Whether your business centers around a small brick-and-mortar store or a vast omnichannel empire, this critical question remains the same: how will your business stay relevant in the future? Advancing technologies, changing customer interests and demands, and improving industry standards for operational efficiency all drive a bit of FOMO that hangs in the back of your mind. That’s why it’s so important to identify 2025’s retail technology trends.
This article’s mission is to show you the trends that are relevant and impactful for your business. Our findings will show you how you can use these technologies to drive product innovation and support your strategic goals. Let’s dive right in.
Trend #1: Modernization Before Innovation
Should you keep your existing retail software, or should you upgrade? There’s no better time to make a decision about product modernization than right now. It’s no secret that older systems are subject to maintenance costs, scalability issues, compatibility problems, challenges with adding new features, and a host of other problems. If your legacy systems are still going strong, that’s great! However, how much longer are your legacy systems going to last, and what opportunity cost are you suffering by holding onto the past?
As you’ll see later in this article, your competitors are investing deeply in artificial intelligence, augmented reality, omnichannel experiences, and other technologies. Even if your legacy systems are working as planned, it may be difficult to take advantage of the full potential of these technologies and keep up with your competition if you don’t modernize. Let’s look at some examples.
Application Modernization
According to a survey conducted by Retail Consulting Partners in 2021, over half of industry POS software and hardware systems are over 5 years old. Assuming those surveyed still haven’t upgraded, those systems are now over 8 years old. In fact, according to that report, only 21% of those surveyed utilize POS software newer than two years.
Upgrading your systems is expensive. However, you need to start planning for when you need to make that upgrade before your competition gets too far ahead in the race and before your customers lose faith in your brand.
Application modernization isn’t just about keeping up with the pack. It’s also about enhancing security, increasing flexibility, and improving the performance of your business. Security is a hot topic right now. Just think — how many vulnerabilities are lurking undiscovered in your legacy system? What’s the risk of your customer data being leaked to the dark web?
Working with a strong and experienced tech company can help you audit your legacy system and help you decide if and when it will be time to upgrade. A modernization consulting firm can help you decide how to lay out the roadmap as well.
POS Trends
Modern Point of Sale systems are evolving to support more popular payment methods, cloud-based systems and omnichannel experiences. One of the most important Point of Sale technology trends is the industry realization that POS systems generate a wealth of data. By leveraging this data with artificial intelligence and machine learning systems, businesses can better understand the buying habits of their customers and better oversee their inventory management.
As an example, AI and ML technologies can benefit POS systems by advancing retail demand and sales forecasting. By processing omnichannel purchasing data from both digital and in-person POS systems, forecasting can be more accurate. This can enable your business to enhance its ordering and stocking mechanisms by predicting what your customers will want and when.
Recommendation engines are another technology that brands are enhancing with their modern POS systems. By tracking what each specific customer is buying in-store and online, via apps and POS screens can deliver targeted recommendations to customers. These sources can also upsell, suggest coupons, and encourage customers to buy other items that they are likely to want based on their unique profile.
How to Start with Retail Application Modernization
- Recognize what your retail systems need for effective modernization. For example, upgrading your POS systems with AI can greatly improve your inventory management.
- How soon do you need to modernize? Work with a software modernization consulting company to produce a plan that keeps your business relevant while maintaining a desirable return on investment.
Trend #2: AI in Retail
The AI hype cycle has been a controversial one. There has been a lot of snake oil in this space, and it’s become hard to discern useful AI technologies from vaporware. In fact, there are technologies here that can be extremely valuable for your business that aren’t just a flash in the pan. The trick is seeing through the buzzword-compliant veil to see the truth.
The most important AI trends in retail are demand forecasting, shopper personalization, a waning focus on self-checkout technologies, and finally, generative AI in retail. Let’s investigate each of them to evaluate the truth about how they can benefit your business.
AI Demand Forecasting
Although the AI hype cycle is a recent development, AI’s use in demand forecasting has been a trend for a lot longer than that. In fact, retailers started using demand forecasting powered by machine learning as early as the 2010s. According to McKinsey (2022), AI demand forecasting can reduce supply chain errors by 20-50%. They also report a reduction in lost sales of 65%.
Although AI demand forecasting has been a growing technology for over a decade, the reason for its continued growth is not necessarily because of advancements in AI. Instead, it has grown because of a few key market evolutions:
- Greater data availability: thanks to grander omnichannel strategies in-store and online, more sources of buying data are available. Data from POS systems can be collected, analyzed, and fed directly into AI demand forecasting systems.
- Improved computational power: complex AI models and prediction systems are easier to run thanks to increased chip power and the growing capabilities of data centers.
- Consumer expectations: AI demand forecasting has grown in use because customers are demanding more personalized experiences and immediate availability of the products that they need.
As a result, not only has it become easier to begin using demand forecasting systems or upgrading existing ones, but it’s become a market necessity. According to Nvidia’s State of AI in Retail report from this past year, 27% of surveyed businesses answered that they were utilizing AI for demand forecasting to enhance their supply chain systems. It’s time to start thinking about how demand forecasting can help you put the products your customers are shopping for on the shelf when they need it.
Personalizing User Experiences with Data Analytics
It’s true, greater data availability is improving supply chains — but what about an individual’s shopping experience? The same data from POS systems that you can use for demand forecasting can be used to build unique customer profiles. AI systems can analyze what individual shoppers are buying and use their profiles to power recommendation engines. This has been used to significant effect by ecommerce platforms like Amazon for years. AI futurist Jared Ficklin in an interview with Freethink described Amazon as “quantum-like”, where every visit by every person is completely unique. It’s no surprise that Amazon took to this strategy. According to Swiftly (2024), personalization nets retail businesses a 40% increase in revenue.
The Salesforce “State of the Connected Customer Report” (2022) found that 56% of customers expect all retail offers to be personalized, making AI-recommendation engines more important than ever.
Waning Focus on Self-Checkout Technologies
Self-checkout technologies were growing over the past few years, but they have now started to decline. Amazon recently has pulled back on its efforts to build a “just walk out” model for its Go Grocery experiment. This is possibly due to allegations that the AI systems that supposedly made the model possible were actually powered by human workers in India. However, Amazon claims that these workers were only for data annotation.
Regardless of which story is true, Amazon’s exit from futuristic self-checkout technologies and the closing of their brick-and-mortar Amazon style stores shows that this technology has a long way to go. If one of the largest and wealthiest retailers on the planet can’t seem to find self-checkout systems profitable, it’s hard to imagine small and medium retailers implementing a “just walk out” model. Other retailers are cutting back on self-checkout technologies too. For example, Target is limiting the number of items customers can buy at self-checkout. LendingTree in 2023 found that 69% of shoppers believe stealing is easier at self-checkout, with 15% of respondents saying they’ve “SCO-swiped” before.
So, what should you do? Self-checkout doesn’t have to be eliminated entirely. In Dollar General’s Q3 2023 earnings call, CEO Todd Vasos explained that “We should be using self-checkout as a secondary checkout vehicle, not a primary.” By returning the human element to brick-and-mortar stores, you can restore trust and empathy to the shopping experience, reduce shrinkage, and have more energy to spend on other innovative technologies.
Generative AI in Retail
You knew this was coming. Yes, it’s true, generative AI is the hot buzzword of the year. However, what generative AI applications are useful for retail businesses like yours? Bath and Body Works decided to throw their hat in the ring with a generative AI fragrance finder, called Gingham Genius, which was announced in September. Bath and Body Works states that the app will allow customers to describe a scent they’re searching for with natural language. The app will provide personalized recommendations based on the user’s query. As of the time of writing, the app has not yet launched.
Regardless, Gingham Genius is a perfect use case for generative AI. The key component of generative AI is natural language processing. While Bath and Body Works haven’t explained how the application works behind the scenes, it may utilize the following components:
- A database of their various products with keywords that describe their various scents.
- A natural language processing engine that extracts keywords from user queries.
- A recommendation engine that understands the user’s profile and suggests products that match the keywords of their query, possibly returning an answer with humanlike responses similar to ChatGPT.
Bath and Body Works recognizes a need for users to be able to describe what scents they’re looking for in a conversational way, which isn’t the case for more generic products like office supplies. If you have more complex and subjective products, a natural language search engine like Gingham Genius could be a great opportunity.
Sentiment Analysis and Review Management Systems
According to the Northwestern Medill Spiegel Research Center, reviews and ratings are very important for product sales, especially for higher price items. With 95% of shoppers looking to online reviews before making a purchase, retailers need to consider how their stores and products are being talked about in testimonials online. They also recommend responding to reviews, especially negative ones.
There are a few ways to accomplish this. For small retailers, human-led responses are the most cost-effective. However, larger businesses might resort to copy and paste templates, outsourcing to external firms, or copying and pasting from ChatGPT. Many of these options are just not effective, scalable, or cost-effective depending on your business size.
Some startups, for example, RightResponse AI, have begun to explore directly connecting review management software with generative AI. By providing AI models with relevant information about your store and products, the AI can respond to customers at scale with relevant and useful information.
For example, let’s say a customer leaves a review complaining about a store being closed during a certain time over the holiday season. If the AI has information about the store’s hours in its database, it can respond by explaining where to find holiday hours on the store’s website. When operating at scale, this kind of review management can help you get the edge on customers in Google Maps map packs and improve customer loyalty during their research process.
How to Get Started with AI in Retail
- Understand what data you have that can become the basis of AI solutions.
- Trust proven AI consulting services to find the best match for your goals, market needs, and capabilities.
- Build or hire a remote team of AI engineers who will be responsible for implementing AI innovations in your company.
Trend #3: Omnichannel Retail Experiences
Customers expect consistency. Salesforce reports that 71% of customers prefer omnichannel experiences.
Buy Online Pick Up in Store (BOPIS)
More retailers than ever are using order pickup solutions at brick-and-mortar stores. According to Capital One, 2023’s BOPIS sales accounted for 10.1% of ecommerce sales, with over $113.19 billion spent and is the third most-used fulfillment method by online shoppers.
However, although it’s clear that BOPIS is a powerful tool in a retail business’s arsenal, it comes at a cost. They require strong supply chain management, as well as the proper staffing to reach maximum effectiveness. As stores reduce hours and positions, it becomes harder for the remaining staff to maintain BOPIS operations. As a result, the quality of service for the customer decreases, which in turn decreases customer satisfaction and loyalty. However, when staffed appropriately, the benefits are worth it for both your organization and for consumers.
Omnichannel POS Systems
As you saw in the AI section, POS systems are incredibly valuable as data generation tools. However, they can only function in this way and provide omnichannel experiences if the systems are interconnected. You should connect POS systems to a wider, centralized network that allows you to get a clearer picture of inventory movement.
This is important, not just for tracking your inventory, but also for customer trust. If you provide availability information for products online, an accurate and up-to-date count contributes toward customer confidence in your brand. This same level of quality and connectedness must extend to both your in-person and online POS systems.
How to Start with Omnichannel Retail Experiences
- Identify what channels you need to integrate into your omnichannel strategy
- Invest in a robust, unified commerce platform that integrates with your sales channels, inventory management systems, customer databases, and other relevant systems
- Work with software experts to analyze your existing infrastructure and update it in line with your new strategy. This may include upgrading your POS systems, implementing mobile apps, and adopting new software solutions.
Trend #4: AR in Retail
Augmented reality shopping hasn’t achieved anything new and groundbreaking this year. Instead, AR is solidifying its place as a reliable engagement method and tool for shoppers. Allied Market Research projects AR in retail will reach a market size of $61.3 billion by 2031.
Virtual Try-On
The most widely used application of augmented reality in retail is virtual try on. The “try before you buy” model remains a powerful marketing and sales asset that makes customers feel more comfortable before they buy something.
In the earlier days of AR virtual try on applications, opponents pointed fingers to call it a fad. However, several major retail brands in various categories continue to operate their AR applications for their customers. While the most notable examples of this are apparel and cosmetics brands like Sephora and Warby Parker, there are other contenders in the market too. For example, the Ikea app allows you to visualize furniture in a room using AR.
As AR measurement technology continues to evolve, the potential to enhance customer engagement grows, enabling users not only to visualize furniture but also to experiment with complete space redesign, both indoors and outdoors, making AR an essential tool for many retail brands.
AR Planogram Setup
Ensuring that merchandise follows planograms is essential to ensure store consistency, product visibility, sales, inventory management, and a high-quality shopping experience for the customer. To support that mission, it’s possible that 3D planograms overlaid on top of a shelf or section of the store using AR could support retail workers. This could help instruct employees on how to arrange shelves, zoning devices, merchandising displays, and products in accordance with the planogram.
Many stores are already using devices that could be used to display 3D planograms. For example, the Zebra TC-51 portable computer and its successors are ARCore-capable Android devices. If supported by the right development vision, this technology has the potential to make retail workers more efficient and compliant with planogram setups, especially with more advanced displays.
How to Start with AR in Retail
- Define your goals for using AR in your store. Pinpoint particular applications, like product visualization, virtual try-on, interactive product details, or gamified experiences, which can improve the customer experience and boost sales.
- Seek help from experienced AR consultants to choose the right technology and build an AR app that seamlessly fits into your existing infrastructure.
Trend #5: Voice Commerce
Voice commerce is in a peculiar place as a retail trend. Back in 2018, OC&C Strategy Consultants projected that voice commerce would be worth $40 billion in the United States by the end of 2022. However, in practice, voice commerce options for consumers aren’t common or dependable. For example, as of the writing of this article, Walmart’s landing page for its integration with Apple’s Siri results in a blank, white page. Many other options for voice ordering through other platforms like Google Assistant aren’t available anymore for major retailers either. Things might seem bleak, but there’s actually a huge opportunity to reinvigorate this space.
It’s true that a lot of voice commerce options have disappeared, but this year might be the perfect time to take advantage of a number of important variables that make voice commerce a great opportunity for retailers:
- Major retailers are neglecting their voice commerce solutions, meaning that there is less competition.
- Generative AI and natural language processing are making it easier for humans to interact with software via voice.
- Fewer options for voice commerce means that demand is higher from niche audiences such as those with vision impairments who need accessibility options for shopping.
Because of the vacuum being created by declining voice commerce options from major retailers, there’s opportunity for retailers of all sizes to jump onto the trend and make early gains. With generative AI APIs, even smaller businesses could make a dent in the market with more than just natural language processing. Brands can integrate their voice ordering systems with smart keyword search, and even recommendation algorithms. Large enterprises like Amazon are already investing in large language models that could enhance their voice purchasing options, so getting into the market sooner rather than later is critical.
Adoption Challenges
Although there is opportunity in the voice commerce market right now, there are still challenges to overcome when implementing voice ordering solutions. It’s important to consider the following when planning a voice commerce application:
- Complexity: Voice-based UI interfaces are very different from traditional visual UI. Special attention will need to be placed on NLP, speech recognition, and how data is exchanged between the device and the cloud.
- Payment: How will customers select their preferred payment method? Will they have to set up a payment method on another device like a smartphone or desktop before using your voice commerce application, or will they be able to set it up using only their voice?
- Privacy & Security: Ordering via voice can make privacy and trust complicated. What happens if a mistake happens and an order is placed accidentally? You also need to make sure that the customer’s voice, purchasing, and billing data are transmitted securely to protect trust and secure your legal liability. As another example: how will you prevent children from using shared smart devices to make purchases only their parents should be making?
- Omnichannel Integration: how will you integrate your voice commerce application with the rest of your retail systems?
- Adoption: since voice commerce is not a well-known channel for consumers, how will you make customers aware of it and want to use it? Will you target a broad audience or a particular niche?
How to Start with Voice Commerce
- Determine the specific use case that your customers would find voice commerce most valuable. Consider options like product searches, ordering, and customer support via voice.
- Work with a team that can help you evaluate a voice assistant platform. You might consider collaborating with an existing platform like Google, Alexa, or Siri. Alternatively, you might consider hosting an LLM AI model or partnering with a provider like OpenAI’s API.
- Integrate your voice commerce system with your omnichannel ecosystem to ensure that up-to-date information is available and provide customers with the best possible shopping experience.
There’s no one correct solution to any of these challenges for any given brand, but these challenges are worth considering as you envision your voice commerce product.
Trend #6: Social Shopping
Brands have turned social media into a critical battleground for retail commerce. When shopping online, consumers do a lot of research. According to a report by Rithum, 82% of shoppers investigate two or more websites before buying something. It’s clear that these shoppers are searching for social proof. In most cases, they will trust the word of others more than your brand.
That’s likely why social media commerce has been such a prime target for retail marketing. Rithum also found that 63% of surveyed shoppers between 18-25 bought a product because social media promotion had influenced them to make the purchase within the past year. Other demographics saw comparable results.
Social media websites are also quickly becoming ecommerce platforms. TikTok launched TikTok Shop in 2023 in the United States and quickly became the fourth most popular social commerce platform. RetailDive describes “non-celebrity micro-influencers” as being a critical factor in this space. Partnering with these influencers to help promote your brand can be a highly strategic move that can not only increase your brand awareness, but directly contribute to your revenue.
Maybelline recently launched a new social media campaign bringing back their old slogan, “Maybe It’s Maybelline” from 1991. However, a lot has changed since then, and Maybelline’s social commerce strategy reflects that. Maybelline targets their audience with short, viral videos with catchy music snippets.
So, how can your business capitalize on social commerce? Well, there are a few things to consider:
- Product availability: are your products available on popular social ecommerce platforms? Some options are Instagram Shopping, TikTok Shop, and Facebook Shops.
- Audience research: the key to any social marketing strategy is information. How well do you know your target demographic and their interests? This may be the area where the most innovation is possible.
- Influencer research: once you know your target audience’s interests, who are the influencers that impact them the most who you can partner with to promote your product?
How to Start with This Trend
- Audit your current social marketing strategies to see where improvement can be made.
- Consider your options for understanding your audience, such as data analytics systems. You might consider integrating your POS data to better target your audiences on social media.
- Partner with influencers that resonate with your audience.
Trend #7: More Payment Methods and Increasing Risk of Identity Theft
As you saw in the section on modernization, data breaches and identity theft are becoming more common over time. Experian’s 2024 US Identity and Fraud Report found that 84% of surveyed consumers were worried about identity theft. Since over 3,000 data breaches occurred in 2023 alone, those fears are warranted.
Meanwhile, as customer security concerns continue to rise, so do options for consumers to pay for products.
Mag Stripe Phase Out
The evolution of payment methods continues with saying goodbye to the mag stripe. MasterCard recently decided to start phasing out magnetic stripe payments on its credit cards. They cite data from EMVCo, which reports that smart card chip transactions on credit cards account for 86% of transactions. MasterCard asserts that smart card technology is much safer than the classic magnetic stripe. With credit card companies making this shift away from mag stripes, retailers feel less pressure to support mag stripes on their POS terminals. This will eliminate the threat of credit card skimmers that thieves use to copy the information off mag stripes.
However, smart card microchips on credit cards can still be stolen with small card shimmers that are difficult to detect when shoved inside of a POS terminal. It’s critical that you educate your staff on how to detect these devices and protect your customers.
Contactless Payments
Contactless payments are also exceedingly popular and secure. NFC-based cards are convenient, fast, and difficult to steal and replicate. NFC wristbands and integration with smartwatches are also becoming more popular.
Digital Payment Services
Partnering with the right digital payment gateway can be a great supplement to your existing POS system or even a great alternative to running your own POS system. Options like Stripe, PayPal, Authorize.net, and others are popular options and can make paying for your products more convenient for your customers.
Photo by Christiann Koepke on Unsplash
Digital Currencies
A few years ago, some retailers began accepting cryptocurrencies. In 2019, Whole Foods partnered with Spedn to accept cryptocurrencies like Bitcoin. However, the state of cryptocurrency in the retail sector seems to have waned significantly since the digital currency hype cycle blew over.
It’s certainly possible, and even easy, to add cryptocurrency gateways to your ecommerce platforms. WooCommerce for WordPress is a notable example of this. There are also plenty of open source payment gateway repositories for accepting cryptocurrencies on GitHub. However, given high transaction fees for popular currencies like Bitcoin, the volatility of their value, and Know Your Customer regulations (KYC), it’s not worth investing resources into unless you have a niche audience.
How to Start with This Trend
- Research the payment methods your customers are using most.
- Ensure that your POS systems support the payment methods your customers want to use to buy your products.
- Reinforce your security to maintain the trust of your customers.
Future of the Retail Industry
One of the most important takeaways from this year’s retail technology trends is a balance between innovation and practicality. Even the biggest businesses that reach too close to the sun can’t perform miracles, as we saw with Amazon and their failed “just walk out” checkout model. However, not modernizing at all comes with its own set of risks. Brands must find their place in the modern market before they fall out of relevance.
More importantly are the technologies, like AR, which are becoming mainstream instead of state-of-the-art. Instead of offering AR try-on products to customers with a separate app, like Ikea did with Ikea Place, Ikea now offers their AR features directly in the main Ikea app. This is a clear indication that brands are placing trust in their AR products to hit the mainstream and is evidence that consumers find value in the technology to assist their purchasing decisions.
However, it’s also important to look a bit farther into the future and think about innovative ideas. Can voice commerce make a return thanks to advances in AI language models and natural language processing? How can you integrate innovative technologies with omnichannel systems to provide consistent customer experiences? Will you use generative AI and sentiment analysis to improve your review management strategy? Brands like yours will define the future landscape of the retail industry. How will you carve a path forward for you and your customers?
Create or Modernize Your Retail Product with MobiDev
MobiDev’s years of software development business has supported brands since 2009, especially for POS leaders like SmartTab and Comcash. Brands trust MobiDev with POS solutions, ERP software, virtual try-on products, demand/sales forecasting, chatbots, recommendation engines, and other innovative retail systems. MobiDev has a deep understanding of what it takes to keep your retail software agile and competitive. You can learn more about MobiDev’s retail software development capabilities and expertise, or contact us directly now to discuss your product idea.
