My 2025 Retail Predictions—Plus A Few Wildcards (Part 1)

Since 2018 I have been sharing my annual predictions for retail’s future. And each year I take full account of how well I did or didn’t do (here’s last year’s reckoning).

Without further ado, here’s my first batch for this year, as well as a few more “out there” prognostications.

1. 2025 is a rinse and repeat year for retail—with one “yooge” caveat.

2024 was characterized by a flight to value, which included pronounced trading down behavior to retailers with strong price reputations (think Amazon, Walmart, and Costco, TJMaxx), as well as disproportionate growth in private brand offerings. Discretionary categories like luxury and big ticket home purchases performed disproportionately poorly as inflation remained sticky and interest rates remained high. While there is optimism that the new US administration is more business friendly, a weakening job market, along with continued inflationary pressures and slow progress on interest rates, will likely make 2025 look a lot like 2024.

WILD CARD #1: Whether Trump will do what he says (spoiler alert: he often doesn’t) his stated policy plans of big tariffs, mass deportations, and tax cuts could erode inflation progress, keeping interest rates high, leading to a worse year for retail.

2. Land of the Giants: Massive retailers continue to rise above the rest.

In 2024, Walmart, Amazon, and Costco represented about 17% of retail sales, but captured over 50% of the industry’s incremental growth. Because of the factors mentioned above, these behemoths will continue to grow share, largely due to their strong value and convenience reputations as well as the ability to offer one-stop shopping. Their scale and scope, along with out-sized technology investments, will allow them to deliver enviable profit performance

3. US TikTok ban lives to die—or get sold—another day.

I first released the prediction that the Trump administration would kick the can down the road on a ban more than a week ago—and so far it’s looking pretty good. But the longer-term prospects remain unclear as ByteDance appears to be pushing back hard against a sale. The distressingly addictive app remains hugely popular and failure to keep it alive has major negative implications for the new administration. Plus Trump has over 15mm followers. One way or another I expect Tik Tok will remain alive.

WILD CARD #2: Trump helps orchestrate a sale to one of his buddies (Elon Musk, Larry Ellison) or merges it into Truth Social.

4. Search reinvention gains momentum.

And isn’t it agentic? Don’t you think?

The search functionality we’ve grown used to is getting a major rework as the age of AI agents emerges. Not only does this mean more efficient and effective search, but it also suggests a reduction in Google’s hegemony as Salesforce, OpenAI, and a whole host of others deploy new capabilities. Moreover, new applications like Perplexity, and an increase in product searches being done on TikTok, means that the search market will start to look a lot different by year’s end.

5. Retail media will continue its strong growth, but it will remain the province of a few—and in-store will underwhelm.

There is no question that overall sales growth will remain very strong and that the profit contribution from retail media networks can be material for some retailers (selling ads now accounts for nearly one third of Walmart’s profits). But the market will remain highly concentrated (Amazon’s share is some 75%).

As much as there is a lot of talk about in-store media networks, the opportunity will remain de minimus for now, owing to implementation challenges and difficulties getting the shopper experience right.

6. Retail return concerns generate lots of heat and noise, but not much light.

Product returns and exchanges have been a vexing (and expensive) problem for a long time and no one should be surprised that rates continues to grow. This issue generates a lot of clickbait stories, but despite retailers adjusting their policies and many new technology approaches getting deployed with the aim of both reducing the incidence and cost of handling returns, very little progress is being made.

While this is terrible for the environment, customer satisfaction, and retailers’ bottom lines, the truth is the industry has created a monster and easy and free returns have become the basic consumer expectation. Only radical action will stem the tide and it’s unlikely any retailers have the courage to step up.

For a more fulsome discussion of these predictions, check out our recent episode of the Remarkable Retail podcast.

I will release the remainder of my predictions—plus additional wild cards—next week.