What's In-Store for 2025

Agile Retail's View of 2025

 

2025 is underway and the retail industry continues to evolve rapidly. Every year we see new trends come and go but this year feels unique. The pandemic seems like a ghost from the past and the industry has begun to shift its weight in a way that seems reflective of large-scale change on the horizon – change focused on experience over everything. 

 

Big brands are copying small brands, large store footprints are shrinking along with in-store teams, and of course, AI is now the most influential addition to the sector since the self-checkout. 

 

We spoke to some of our colleagues about the trends that they see shaping retail in 2025 given their experience designing, building, and operating stores. How will the sector change this year? How can retailers take advantage of these changes? And how is Agile Retail leading the charge in 2025’s retail environment? 

Experiential Recalibration 

“There’s a clear acceleration in the shift back to the power of real-world connections and it’s a timely reminder that authentic, in-person engagement remains one of the most impactful ways to build meaningful relationships with consumers.” 

- Marcus Fox, CEO 

The retail sector has been trending further and further toward an experience-led archetype for almost a decade, but we believe that the industry has reached its Rubicon moment. We all watched as digital retail exploded during and after the pandemic, but in reality, it never even surpassed 30% of overall retail sales revenue. In fact, the digital share of revenue began to fall as soon as 2021! There seems to be a level of digital fatigue, partly thanks to an over-commitment to the channel in recent years, as retailers flooded to promote their online stores despite the lack of ability to diversify online compared to a physical store. 

Brands who are prioritizing customer experience are seeing more customer loyalty and brands that fail to adapt risk being left behind in this new ‘engagement-first’ marketplace. This is because we have reached a point in the sector where experience is no longer a differentiator but an expectation. Customers enter a physical retail location with the assumption that some part of their buying journey will be a unique experience beyond a transaction. 

Sensory and emotional engagement in-store can create far stronger and far longer customer relationships. The most influential effect that a brand can have is to create a memory. The memory does not have to be specifically tied to a store, product or a transaction. If this memory is associated with a brand, then that brand has ascertained a valuable piece of that customer's attention and loyalty moving forward. Creating a memory does not even need to be ostentatious or elaborate – it simply needs to be unique. 

Experience is Expanding 

“I keep circling back to brands that are bringing in other offerings and experiences that drive footfall. For example, luxury brands opening coffee shops!” 

- Owen Arundell, Creative and Build Director 

As our Creative and Build Director points out, luxury brands are opening coffee shops in their stores, sports outlets are installing treadmills for test runs, and far too many stores have decided to hire DJs on weekday afternoons. 

These all represent new ways of enhancing the customer experience, by blending lifestyle with what could otherwise be a very basic retail experience. What separates a somewhat unnecessary DJ performance from an integrated coffee shop is twofold; dwell time and monetization. Although both ventures add to the customer's retail journey, the opportunity to sit and enjoy a hot beverage encourages customers to spend more time in-store. Beyond this, the location becomes more than just a store, it becomes a lifestyle destination. Crucially, this provides another channel for monetization for the brand. It may not be a huge source of revenue, but it is an experience that pays its own way alongside enhancing the customers' interaction with the brand. 

The impact of these non-traditional offerings extends beyond just in-store experience and monetization. It helps to create buzz and interest in the brand and their retail locations – customers might even visit just to experience this new offering! For brands, these kinds of activations open the door to a far wider set of opportunities and partnerships that can continue to push their physical retail offering and what customers come to expect from a store. 

Retail is becoming increasingly centred on customer experience, whilst the concept of customer experience is continuously developing. 2025 will be a year that sees retailers experiment more with the experiences they provide their customers. Retail real estate is condensing, as brands scale down their footprints to focus on a smaller number of stores. What they choose to create in those stores will be elevated and more engaging than ever – otherwise they may get left behind. 

Technology and the Customer 

“The boundaries between physical and digital retail are blurring, giving rise to 'phygital' store experiences. These advancements enable hyper-personalization, creating unique, engaging in-store experiences that build lasting customer connections.” 

- Tamara Pfaunmann, Project Director 

While physical experiences are becoming ever more elaborate, the importance of digital experiences is equally as elaborate. How these two aspects of a brand's offering fit together will be integral to retailing in 2025, where the technology that is now pervasive in the industry will only accelerate the importance of these overlapping realms. 

Ultimately, the goal is to immerse customers in a brand's story and identity as completely as possible, regardless of where and when the interaction takes place. Whether online or offline, the central pillar emerging in retail is personalization – making customers feel involved and catered to. How brands can achieve this is not unilateral, but it needs to feel unilateral for the customer. 

Online retailing is becoming more and more personalized thanks to AI. Personal deals, recommendations, and AI personal shoppers are now normal for an online storefront and can help customers feel immersed and connected with their shopping experience. This is nothing revolutionary in 2025. Where brands need to push the boundary is bringing this experience into the real world in a seamless and engaging way for their customers, in-store personalization is a more complex problem to solve.  

Flagships are fertile ground for this new experiential and personalized retail environment. At an increasing rate, we are seeing big brands shrink their store footprint to focus on fewer, but far more revolutionary, large flagship locations. Interactive displays, gamified shopping experiences and AR fitting rooms are appearing more frequently, as retailers aim to bring customers into stores for reasons beyond product and check-out.  

It does, however, remain important that these implementations are executed correctly. Where online personalization has a light touch, somewhat thanks to personalization being prevalent online anyway, in-person personalization is far more at risk of becoming overwhelming. Meeting the customer where they are in the way they want to interact with your brand can lead to huge increases in not only sales, but also loyalty. Overdoing the experience can risk the opposite. 

Merging the two is where the greatest benefits can be found. If customers can seamlessly move between online stores and flagship locations, and visa-versa, then they will shop wherever works best for them while enjoying the experience that both provide in their own unique way. The closer these two experiences feel, the more solidified the brand's identity will be from a customer's perspective and the more immersed they will be in their retail journey. 

The Cost of Doing Business 

“The cost of people is going up. Businesses will need to focus on fewer, more quality talent and technology that bolsters them.”   

- Richard Palmer, Managing Director Strategy 

Staffing is one of retail's constants, but the cost of staffing is increasing. For example, in the UK the effects of the incoming budget in the coming financial year will cause retailers to evaluate their in-store teams and likely scale them back. As we’ve seen, many retailers have already alluded to their plans to do so. At the same time, a technological boom has been occurring in the industry that’s accelerated further by the increasing prevalence of AI. Retail employees are becoming more expensive while technological alternatives are becoming cheaper. 

The result - smaller teams of quality retail staff. 

Good staff are arguably the most essential element of any retail experience. At Agile Retail we believe the most important interactions with customers happen in the real world – creating the right spaces in the right places, with the right people representing a brand. Elevating the standard of the staff that represents a brand has always been a cornerstone of physical retails evolution, especially for products that require demonstration, education, or integration. 

Let's talk Staffing 

“A shift in focus toward soft skills, employee engagement, and retention will grow exponentially as hiring costs rise and experience becomes a central pillar for physical retail.” 

- Lee Strickland, Staffing Operations Director 

The need for quality staff is growing and the standard for quality staff is increasing too, but what are the markers of this quality? Simply put, soft skills and interpersonal competence. In-store staff are becoming an increasing point of interaction for customers, and rightly so! Visiting a physical store as an alternative to shopping online is built on the three pillars of place, space, and people. The importance of human interaction in retail is growing year on year as customers turn away from faceless transactions, a great example is the recent removal of self-checkouts as customers opt for a more communicative and interactive checkout experience. 

Finding these quality candidates with impressive soft skills can be a challenge, however, this can once again be solved by focusing on real-world, physical operations through human-centric recruitment, focused on interaction and in-person interviews. If personal interaction is the most essential marker of a quality candidate, you need to interact with them personally. This recruitment process has also become increasingly akin to finding a needle in a haystack. Whittling down a huge pool of candidates to one or two talented staff members is now the norm – in fact when staffing a flagship, we see an average conversion of 1% of applicants within the recruitment process, because we know we need to ensure the stores we operate are represented by the highest quality team. 

The cost of recruitment is increasing, both in terms of time and money, so once a high-quality team has been found, it becomes a matter of retention through engagement, education, and career development. From the outset it is essential to engage in-store staff, as this will be a motivator for improved performance and satisfaction in the role, and in turn, will increase their desire to remain in the role long-term. Educating and training staff can be a wonderful avenue to engage, and it also stands to future-proof your teams. At Agile Retail we focus heavily on training and upskilling our incredible workforce because we know that as customer expectations evolve, our staff will be able to meet those expectations. Finally, it is integral that career development is available and accessible. This not only encourages our incredible staff to continue to provide best-in-class customer service, but it also provides opportunities that encourage retention. The Agile Retail Head Office is home to multiple team members who started their journey with us as a member of a store team! 

2025 – Experience the Opportunity 

We know this is all quite experience-centric, but that is simply where the sector is heading. The conversation around retail often paints a bleak picture, but we don’t believe that it is an accurate picture. Simply put, customer expectations for the sector are evolving, but only some retailers are keeping up with these expectations. When customers can simply buy a product online, the physical retail location MUST become something more than a transaction. This is achieved through unique offerings outside of traditional retail expectations, personalization for every unique consumer across their journey with the brand, and exceptional and personable retail staff who elevate the brand offering and product. 

Our customers are focused on creating experiences for their customers to meet and exceed these expectations, and we continue to create unique and engaging experiences for them!