At a glance

“Inflation” was the word on every leader’s lips in last year’s Retail 2024 report as the industry battled increased operating costs and the cost-of-living crisis impacted consumer spend.

As the sector looks ahead to 2025, “inflation” is the buzzword once again. But this time inflation is coming down significantly, with interest rates expected to follow suit, putting a bit of extra money in people’s pockets and presenting a real opportunity for the retail industry to thrive in the months ahead.

Those leaders laser-focused on getting their proposition right and finding the appropriate combination of digital and physical presence, and who continue to adapt to what the discerning consumer wants, are set to flourish.

Indeed, when interviewing 43 leaders from 39 businesses across the UK retail industry, there is clearly optimism about the months ahead and an expectation that 2025 will bring success.

Whether it is to do with the improving economic situation, the certainty brought about by a majority government being voted in by the public in the July 4 general election, or the opportunities afforded by new technology, there is a sense of positive momentum.

Unprecedentedly for this annual report, for 2025, no retailer we interviewed is expecting sales to drop year on year. That is the headline finding as we measure the industry’s health as the new calendar year approaches, but these projections will only come to bear with hard work and strong leadership.

In the following chapters, we assess UK retail executives’ expectations surrounding 2025, where they plan to invest, what they think of evolving tech such as artificial intelligence (AI), and how they are shaping new business models, approaching sustainability and creating more inclusive working environments.

Partner viewpoint

Mark Thomson, retail industry director EMEA, Zebra Technologies

It’s a privilege to once again partner with Retail Week to produce this report.

The last few years have been tough for retailers across the globe and the UK is no exception. Inflation has hit hard and despite recent reductions in the overall rate, the level of costs is at an all-time high.

On the employee front, wages have increased significantly and the availability of staff still appears to be a challenge in many sectors, particularly warehousing. In spite of this, retailers seem to be turning the corner and while cost focus is still there, increasing attention is being paid towards growth strategies and expansion.

Online retail remains a growth area, though this often adds complexity, whether due to the demands from customers for on demand delivery or the negative impact of higher levels of returns. Physical stores are clearly not dead and the most progressive retailers are developing integrated strategies where online and physical retail work seamlessly hand in hand.

I am also convinced we will see an uplift in the use of AI in the physical environments, not just for customer experience, but also to augment the employees and drive improved productivity; 2025 looks to be an interesting and prosperous year ahead.