AI no longer left on the shelf: What’s in store for retailers in 2025?

Today, retailers are navigating a challenging environment characterized by escalating costs, supply chain volatility, pricing pressures, and high employee turnover. Simultaneously, consumers are demanding increasingly personalized, omnichannel shopping experiences. Gen AI will help retailers address these challenges, but its successful implementation necessitates a strategic, enterprise-wide approach, instead of isolated, departmental deployments.

Let's dive into four trends that will shape gen AI adoption in retail in 2025:
 
1. Multimodal AI unlocks deeper insights and value

Retailers have access to vast troves of data, much of it unstructured, and this includes product descriptions, images, customer reviews, and in-store video feeds. This unstructured data often remains underutilized by existing AI systems. Multimodal AI, with its ability to analyze diverse data types in concert, will unlock new insights for retailers.

For instance, multimodal AI can optimize inventory management by analyzing sales patterns alongside supplier communications and customer feedback. It can also enhance marketing efforts by correlating visual trends in product images with purchasing behaviour. These capabilities empower retailers to extract actionable insights from their data and drive efficiencies that impact their bottom line.

2. Intuitive search redefines product discovery and personalization

Intuitive search capabilities powered by gen AI will transform how customers discover products, both online and in physical stores. Early adopters like Central Retail have already rolled out next-generation conversational search interfaces, which mimic natural human interaction, making it easier for customers to find exactly what they are looking for and receive recommendations for complementary products. 

In 2025, online shoppers will be able to describe desired products in natural language and receive highly relevant suggestions. In brick-and-mortar stores, AI-driven digitization of the shopping experience will guide customers via interactive kiosks or smartphone apps, seamlessly merging online and offline channels. Store associates will also leverage intuitive search to provide customers with detailed product information, facilitating informed purchasing decisions. This omnichannel approach will ensure a consistent and personalized experience across all touchpoints.

3. Conversational AI agents drive commerce growth

Conversational commerce will experience significant advancements in 2025, with AI agents enabling retailers to engage customers in novel and meaningful ways. These agents will function as digital brand ambassadors, assisting with purchases, answering questions, and even offering style or product recommendations.

In fast-paced environments like drive-thrus, conversational AI will enhance efficiency and customer satisfaction. Quick-service restaurants, for example, could deploy AI agents to take orders with increased accuracy and upsell based on customer preferences. These systems not only improve service quality but also unlock new revenue growth opportunities.

4. AI enhances content moderation and safety

Retailers will increasingly utilize AI to ensure safety and uphold brand integrity. One area of focus will be content moderation. For example, companies will use AI to implement safety filters that review product imagery, and detect and block inappropriate or non-compliant content before it reaches consumers. This proactive quality control mechanism ensures compliance and fosters customer trust.

Beyond content moderation, AI will play a vital role in theft prevention, fraud detection, and workplace safety. Retailers will leverage AI-powered surveillance and analytics capabilities, such as the solution developed by Singapore-based startup Lytehouse, to identify suspicious activities in real time, creating a safer shopping and working environment.
 
Data imperative for AI success

The adoption of gen AI at scale hinges on a retailer's ability to effectively harness and utilize data. A robust data platform, underpinned by advanced analytics and business intelligence tools, is essential for unlocking the full potential of AI. Companies that prioritize data integration and accessibility will be better positioned to adapt to market demands and achieve rapid progress.

In 2025, retail leaders will be those who can leverage AI to generate value across their entire enterprise. By focusing on scalable solutions, empowering employees with AI tools, and addressing core business challenges, they can lead the industry into a new era of growth and innovation.

By Mark Micallef, Managing Director, Southeast Asia, Google Cloud