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The retail industry is undergoing a rapid transformation that’s being driven by evolving consumer expectations and new economic realities.
As 2025 approaches, retailers will need to adapt to shifting dynamics. Change is on the horizon, whether it’s the slowing growth of discount stores, the rise of tech-powered dining, or the growing demand for convenience. Retailers that are willing to rethink their strategies may be the one’s to thrive.
Today’s shoppers are looking for more than just good deals – they want elevated experiences, quality, and innovation. From value-driven retailers like Trader Joe’s offering premium products at lower prices, to brands like Taco Bell (YUM+1.34%) leveraging nostalgia-driven campaigns to win back Millennials, it’s clear that consumers are rewriting retail’s playbook. At the same time, legacy brands like Gap (GPS) are making a comeback, and retailers like Macy’s (M+1.32%) are recalibrating with smaller store formats in hopes they can meet the moment.
Retail in 2025 will require striking a balance between tradition and innovation to capture the attention, loyalty, and wallets of the modern shopper. According to a new report from foot traffics analytics firm Placer.ai, there are seven key trends that will shape retail’s 2025 playbook.
1. Discount store growth is tapering
The growth of deep discount retailers like Dollar General (DG+0.18%) and Dollar Tree, which thrived during economic uncertainty, may be slowing. Foot traffic is declining, a signal that these stores might need to evolve. Analysts previously told Quartz that while discount stores are well-stocked, they struggle with online presence and limited grocery offerings.
2. That value needs a twist
Value still matters, but consumers want it with an upgrade. Retailers like Trader Joe’s and Chili’s are winning by offering unique items at affordable prices. Shoppers are drawn to these brands because they provide an “elevated experience” without the sticker shock, Placer.ai notes.
3. Convenience is evolving
Convenience is good but it’s far from being king. Customers are actually just making more grocery store runs for less items and are willing to go farther (quite literally) for special items or simply, better experiences.
4. Calling the robots
Technology is shaking up the dining experience. Chipotle’s (CMG+1.59%) avocado-cutting robot “Autocado” has boosted sales at a California location, while McDonald’s almost automated restaurant in Texas is seeing positive results. In September, McDonald’s (MCD-1.06%) said it was piloting a new setup of digital kiosks at some U.S. locations with the promise it wouldn’t reduce its workforce. Other chains, like Wendy’s and Taco Bell, are experimenting with AI to keep up with demand, inside and in the drive-thru.
5. Retail’s shrinking, just to expand
“Little things make big things happen,” and Macy’s sure thinks so. The chain is thriving with compact, local stores that cater to daily foot traffic. In comparison, supermarket chain Hy-Vee has been experimenting with mega-stores to meet the needs of weekend shoppers looking for one spot to make their purchases.
6. Legacy brands welcome a resurgence
Iconic fashion and lifestyle retailers like Gap and Abercrombie & Fitch (ANF+0.56%) are having a moment, once again. The classic brands, including Anthropologie (URBN+0.24%), are seeing steady growth in-store visits, now outpacing foot traffic before the pandemic.
7. Millennials for the moment
Millennials, those between the ages of 28 to 43, are more crucial than ever for retailers aiming to drive growth. Taco Bell is tapping into this group’s sense of nostalgia with a new menu launch, while Sam’s Club is drawing in single Millennials with its focus on affordable shopping experiences.