By Rieva Lesonsky
The holiday shopping season was successful for U.S. retailers. A preliminary report from Mastercard SpendingPulse shows that 2024 holiday sales increased 3.8% over 2023’s holiday season.
There’s every reason to believe American consumers will continue spending this year while still searching for value. And more shoppers are opting to shop online: online retail sales rose 6.7%, while in-store sales were up 2.9%.
The good news for retailers is that many of the experts I talked to believe consumers will continue to spend. However, there’s a possible downside. If tariffs are imposed, they could lead to inflation, slow consumer spending, and negatively impact many businesses.
Retail Trends for 2025
Strengthening Connections with Your Customers Increases Customer Loyalty
Modern consumers base their purchasing decisions on more than just product quality and price. Retailers that stay in tune with shoppers’ evolving needs, interests, and values will earn their hearts, trust, and, more importantly, their wallets.
This year, the need for retailers to adapt to shifting consumer behaviors will be challenging, but addressing these three prominent trends can help businesses stay competitive:
Reduced spending
Rising inflation, unemployment concerns, and potential overseas tariffs make shoppers more cost-conscious. To cut costs, consumers increasingly turn to private labels, off-brand options, and discount retailers. Offers like BOGO deals, coupons, and sales events are becoming harder for shoppers to resist, providing key opportunities for brands to engage with value-driven consumers.
Buying better
Shoppers are shifting toward higher-quality, longer-lasting products that deliver better value. Reliable, reusable items are seen as less wasteful and more cost-effective over time compared to cheaper, disposable alternatives. In-store displays and marketing that effectively communicate why a product is worth the investment can significantly influence buying decisions.
Ethics and values
Transparency around sustainability, diversity, and social responsibility resonates strongly with today’s conscious consumers, especially Gen Y and Gen Z, who comprise more than 40% of the U.S. population. These shoppers prefer to support companies whose values align with their own. For example, REI’s commitment to environmental and conservation efforts has fostered loyalty among its outdoors-focused audience.
By prioritizing these trends, retailers and brands can build deeper connections with their customers, positioning themselves for success in an ever-changing market.
—Andrew Swedenborg, Executive Vice President, Business Development, Agility Retail
2025 Will Be the Year of Predictive and Preventative Solutions for Retailers
Retailers will concentrate on three major areas:
1. Environmental and sustainability measurements for retailers by digitizing processes
Retailers are focused on becoming more carbon-neutral by 2025. One method gaining traction is digitizing processes to reduce paper usage at the store and audit levels. Retailers now use process management apps to generate jobs for cleaning crews when necessary rather than scheduling them regularly. This reduces cleaning supply usage by deploying teams only when needed, minimizing the amount of cleaning chemicals purchased.
2. Streamlining in-store checks, compliance, and enhancing maintenance processing
Retailers want to get a handle on compliance and maintenance checks this year, ensuring in-store tasks are completed in real time. Store managers are introducing process management platforms on digital devices to complete vital checks. This comes with the trust that the checks are being completed with location and signature tracking and RFIDs to confirm that checks are fulfilled.
Increased compliance and maintenance checks come with added automation. Store managers can log tasks and instantly send them to maintenance teams, reducing the time required to resolve issues and improve operational efficiency. Retailers can also generate non-compliance reports to resolve and monitor concerns.
3. Predictive, preventative maintenance and the integration of IoT sensors/cameras
Retailers want to achieve predictive, preventative maintenance, but with paper-based processes, they cannot look at mass-scale trends compared to digital applications. In 2025, retail managers will look to identify these trends with digital platforms to identify issues such as faulty equipment to prepare more efficiently for potential replacement.
Retailers are also integrating technologies such as the Internet of Things (IoT) sensors and cameras to prevent theft, crime, and damage, and sending guards to areas where alerts have been raised. Cameras and sensors share alerts, which generate a job to a business’s process management platform for a security guard to attend a site to prevent further damage.
—Fred Whipp, Vice President of Business Development, mpro5
The State of Last-Mile Delivery and Its Increasing Importance
Five factors that will impact last-mile delivery:
1. Tariff tremors
Supply chains will diversify further as businesses seek to reduce risk. Already, businesses are stocking up on inventory to get ahead of potential tariffs, driving up commodity prices. Some companies use the risk of tariffs to encourage customers to buy now, while others indicate they’ll likely raise prices in the future. It’s too soon to know who the winners and losers will be, but 2025 is looking to be a more complex year for supply chain and finance leaders.
2. AI and machine learning take the wheel
AI and machine learning will become critical for logistics companies to achieve greater efficiency, cost savings, and revenue generation through improved delivery experiences.
3. The gig economy drives on
Gig economy drivers will become a staple of the delivery landscape, offering flexibility and scalability for both carriers and retailers.
4. “Free” over “fast shipping” wins
Retailers can protect themselves against legacy carriers raising shipping costs by offering slower delivery at lower costs. Giving consumers the choice to receive deliveries more slowly helps retailers reduce costs, and carriers rebalance deliveries for greater efficiency.
5. The importance of diversification
Businesses will demand a greater return on their shipping spend, recognizing the impact of delivery experience on customer loyalty and revenue generation. Retailers will accelerate the diversification of delivery carriers to mitigate risk, save costs, and optimize their logistics networks.
—Itamar Zur, CEO and Co-founder, Veho
More Retailers Will Embrace Marketplaces
The explosion of marketplaces in recent years is only the beginning. Platforms like TikTok Shop, SHEIN, and Temu continue to disrupt e-commerce, while established retailers are entering the marketplace arena. We’re also witnessing the rise of verticalized marketplaces specializing in niche categories, such as pre-loved items with Poshmark or refurbished tech on Back Market.
For retailers, this diversification presents a tremendous opportunity—but also a challenge. Success will depend on their ability to access these marketplaces without high developmental costs or resource-heavy integrations. Streamlined multichannel management software will be critical to avoiding operational bottlenecks and the risk of falling behind competitors.
—Chris Timmer, CEO, Linnworks
B2B Buyers Want a “Blended” B2B and B2C Experience
B2B buyers will seek the functionality they’ve come to expect in their personal shopping experiences. While they may not be as quick to adopt the most cutting-edge B2C trends, like social commerce, they are looking for a blend of B2B and B2C features—like mobile ordering and flexible delivery schedules—that deliver speed and convenience tailored to their business needs.
More B2B marketplaces will gain traction in the year ahead as buyers seek more choices and better deals. As demand increases for access to a wider range of products, superior quality, and competitive pricing for business purchases, the demand for and use of B2B marketplace platforms will likely increase.
—Ashley Hubka, Senior Vice President and General Manager, Walmart Business
Small Businesses Will Focus on Selling Directly to Consumers
While online marketplaces like Amazon and eBay will still be valuable to small business owners when looking to reach a wider audience, we expect to see more businesses building their own online storefront and checkout functionality, with platforms like Shopify and Square to sell more directly to customers.
—John Towle, Director of Small Business at Block Advisors by H&R Block
More from AllBusiness:
2025 Franchise Trends
Franchising Will Continue to Grow, But If There Are Major Hiccups in the U.S. Economy, That Growth Could Be Severely Limited
What factors can slow the growth trajectory of franchising?
• Possible tariffs: Be alert to potential tariffs and the real possibility of inflation ticking up again. If that happens, consumers will reduce spending, which means franchises in the retail and food service sectors will take a hit.
• AI adoption: More and more franchisors will realize they must get on the AI bandwagon, particularly for marketing and operations. First, however, they’ll need to train their employees at headquarters on how to use AI effectively.
• Franchise sales: This will likely be a good year for franchise sales, especially if corporations continue to downsize, attracting numerous prospective franchise owners.
• Consolidation: I expect to see industry consolidation, especially in the fitness category. Nearly 100 different franchise opportunities are currently offered in the fitness space. Some newer concepts include ultraviolet light therapy and more modern versions of Pilates. This means some larger fitness brands will look to buy some of the smaller ones, especially the franchise concepts that offer services they don’t.
—Joel Libava, The Franchise King
Franchises Need to Adopt New Technologies
As franchising evolves, so do the ways franchises should leverage technology. At Stretch Zone, we effectively use AI to communicate with our members and studios. For example, AI has become crucial not only for operational improvements but also for onboarding new franchisees. It is also a helpful tool for creating streamlined content that is impactful on both a national and local level and for a social media strategy.
Our focus has also shifted, and we are adapting membership trends to align with consumer preferences. The marriage of an on-demand service via membership models is spreading. Gone are the days of long-term contracts as we shift to match the needs of a changing health and fitness franchise space. Technological advancements have fueled the growth of the wellness market, and franchises should evolve with the demands of the industry.
Key trends for us include our successful membership model and meeting our members where they are in their daily lifestyles. To attract customers, we offer our first stretch free. And instead of focusing on KPIs, click-through rates, and marketing data, we’ve found that our members are searching for human connection. So, we’re bringing our messaging and marketing strategy back to the basics.
—Rob Koehler, Director of Marketing, Stretch Zone
Will the Gig Economy Rebound in 2025?
While the gig economy experienced a lull post-Covid-19, we expect a resurgence this year. Small businesses will increasingly rely on gig and contract workers to fill specialized roles or manage specific projects. Workers seeking more control over their schedules and workloads will also fuel this trend. With consumers struggling to pay for day-to-day expenses such as rent, groceries, and gas, we’ll see an increase in gig work, which can likely be attributed to workers desiring more work autonomy and needing an extra source of income to make ends meet.
These predictions are backed by stats in H&R Block’s recent report, which found that 29% of Gen Zers “want to be in business for themselves,” and 7% prefer to work as 1099 independent contractors. Among those who want to be self-employed, 59% wish to own a small business. Over half of Gen Z anticipates turning a hobby into an income source in the next 12 months. But it’s not just the younger generation fueling this phenomenon: 37% of millennials, 29% of Gen X, and 16% of boomers feel the same.
—John Towle, Director of Small Business at Block Advisors by H&R Block
About the Author
Rieva Lesonsky creates content focusing on small business and entrepreneurship. Email Rieva at [email protected], follow her on Twitter @Rieva, and visit her website SmallBusinessCurrents.com to get the scoop on business trends and sign up for Rieva’s free Currents newsletter.
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