2025 retail trends from NRF’s Big Retail Show

The important societal role played by the retail industry as an employer, a talent enabler, a provider of hubs for community activity, and as a source of support during crises like the recent Californian wildfires was highlighted by several speakers during the conference.

As the human face and voice of the industry, employees can be and are a competitive differentiator. Target CEO Brian Cornell spoke of the importance of a focus on team and talent in the competitive dynamic. At Target, people can start as store associates and progress very quickly to store director with 200 people working for them, he explained. Mentorship is very important in career progression and helps people move from being individual contributors to leaders of people. Technology also plays its part, with AI being used to push the right information to staff to make relationships better and help make recommendations to customers.

Labour shortages at a time of full employment and much tightened immigration policies in the US were addressed by the NRF leadership during the conference. It was noted, however, that jobs displaced in some sectors by AI and automation may provide a new source of labour for the retail sector.

Overall, there was a strong emphasis on the need for continuous investment in staff training both to attract and retain talent and to improve the customer experience.

A number of common themes emerged in relation to customers. Today’s retail customer wants value, innovation and a high quality experience. The also want bricks and mortar stores to be in the right locations for them.

Online channels are of increasing importance to younger consumers with 60% of US GenZ using the TikTok shop every day. In just 1.5 years it has grown bigger than both Shein and Sephora. Brand loyalty is nuanced with those younger consumers and while the beauty brand boom continues, younger customers are loyal but use lots of brands, but the product has to be good.

The ability to learn from challenge and to embrace change was highlighted by the Corie Barry, CEO of Best Buy. Noting the technological and store experience changes which have occurred since the Covid pandemic, she emphasised the continuing need to place the customer at the centre and to personalise experiences to meet the differing needs of customers. In that sense, retailers should strive for adaptability rather than perfection, she advised. Furthermore, innovation, while important, must resonate with customers and not be engaged in for its own sake.

In Lululemon’s case that means using technology to differentiate and serve customers, who it describes as guests, and develop a relationship with them. Innovation is used to develop products with two things in mind – what the person is doing and how they want to feel. The importance of being selective in terms of innovation efforts in order to devote resources to bigger opportunities was also highlighted.

The importance of the post-purchase experience was highlighted by a speaker from Carraway Homewares who noted that “lots of retailers check out at the checkout” with a focus on getting customers to transact and little more.

Closing the loyalty loop by focusing on the post purchase experience requires a change of mindset but offers significant benefits in terms of competitive advantage, improved customer retention and enhanced reputation. It also presents additional opportunities to interact with customers thereby creating new sales prospects.

Amid much speculation about brave new worlds of retailing brought about by AI, the industry itself doesn’t quite see it that way, and nor does the acknowledged leader in the AI space. According to Nvidia Retail CEO Jensen Huang, the areas where the technology is likely to have most impact will be supply chain and store layout optimisation along with forecasting for stock replenishment.

Of course, the technology will have front of house benefits as well, particularly in the area of personalisation. Retailers have access to a vast amount of data which can be turned to their advantage by AI. Potential uses include replicating sales assistants with AI, using AI agents to support employees and make them more efficient, using the technology to write responses to customer queries, and using it to detect items at checkouts.

“When you’re asked to get on a rocket ship you don’t ask which seat”, Huang declared before advising young retail executives to think big, get out of their comfort zone and keep learning.

The industry is investing heavily in AI, however, and the KPMG CEO Outlook 2024 revealed that 81% of consumer and retail business CEOs recognise it as a key investment area with 67% confident that they will see a return on their GenAI investments within three to five years.

Amazon Stores CEO Doug Herrington explained how the company is using AI in a variety of areas while much remains the same at the born on the internet retailer. He pointed out that there were a lot of failures in its first five years and the company almost went bust. The response was a simple strategy of lowering prices, adding selection - not just books, and improving customer convenience. Those things are not going to change as the faster the organisation delivers the more people buy.

AI is being deployed to summarise reviews, answer questions, make size recommendations and summarise feedback, re-write product titles and descriptions based on what customers are looking for, create listings for sellers, and improve customer service through higher quality responses.

It is also being used “everywhere” in the Amazon supply chain.

He believes the use of AI will continue to grow and quoted OpenAI CEO Sam Altman who said: “AI is overstated in the near term but understated in the long term.”

The adoption of new technologies must go hand in hand with innovation, but that requires a high tolerance for failure.

At Walmart, GenAI is being used in store to help staff by acting as what the company terms a ‘superhero sidekick’. At another level, it is helping to plan overnight shifts in individual stores and what formerly took an hour now takes five minutes a night delivering highly significant savings and efficiencies across 4,600 stores 365 days a year.

Rami Baitiéh, CEO of Morrisons, had this piece of advice for retailers implementing new technologies: “You need to select the right technology to get the right results – technology is best when you don’t see or feel it.”

The continuing importance and relevance of physical stores was emphasised time and again at the conference. Indeed, Walmart revealed that 80% of its sales still happen in stores with online seen as complementary to the in-store channel. Traditional stores are investing heavily in digital capabilities but online retailers are opening physical stores demonstrating the importance of bricks and mortar.

Morrisons commitment to bricks and mortar is evidenced by its current strategy of opening one small format store per day in the UK to respond to demographic and consumer trends including high density in UK cities, an increasing number of single person households, smaller basket spends, and a desire to shop local.

In the US, Sprouts is sticking with its single store format model but remains committed to physical stores.

In his presentation, Martijn Hagman, advisor at PVH Europe, pointed out that sales are just part of the picture and stressed the importance of stores as a destination and experience. Partnerships and links to pop culture are important to the company in building that experience. Innovation is also important, and he urged other retailers to always think about what’s next and work it out before consumers do.

The enduring importance of bricks and mortar stores to Lego is highlighted by the fact that all management team leaders work in the stores for a couple of days per year. The company aims to create memorable experiences for customers and believes technology, while useful, will never replace good in-store interactions.

Location, location, location has long been the estate agent’s mantra, but it was echoed in a presentation when delegates were advised to be in the right locations for customers rather than taking a scattergun approach and trying to be everywhere.

Olivier Bron, CEO of Macy’s and Bloomingdale’s claimed “The best marketing investment is the investment in stores”. However, he also said there is a need to constantly reimagine stores to make sure they offer the best experience.

That has been the experience of department stores for many years, the successful ones are those that changed and evolved over time.