5 Tips for Retailers to achieve winning strategies in 2025

With the new year truly underway, retailers around the world are putting their game faces on for a volley of fresh challenges. From ever-changing consumer behaviors to emerging technologies, market fluctuations, and shifting regulations to convoluted trade dynamics, retailers will have to square off with a new retail game in 2025. Thriving retailers will want to push boundaries this year, leveraging tech, reinventing loyalty programs, and strengthening their supply chains to ensure global success and starve off uncertainty. In spite of posed hurdles, external factors like rate cuts and tax incentives make 2025 a winning year for strategic innovation and long-term gains.

How winning? Well, in a recent study published by American management consulting company Bain & Company, Inc., US retail sales are predicted to grow by 4 percent in 2025 (unless disrupted by major economic or geopolitical events), totaling approximately 5.2 trillion dollars. Reflecting stable growth amid a tough consumer outlook, inflation concerns, and rising costs, Bain further expects non-store retail sales to drive this growth, with a 10 percent increase. In-store sales are predicted to grow by a humble 2 percent, led by general merchandise, apparel, and health stores. Retailers looking to capture the biggest share of this growth are advised to proactively leverage opportunities and strategically use AI, not just use it as a checkbox of must-haves.

To pave a winning path in 2025, Bain & Co. outlines five winning strategies that we share below.

1. Make yourself unmissable on all shopping lists

Many retail giants like Walmart, Amazon, and Costco, with their massive assortment, dominate the market share, driving 57 percent of recent retail growth and 17% percent of total US sales in 2024, according to Bain & Co. While competing head-on with these players is tough, retailers that can build and leverage a differentiated value proposition can thrive alongside them. The fast track to success starts with the basics – fast shipping, consistent quality, and an omnichannel shopping experience. However, real differentiation comes from excelling in key areas that matter most to target customers. Retailers that break away from traditional trade-offs and deliver unexpected value can stand out and win loyalty.

For example, Bain & Co. highlights that Costco’s success stems from pairing low prices with high quality, optimizing efficiency while limiting assortment. Similarly, retailers that refine product offerings and pricing strategies can enhance their perceived value. Balanced assortments can lift sales by 2 percent to 5 percent, while strong private brands boost grocers’ share of wallet by 12 percent, according to research from the consultancy firm. Competitive pricing and tailored promotions further strengthen value perception and drive ROI.

Trader Joe’s further exemplifies this approach, using curated selections, innovative private brands, and a strong brand identity to build loyalty. The main takeaway? Winning retailers go beyond just offering low prices—they create a distinct, compelling shopping experience that keeps customers coming back and back for more.

2. Build Loyalty That Lasts

Ask any retailer, loyalty isn’t bought – it’s earned. While members of strong programs do tend to buy more and spend more, many consumers rarely use the programs they join. According to Bain & Co., more than one-third of US online adult consumers don’t use their loyalty program frequently, with many forgetting about them altogether. The key to an effective and efficient loyalty program? Look beyond discounts to create emotional connections with consumers by offering personalization, exclusive perks, and fostering a sense of belonging through community.

Sephora’s Beauty Insider program is a winning example. Using AI-driven tools like Shade Finder, it tailors recommendations and enhances in-store experiences by offering early sales and VIP events. Leveraging customer data means that Sephora Members purchase 58 percent more often, spend twice as much, and hold a 63 percent higher share of wallets. Winning loyalty means winning long-term customers.

3. Future-Proof Your Supply Chain

As the world becomes increasingly globalized, retailers prioritize cost efficiency over resilience. Forever in pursuit of the lowest-cost resources and manufacturers to produce high-volume products, that age seems to be coming to an end. Following the lasting impact of COVID-19, increasing natural disasters, and geopolitical changes, adaptability is essential to long-lasting success. With 70 percent of retailers citing macro risks as top concerns, according to the Bain & Co. study, flexibility is key amid inflation, labor shortages, and shifting trade policies.

With succeeding retailers using the latest technologies to create resilient supply chains, here are some of the other steps they’re taking to build a winning formula:

• Expanding supplier network to help balance cost, speed, and resilience.

Rather than relying on a single low-cost source, these retailers are adopting a mix of onshoring, nearshoring, and offshoring strategies. For example, footwear brand Steve Madden is cutting China imports by 40 to 45 percent and shifting production to India and North America to reduce dependency on imports and mitigate risks.

• Boosting agility with predictive digital modelings to simulate disruptions and optimize operations in real time.

These virtual models let retailers test different scenarios, such as extreme weather, supply shortages, or labor strikes, which helps them adjust logistics, reroute shipments, and prevent bottlenecks before they happen.

• Leveraging AI for precise demand forecasting.

With changing consumer behaviors and unpredictable disruptions, AI-powered analytics help retailers anticipate fluctuations in demand, optimize inventory placement, and reduce waste. According to research from Bain & Co., custom AI forecasting models can cut excess inventory by 40 percent and improve accuracy by nearly 50 percent, reducing costly stockouts and overages.

4. Cut Costs Smarter with AI & Tech

Cost efficiency is critical for retailers’ success, as it unlocks resources that can be used to enhance resilience, the customer experience, and competitive pricing. However, traditional cost-cutting methods often fall short, particularly when they focus on isolated functions rather than a holistic, tech-driven approach. Research from Bain & Co. shows that without alignment to broader business goals, many cost-saving initiatives from retailers fail to deliver long-term impact. With new technologies emerging every day, opportunities for retailers to go beyond conventional workflow optimizations and inventory management have never been so abundant. New technologies, some of which weren’t available just 18 months ago, are reshaping the way retailers approach efficiency. Generative AI, machine learning, and automation can create new pathways to reduce costs, but only for retailers willing to rethink end-to-end operations and commit to long-term transformation.

Two of the main ways retailers can find a middle ground between major improvements and fast outcomes are:

• Optimize for today by deploying proven solutions that drive immediate, sustainable results. AI-powered tools can refine promotions, simplify product lines, automate distribution centers, and streamline labor scheduling. Machine learning models can also help retailers analyze sales patterns to optimize pricing and reduce excess inventory while robotics enhance warehouse efficiency.
• Invest in tomorrow by leveraging generative AI and advanced tech for deeper cost efficiencies. Having access to real-time supply chain visibility, AI-driven forecasting, and digital assistants for store associates and buyers enables smarter decision-making. Forward-thinking retailers are also exploring breakthrough innovations like AI-powered online assortment optimization and autonomous inventory management, setting the stage for their long-term success.

Note that achieving lasting cost savings often requires upfront investment. Leading retailers strategically sequence their initiatives, balancing quick wins with impactful changes. These retailers assess feasibility, considering factors like capital requirements, time to value, and technology maturity, to prioritize the most impactful opportunities.

5. Unlock New Revenue Beyond Retail

As growth slows and margins tighten, winning retailers are tapping into beyond-trade ventures by leveraging their assets to create new revenue streams outside of traditional product sales. These ventures, which range from retail media to marketplaces, can drive up to one-third of revenues and half of profits over the next decade, according to estimates from Bain & Co.

Retailers are likely to succeed in these beyond-trade ventures by using their scale and unique assets. Retail giants like Walmart use their large customer base and resources to build expansive ecosystems, while more niche brands like Zalando thrive by curating specialized marketplaces tailored to their specific audiences. Beyond sheer size, the ability to monetize proprietary data, strong supplier networks, and brand equity gives these retailers a competitive edge, unlocking new revenue streams outside of conventional sales streams.

Two of the most lucrative beyond-trade models are retail media and marketplaces. Retail media allows retailers to capitalize on first-party data to offer highly targeted advertising, as seen in Best Buy’s ad platform for high-intent electronics buyers and Amazon Ads’ precise audience targeting. Meanwhile, marketplaces expand retailer’s ecosystems. For example, Walmart scales through its robust logistics network, while Zalando creates a curated fashion experience through additions like Zalando Lounge that further sets it apart from other platforms. Of course, success in these ventures depends on their abilities to align capabilities with consumer needs and make sure these ventures complement the retailer’s core business.

According to Bain & Co., retailers who embrace these strategies will be best positioned for success in 2025. But there is one leading factor that ties them all together: data. Strong data strategies drive real results, and retailers who leverage data effectively saw twice the revenue growth and four times the profitability from 2020 to 2023, according to the consultancy firm.

Using data to strengthen loyalty, optimize supply chains, advance technology, and unlock new revenue streams, these forward-thinking retailers will likely lead the way for a winning streak throughout 2025 and beyond.