AI, automation, and authenticity: our retail tech trends for 2025

Wondering what 2025 might have in store for the global retail industry? We’ve got you covered. From emerging AI trends through to developments in the retail media space (not to mention the latest insights from our Consumer Pulse study), we’ve already shared some of our biggest predictions for the year ahead.

Now, in this latest piece in the series, Leo Nagdas—head of dunnhumby ventures—gives us his view on 2025’s biggest retail technology trends. Whether it’s an evolution in the way that we understand and engage with customers or innovations in the store and supply chain, there’s a lot to cover—so let’s dive in.

Understanding the customer

Psychology comes to retail tech

Understanding what customers really want is close to our hearts here at dunnhumby. Naturally, then, we’re also quite heavily invested in anything that can help retailers and brands get better at that. And in 2025, we can expect to see a growing focus on the use of psychographics from linguistic, behavioural, and aesthetic preference patterns to understand what shoppers want.

It’s early days here, but use cases are continuing to be refined, and adoption which started with a focus on a few priority categories (e.g. fashion and beauty), is now moving into mass applications. ‘Retail psychologists’ are already hard at work in training machines on how to respond to new customer signals. New biases will need to be overcome as a result.

The importance of data transparency will continue to increase

Artificial intelligence (AI) is becoming increasingly prevalent across the retail industry. And, as it does so, scrutiny over its use of data will only increase. Customer and regulatory sentiment is now pointing towards proactive traceability, with a requirement for full auditability over customer data assets and the AI models that utilise them. Innovation examples here will include creative opt-in surveying, data wallets, blockchain use cases, and multi-party loyalty collaboration.

Richer preference signals will help to find product gaps for brands and private label

While price will continue to be a key driver in customer purchasing decisions, the continued shifts in customer preferences, especially in fragmented needs of younger buyers, is reshaping how we think about products on the shelf. Customer decisions are increasingly driven by enriched product characteristics such as nutrition, wellness, and sustainability. As such, having access to harmonised and meaningful product attributes is a key driver of alignment to customer needs in 2025.

Combine that with an ever-improving ability to capture social trends, and CPGs and private brands alike will have more ways to succeed with both new product development and audience targeting. An insights-driven approach to private label development will reap a dual benefit here—bringing price and differentiation together, fulfilling the ultimate goal of improved loyalty.

Composable data collaboration will drive the convergence of retail and adtech

In the past few years, retail media has been a catalyst for targeted data collaboration between larger advertisers and retailers, with clean rooms facilitating the safe sharing of data across the divide. Now, the concentration of retail media ad spend makes it inevitable that competition will expand to cross-retailer/sector partnerships, with the focus being on sharing inventory and audiences to win share of spend.

As such, 2025 will be another year of convergence between retail and advertising technology. Data collaboration will be a central theme, spanning composable data infrastructure, identity resolution, dynamic audience marketplaces, and insights-driven, real-time, and personalised activations.

Innovation around engaging the customer

The birth of shoppable AI search

In 2025, brands and retailers will start to battle for ‘share of generated sentence’ as consumer adoption of AI search accelerates. While this will be driven mainly by new integrations with AI-based product discovery and shopping (Perplexity and others have already announced the first generation of these features), adoption will truly accelerate when mainstream online retailers and marketplaces integrate at scale.

From an innovation standpoint, the focus here will be on summarising content for AI ingestion, as well as the recommendation mechanisms needed for content-rich product discovery. Most excitingly, the adoption of AI search will give retailers a new way to capture digital customer journey signals. However, it remains to be seen whether this will lead to the expansion of the ‘walled gardens’—or simply more power to consumers via controllable opt-in preferences.

New channels will be the battleground for share of search, watch, and wallet

Brands and retailers will continue to broaden their horizons when it comes to customer engagement. While social media has led the agenda over the past few years, 2025 will see retail media expand further into Connected TV, video gaming, livestreams, and AI search. Customer signals captured from these channels will help brands balance their budgets more effectively, powering a more cohesive engagement journey.

In the age of content overload, authenticity will be key

While creative automation and GenAI-developed content will continue to be trialled, retailers and brands will also need to earn consumer trust through authenticity. Social media (including notable additions like Bluesky) will remain an unmatched channel for doing so; its ability to capture critical consumer signals in real-time—and deliver high quality content tailored to those signals—remains unparalleled.

Innovation in this area will come from the bridging of gaps between influencer agencies, social listening, and shopper behaviour and product insights providers, as well as retail media platforms.

Immersive ‘phygital’ experiences begin to take hold

As in-store retail media continues to mature, and new analytics solutions allow for better customer tracking, new opportunities for customer engagement will emerge. On the customer and brand side, this will mean more content-rich experiences via shelf labels and QR codes, with some early adoptions of in-store AR.

On the retailer side of things, privacy and the cost of scaling will remain as key considerations. As such, innovation will be focused on tech that can be overlayed onto existing infrastructure (e.g. digital twins), rather than mobile-based geolocation targeting.

From a digital standpoint, experiences will start to be underpinned by truly hyper-personalised recommendations, and storefronts driven by a brand-new generation of behavioural AI. The next generation of virtual ‘try-ons’ will be both more immersive and more accurate, and expand into new categories like cosmetics and home goods.

Innovation around the store and supply chain

Spatial AI will transform our view of the store

New computer vision, augmented reality, and digital twin applications will focus specifically on the store and supply chain. The data collection infrastructure that results will expose dramatic inefficiencies around planogram creation and operational compliance, as well as overall utilisation  of space. This will lead to the creation of new, data-centric KPIs for employees and field reps, driving meaningful increases in store efficiency and value for both suppliers and retailers.

While the prior wave of innovation here focused on disruptive robotics and costly hardware, the next will be centred around employees and existing environments. The result will be an increasingly seamless, always-on view of the store, the shelves, and people’s interactions with them—including employee and customer journeys, theft prevention, and A/B testing.

Virtual agents will simplify decisions for all

AI agent use cases will become widespread. Customers will benefit from shopping agents and chatbots acting as personal assistants, helping them find the best deals and products based on their preferences. Retailers will adopt ‘AI analysts’ to contextualise and prioritise decisions, allowing for significant efficiencies and reduced reliance on people-based functions. AI will be universally accessible, improving the competitiveness of smaller retailers and brands.

Health and sustainability go from intention to action

The ‘say-do’ gap around sustainability and health is narrowing, while the need to engage customers in a differentiated capacity is growing. Expect the retail ecosystem to respond accordingly. The FDA’s recent announcement of a new ‘healthy’ label is an example of US starting to catch up to Europe and the UK around health and nutrition transparency, while sustainability goals set by retailers are also coming into sharper focus as delivery dates approach.

This remains a complex journey, and one that’s ripe for innovation. Moreover, it calls for collaborative action by government agencies, industry think-tanks, product information startups, retailers, and suppliers.

Automation along the supply chain

Growing demand for home delivery will drive innovation in micro- and store-based fulfilment, last-mile and hyper-local delivery, and warehouse operations automation. While full automation is becoming less scalable (and slower to adopt), startups are providing cheaper alternatives at a tenth of the cost.

Backdrop to innovation in 2025

The pace and acceptance of innovation will be influenced by a relatively challenging backdrop of inflationary concerns catalysing economic misbalance, lower regulatory barriers & increased importance of economies of scale driving buyer consolidation, and an abundance of retail tech solution options driving indecision (further exaggerated by blanket positioning of them as “AI”). The way to navigate this will be to follow the golden principle of putting the customer first and working backwards.

One way to supercharge innovation is by finding the right set of partners that can quickly validate and test ideas, provide smart capital for efficient scaling, and connect new propositions into established workflows of retailers and suppliers. Our Retail Innovation Network aims to facilitate this by bringing together pioneers from startups, technology vendors, investors, and retailer & supplier innovation teams. We welcome you to join us in 2025.