In 2017, commercetools published, "Reimagining Retail Commerce...with the Right Tools," a white paper that challenged retailers to move beyond competing with giants like Amazon and, instead, focus on building unique, personalized commerce experiences. Its phenomenal success along with the evolving commerce landscape inspired multiple updates. The increasingly rapid pace of change in today’s retail environment — from technology advancements and commerce trends to changing consumer expectations — led us to decide to refresh it annually. In addition to providing a detailed overview of the current retail environment, the 2025 edition dives into three pivotal trends: Unified commerce, the convergence of digital and physical retail and AI. Here, we summarize some of the challenges retailers face in 2025 and offer a glimpse into how, by embracing these trends, they can create new opportunities.
2025 retail outlook
Success in retail is harder to achieve and sustain than it was in the pre-internet era. At this point, investing in innovation and improvement has become imperative to remain competitive. As the recent 2025 State of the Industry, Unified Commerce¹ report from Incisiv pointed out, outdated technology is the root of the majority of issues retailers face today, “creating friction that drives up costs while eroding trust and loyalty.”
The good news is there are a plethora of new technologies and tools to help retailers tackle these issues head-on, in many cases, solving multiple issues simultaneously — we’ll explain more later in the blog.
Key challenges in 2025
Customer experience (CX): The expectation for retailers to deliver seamless, personalized and convenient interactions across all channels, for people of all abilities, is higher than ever.
Customer loyalty: Today’s consumers are quick to switch brands if their needs aren’t met. They're also looking for more personalized and meaningful rewards — and perks not tied to spending.
Customer service: Customers want fast, high-touch support both online and in-store. They also want to be able to get their questions answered quickly 24/7.
Data management: Access to data is critical to delivering the personalization customers expect and creating operational efficiencies that increase profitability. Yet, retailers struggle to merge data from multiple disparate systems and channels.
Inventory management: Having the right products in the right place at the right time drives revenue. However, retailers remain challenged by the complexity of forecasting demand, tracking supply, and optimizing distribution across physical and digital channels.
Returns: Retailers are grappling with the logistical and financial issues created by the rise of online shopping and the pressure to offer flexible return policies.
| Customer experience | Customer service | Returns |
|---|---|---|
54% of retailers said existing customers are more likely to return if they feel the brand understands their needs and exceeds their expectations. | 62%2 of consumers would prefer using a chatbot over waiting for a human agent if it means receiving faster responses. |
76%3 of first-time customers state they would shop with a retailer again if the return process is easy. |
3 trends shaping the future
While a multitude of different trends are being touted as the next big thing in retail, we currently view unified commerce, the convergence of physical and digital retail and AI as the most strategic opportunities for retailers. Investing in initiatives that leverage each of these trends will enable retailers to take advantage of additional opportunities to engage customers, improve efficiencies and drive new revenue.
The flexibility and agility enabled by composable commerce have helped to spearhead a shift from omnichannel to unified commerce, establishing it as the new ideal retailers are aspiring to achieve. Unlike omnichannel, which focuses on delivering consistent customer experiences on the frontend, unified commerce takes it one step further by enabling retailers to merge all commerce and customer data onto a single backend. By enabling real-time updates, it creates a single source of truth that empowers retailers to deliver better customer service and more personalized experiences while creating operational efficiencies.
Retailers that have a truly composable commerce platform in place, such as commercetools Platform, can adopt the unified commerce approach, enabling them to take advantage of opportunities including in-store clienteling, omnichannel fulfillment and unified loyalty programs.
Legacy store technology just isn’t built for omnichannel experiences. If you don't have a composable structure it’s going to create a lot of problems down the road from a transformation perspective. It just doesn’t have the flexibility — so, we’re doing a lot of unified commerce work to support the omnichannel experience.
Chief Information Officer, The Vitamin Shoppe, (NRF 2025)
A significant increase in consumers shopping in physical stores, particularly Gen Z and Gen A, who have overwhelmingly reported that they prefer experiencing brands in person, along with statistics that reinforce shoppers are fluidly switching between physical and digital channels, is the fuel driving retailers to merge the two disparate experiences.
61% of shoppers in 2024 said they continue to shop in-store because they enjoy experiences like trying on items and comparing products, a 21% increase from 2023.
By integrating digital tools into the physical store environment, as well as adding experiential elements and launching in-store retail media initiatives, retailers can exceed customer expectations — making shopping faster, easier and more fun. Forward-thinking brands are even finding ways to bring the physical experience online. For example, LEGO® is shooting their livestream shopping videos inside their stores, using associates as hosts, giving online shoppers the opportunity to experience the magic of the brand experience.
In a January 2025 LinkedIn article, Jen Jones, Chief Marketing Officer at commercetools, noted that “the conversation has shifted from ‘these are the future’ to ‘who’s actually executing and driving results?’” This is a clearly distinct difference from even one year ago when retailers were mainly using AI tools for product recommendations and descriptions.
As more and more retailers actively experiment with generative AI and predictive AI tools, a multitude of use cases where the technology can deliver positive results are being uncovered; for example, in critical areas such as store operations and supply chain management. In his keynote at NRF 2025, Azita Martin, Vice President and General Manager, Retail & CPG at NVIDIA, told the audience the first step to embracing AI is to gain executive buy-in and then decide which of your business challenges you want to tackle first.
Retailers and brands are in the enviable position of having several powerful technologies to choose from to make their business more productive and efficient, as well as to entrench themselves with their consumers.
The composable imperative
The retail industry has been moving toward adopting composability to gain the flexibility needed to embrace change, deliver innovation and continue to delight customers and drive business growth.
In a world where unified commerce strategies, phygital experiences and AI tools are enabling shopping journeys that allow customers to move effortlessly from digital to physical and back again, retailers can no longer afford to put it off.
To explore all the emerging trends, technologies and opportunities shaping the future, download our white paper, Reimagining Retail in 2025: How retailers are adapting, evolving and thriving in a changing world.
Sources: 1 incisiv.com, 2 tidio.com, 3 mailmodo.com, 4coresightresearch.com
Anita J. Temple is the Corporate Journalist at commercetools. She was a fashion editor at Women’s Wear Daily (WWD) and W Magazine before launching a career as a freelance writer and creative producer. She has written content and worked on a wide range of marketing projects for companies including Dreamworks, Walmart, Coca-Cola, Verizon, and Adidas.