Why AI will be retail’s unsung hero in 2025

Experiential retail "trends" like smart fitting rooms and gamification captured a lot of attention at the 2025 edition of NRF: Retail's Big Show.

I’m here to break the news that while this type of technology is fun to talk about, it’s not a reality for most brands. At least not yet. 

However, a lot of AI innovation has been taking place in the industry that’s not as noticeable, yet it’s making consumers’ shopping experiences more seamless and personalized than ever before. 

The many hats AI wears in retail

The majority of consumer surveys conducted over the past several years show personalization remains a top priority while shopping. In fact, McKinsey data shows that 76% of consumers get frustrated when it’s missing. 

AI-powered algorithms analyze customer behavior, preferences, and purchase history to offer more personalized shopping experiences. When equipped with these insights, a store associate can more confidently say, "I know you’ve purchased this before. I recommend you try this one as well, which I think you’d like just as much."

At the same time, customers can receive pricing, promotions, and products that are tailored to them. For retailers, this hyper-personalization can have a direct impact on sales, with Adobe research with companies finding most consumers are prepared to spend more that customize their experiences.

Outside of personalization, AI’s bread and butter is helping with forecasting. Algorithms look at historical sales data, market trends, seasonal patterns, and external factors such as events and weather to predict future demand. 

This thorough analysis helps make sure stores and warehouses have optimal stock levels at the right times, minimizing the chance for both overstocks and stockouts of customers’ favorite products.

AI coupled with computer vision capabilities also gives a more up-to-date picture of current inventory. On average, 35% of inventory is still inaccurate in U.S. retail. To rectify this, retailers have been integrating AI into their store devices and sensors to receive real-time inventory updates. The goal is to reach a point where a customer can check their favorite retailer’s app or website beforehand, and they’ll know for certain whether they will find their item in-store, or if they should skip the trip. 

The other main area we’re seeing AI in retail today is through generative AI chatbots and virtual assistants. These bots can respond to queries, assist with purchases, and provide 24/7 support while consumers browse retailers’ websites.

AI as a stabilizer in a sea of volatility

U.S. retail sales are projected by Bain to increase by 4% in 2025, reaching an estimated $5.2 trillion. Yet, the path to success won’t be smooth sailing. Retailers will face a heap of unpredictable challenges in the new political climate, including economic fluctuations, regulatory changes, trade complexities, and more. 

Amidst this unknown, retailers will need to focus on what they can control: tapping into innovation that enables them to not just meet, but exceed shoppers’ latest demands for more seamless, personalized experiences. 

Retailers using AI to its full potential are more well-informed and can make better decisions this year. Take Walmart for example. Thanks to AI, the discounter can appropriately stock its shelves in stores and warehouses based on predicted demand and determine what promotions and pricing are most favorable and competitive on a regular basis. 

Walmart can also deliver more customized ads that draw people into stores or to its websites, where store associates and chatbots are ready to answer questions, give updates on product availability, and offer personalized recommendations. It’s a true feat, and this is only the beginning.

A tailored future of shopping fit for each consumer

If we can achieve the computing power it requires, then AI holds even more transformative potential in the industry. From real-time dynamic pricing and highly targeted marketing campaigns to AI-powered augmented reality experiences like virtual try-ons, I see AI significantly impacting customers’ shopping journeys for the better.

All of this to say, consumers want blended experiences. It will be exciting to watch how AI continues to revolutionize the industry in 2025 and bring consumers the greater convenience and personalization they’ve hoped for.

Christian Floerkemeier is CTO and co-founder at Scandit.