming up behind. So this is important for a number of reasons. Firstly, this is the most digitally native generation that we’ve ever had.

These are the people that grew up with iPads, with smartphones. They’ve never really known anything different. So they are fully, fully comfortable being online and also specifically running their lives from their phones. So the kind of key things to think about when it comes to this transfer of purchasing power, if you like, is that the Gen Z customer is really all about ease and convenience and it’s really mobile first.

So mobile commerce, people purchasing from their phones, that’s been rising year on year. Every year it increases, it becomes more important. And we’re also seeing the rise, continued rise of social commerce. So social commerce, mobile commerce, any purchasing that happens on a mobile phone, social commerce is part of that.

So that is purchases happening through social apps. So inside Instagram, TikTok, and we’re seeing growth in all of those elements. So the website that we have all spent many hours agonizing over, the desktop version, is definitely going to start taking a back seat as customers just become more and more comfortable with their mobile phones and sort of the opposite of the kind of like the mirror of that, which is that the customers that are naturally already really comfortable with their phones and running life from their phones, their spending power is going to increase.

So it’s definitely something to consider. And also, where I think the opportunity comes is obviously for a lot of people, those of us who’ve been on Instagram since the heady days of the sort of 2010s when you could get really great organic reach on Instagram, it can be feel very demoralizing in being on that platform when it’s a different game. You’re just seeing a different, a completely different way of operating.

However, what I would say is that what we’re seeing with this growth of people who were really comfortable shopping on their phones, they are using them for everything. They’re using them to check out, but they’re also using it for research and they’re also using it for that social proof. So they want to see other people using your products.

They want to see the business themselves showing how the product could be used. And so they are really using it for research, as well as for final purchase. So everything is happening in the apps. And I think that that is an opportunity for us as small business owners to really start thinking a bit differently about social media. In terms of, it’s about nurturing and it’s about building communities and connections and also accepting that it’s going to be predominantly a consideration tool.

So if somebody sees you an ad, for example of yours, they’re going to go to your social media profile and they’re going to use that to understand more about what you do and to move their purchasing decision along. So don’t neglect that through feeling despondent, for example. You need to think about therefore your social media as where you can show your proof, your social proof, your user generated content, and all of that kind of thing to really connect with this customer.

Not to mention, just got to make it smooth and seamless. So people may want to buy in through social apps. They may want to buy on your website, but on their phone. So making sure that everything is mobile optimized is really important as well. 

People, younger generations are also doing a lot of research across channels. So even if they are going into store, they will have done their research online first. And we’ll touch on that a little bit more later as another big trend and therefore you’ve got to make sure your pricing is consistent, that basically everything works really smoothly. They want it to be easy and convenient.

Those are key things for this generation: ease and convenience. The other areas I think that are potentially an opportunity of things. Like the fact that they’re much more, much more comfortable with things like AI, with chatbots. And so in terms of, again AI, a big theme, which we’ll talk about a bit more later, but in terms of how you can leverage this.

Then the younger consumer is not being put off by having technology doing some of the lifting when it comes to answering queries, for example. So I think that that is an opportunity for small business owners who ultimately wear a lot of hats. They can look at ways that technology can interact with their customers more.

How brands can adapt to fickle consumers 

Catherine Erdly: Another piece to think about with this younger consumer, millennials and Gen Z, they are a little bit fickle. So they tend to have lower levels of brand loyalty compared to other generations. That is potentially also an opportunity because it means that they’re not getting wedded into a big brand and not really wanting to try or have a look at anything else.

So there’s opportunities there to gain new customers. When it comes to keeping them, that is trickier, but that’s where things like personalized messaging, especially through emails is going to become even more important than it already is. And also thinking about how you can make it personal at scale, which again, that comes through a lot of AI, but also this idea of community.

So this is something that I think will also become much more of a buzzword over the next couple of years in retail. And I think big retailers are going to start trying to cotton on to that. Going to start to cotton onto the fact that having a community is a way of kind of counteracting this increased fickleness or this decreased brand loyalty.

And that is that people maybe won’t be seeing so much loyalty to brands. But they might see more of like a connection to other people, either the person in the business, which again is great news for small business owners, because it’s very easy for you to put yourself front and center because that is who is running the business.

But equally the people who are around this business and sharing the sharing the same ethics and values and I was talking in my mastermind group. We have our weekly group calls, and we were talking about Lucy and Yak, for example, is a perfect illustration of this way of creating community that people, they buy the brand because they love the product, but they also are bought into the brand values and then the interactions that they’re getting within that community as well.

So I think that as the money shifts towards younger consumers, it’s less about thinking about brand loyalty and more about thinking about the community. And if your customers feel like they’re part of something, they’re much more likely to come back and remain more brand loyal. Even if they maybe aren’t thinking about it so much in brand loyalty terms. They’re more thinking about, they feel comfortable because they’re part of a community.

So that was the first trend, the shift to the younger consumer and what that means effectively in the way that they shop, how they shop, and what they want to see from businesses.

Why considered purchasing matters

Catherine Erdly: The second piece, and I suppose really going back a step, the fact that the consumer is getting younger or that, I should say, the younger generations are growing in their purchasing power, it almost runs through every other single trend because it has a knock on impact.

Because if you think about the people who are doing the majority of the buying, that’s really has a big impact on the overall retail industry and how people shop. So the second piece, then the second big trend is considered purchasing. So considered purchasing pretty much every year that I do these trend recaps, and I’ve been doing them since 2020.

So this is my fifth one. I often bring up sustainability if I’m honest, it almost always comes up. And the big thing is that it changes and it shifts year on year. So, sustainability used to be, back in the day, about do you have recyclable packaging? Then there’s the whole big push towards zero plastic.

Now people, there’s a couple of different things. People are number one looking for people, brands, and businesses to be regenerative where possible. So not just not doing harm, but actively doing good. Whether that’s planting trees or perhaps the packaging that they have gives back in some way because they make a donation to a certain cause or something like that.

Or maybe it’s created by clearing up ocean plastics, for example, and then turning them into something. So people are almost expecting now to see regenerative as opposed to just sustainable. And when I say people, I mean, there’s always going to be there’s a continuum. There’s the customers that aren’t that bothered, but then the number of customers that are concerned grows year on year.

So more and more of the customer base is thinking about sustainability. What people consider to be okay grows. I think that the demands get a little bit higher each year, but equally so I think that customers are also more cynical so they know that there’s greenwashing. They know that people say things and you know, it’s all of the things like when a fast fashion business talks about their eco range and yet they sell it for four pounds and you just think, well, how does that, work?

Okay, maybe the products recycled, but maybe some of the fabrics made from recycled something or other. But really, how eco or how fair is this to the people in the supply chain, let alone the actual materials that it’s made of. So I think there is a growing cynicism. There is a growing backlash against over consumption and equally a real kind of need for businesses to be really transparent and proof that what they’re doing is actually something more than just a marketing message.

So I think that’s the kind of background, the landscape that we’re in right now is that people do want to see sustainability efforts and it is important to the customer. But I think personally, you’re better off doing something smaller than trying to and being transparent and open about it. If you can’t eliminate plastic from every single element of what you do, but you are open about the ones where you can, then I think that customers are ready to hear that.

I also think there’s a reason I called it considered purchasing and not just sustainability is that I think it kind of goes a little bit beyond sustainability. I think it’s more of a general feeling that people’s disposable income, I think it’s, I think it’s, better than it’s been. I think that inflation has definitely eased.

There is not quite so many worries as there were before, about things like the cost of fuel or interest rates aren’t as dominant of a fear in the consumer’s mind. Although, obviously, many people are still being impacted by these things. So I think that the consumer overall is a bit more confident than they have been over the last couple of years.

However, I do think they are thinking carefully about what they’re purchasing. And I think that that’s a combination of things like wanting to avoid overconsumption. This whole idea of we’ve hit peak stuff, you know, most people are thinking about decluttering and reducing the amount of things that they have instead of adding to them.

So it just means that when they are buying that they really need to have a reason that they want to know about the product, that they’re thinking about it there, which I think is a positive thing to be honest. And I think one that small business owners are well placed to tap into because you can tell the story and I think storytelling about your products is going to be increasingly important as we move into 2025 as well.

I’m really explaining the value behind them and what makes them so special and all the things that you know make them special, but are you telling the customers that? So I think that we are seeing continued support for small businesses. So some research that I saw recently said that 21 percent of people were actively aiming to increase what they bought from small businesses this year. And people are looking to support small, they know that supporting small and local and independent is a positive thing to do. 

And so I think that as small business owners, we have to tap into that and we have to tell the stories about our products and explain what makes them so great and allow that customer that is being considered with their purchasing to feel really, really good about buying from us.

Looking at hybrid retail: how people mix online and in-person shopping

Catherine Erdly: Okay, so point number three is about hybrid retail. So I love this trend because I think that, for a long time, people really thought about physical retail and e-commerce as two different things, and they’re so, so intertwined. Also, going back to my previous point, I do think we are going to see people’s decision making processes extending a little bit as well.

So where people might have just said, yep, okay, and bought something. They are thinking about it. So everything that you create from your business content perspective is, it’s useful to really think about the fact that people are taking long to make decisions. So don’t be afraid to be putting out lots of different content for them to consume, to help them move along that decision making process.

But hybrid retail, going back to hybrid retail. So this is the combination of, there’s a terrible word which people use called fidgetal, which I’m not a fan of. Physical, digital combined. So I’m not going to say that word. Hybrid retail, so it’s really about understanding more about the movement between people shopping online and offline.

And there is definite evidence that we’re seeing more of this happening. So research by Shopify suggested that 61 percent of people were looking at products online before buying in stores. And during Black Friday, Cyber Monday, a QR codes unlimited, which is the largest QR code provider to Shopify stores, saw a big increase in QR code interaction. Which means basically that people were starting in store and looking at a product there and interacting with it, but then they were ending up buying online.

So we’ve seen evidence of increased behavior in both directions. We’ve also got the continued development of technology such as NearSt, which is a company that I’ve been following for years. And what they do, which I think is super exciting is that they make physical inventory searchable. So for example, if you want to search for, “I need AA batteries,” you can search “AA batteries near me” and it will pop up with the shops that stock them.

So it’s instead of ordering something from Amazon to come the next day or adding something to online grocery shopping, you can just see, “Oh, actually, if I walk for five minutes in that direction, I’ll get some AA batteries,” for example. So I think that’s really interesting. And I think again, a big opportunity for small businesses because I think that it’s about understanding how the customer shops and allowing them to shop.

If they want to research before they come in store, let them do that. Make sure you’re set up for that. If they want to interact with your products in store, but then buy online, then that’s okay too. And I think that the more we can facilitate that, then we are actually encouraging really great solid customers who will buy from us in a longer term.

Because a lot of research shows that if somebody buys from you more than one channel or even interacts with your business on more than one channel, then you are going to generally speaking, keep that customer for longer. They’re going to be a better customer, a repeat customer.

They tend to spend more, return less and tell people about your brand more. So in other words, they are the best kind of customer that you can have. So I think that it’s an exciting opportunity to really think about how you ping people from one to the other. If you’re a physical store with a website, for example, are you getting people to move from one channel to the other?

And how are you doing that? How are you encouraging that? Can you use things like QR codes? Can you make sure that you’re highlighting the URL? Can you send people emails and encourage them to come into store? All of those things that can be really, really helpful to get people to actually move in between.

And if you think about the idea of moving them in between, it’s almost like a goal for you to have. What can you do to encourage that? And also makes things more convenient for them. Can you offer click and collect? Can you offer something that if you want to buy something in store and reserve it, you could offer them free delivery later or something like that, if it’s local. 

So just thinking about all of the different ways that you could get them to interact with your store in different channels. And I think what is interesting as well is for ecommerce brands is thinking about the role of physical retail or in person retail. Whether or not it’s a pop up, whether or not it’s an event, and thinking about how that works for you.

But equally so, if you’re somebody who doesn’t have a physical store, but you do events, like how are you moving people between your channels there? Are you encouraging your mailing list in your social media to come and see you at the event? And when you’re at the event, are you capturing people’s emails addresses?

Which is, I really strongly encourage you to do that. If you’re seeing people in person, try very hard to connect with them and make sure that you can keep talking to them afterwards. Because again, if they buy from you in person, and then they buy from you online, then they’re much more likely to become a really great regular, repeat customer.

Integrating generative AI into your retail operations

Catherine Erdly: And then the fourth trend we have is AI. So generative AI is absolutely everywhere. It’s amazing to me to see how quickly this has grown because really just this time last year we were talking about it for the first time. It didn’t even make it onto my trends report for 2023 and it kind of exploded onto the scene in 2023.

ChatGPT was one of the fastest launching websites in terms of traffic growth ever and we have seen generative AI. So specifically, generative AI is AI that can create things. So AI has been around for years. I did a talk on AI back in like 2018. So artificial intelligence and big data machine learning, that’s been behind a lot of elements of the retail industry for absolutely years.

So things like, powering your Amazon recommendations and stuff like that. But I think what’s really just spun it into another level has been the fact that it can generate, so generate text. And I think that we’re going to see it reshape the retail industry in ways that some are predictable. Some I think we won’t be able to predict until we get a bit further down, but we’re going to see that really impact the industry in 2025.

Now I personally think that generative AI is a huge opportunity for small businesses because I was having this conversation with someone the other day about the fact that obviously there’s a big concern over it impacting jobs. But in a small retail business where I see it having value is it’s not taking anyone’s job if you never had anyone to do that job in the first place, for example. 

 Because basically as a founder, you often end up wearing so many different hats. So you may have well been the person writing the product descriptions as well as the emails, as well as planning out the marketing.

And now you can get support with that. You don’t ever really have to be stuck for ideas. Again, this is something that I’m really keen to incorporate inside the Resilient Retail Club in 2025 is specifically tailored AI bots for independent retailers to help with ideas about sales growth.

Basically, that’s what I’m working on. And I think that there’s so many opportunities to basically make yourself more efficient, improve your efficiency in a way that it’s not about taking away jobs from other people, but maybe about you getting to bed before 2am when it’s busy. So for me, that is a big win and a really big opportunity.

And I think that if you haven’t thought about using AI or if you’ve not dabbled with it, then definitely take a look. Now, the only thing I will say, the only note of caution about AI that I, that in the back of my head concerns me a little bit is I think it’s really great for ideas. I think it is brilliant for ideation.

So if you are need to come up with some ideas, then fantastic. Go ahead. Do the come up with the ideas using AI. I do think that there is possibility or very high probability that the world has become going to become flooded with mediocre AI messaging because you can say get it to write this campaign for me.

And if you don’t give it more detail, it’s just going to generate a load of very, very generic stuff. And then if everyone’s doing that, then basically what we’re doing is just creating a lot more noise. And yes, it’s good to be consistent, but if what you’re being consistent with is pretty mediocre, then I think that’s not necessarily helpful.

So for me, it’s going to be about operational efficiency and ideas. So helping you generate ideas. But I think the magic will still come when you’re able to put your own particular spit on it, as opposed to getting something too generic from the AI. Now you can put a lot of input into it and you get better and better results, the more you put in.

But I think that that would be my caution. For anyone listening with AI is think about how it can make you better, more streamlined, more efficient, but also just watch that you don’t lose some of that humanity as it were. So there you have it. Those are my four trends for 2025. The shift to younger generations, Gen Z, considered purchasing hybrid retail and generative AI.

I’d love to hear what you thought and what you think will be the big trends for 2025 coming up. Otherwise, I hope you are having a good break. We are going to be back next week with an interview with the fabulous Jamie Watkins from Divine Savages, who’s part of my mastermind. Their mastermind cohort for January will be opening soon.

So keep an eye out for that. And in the show notes, we have got a link to my talk happening on the 8th of January, which is called from six figure years to six figure months. And we’d love to see you there.

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