3 key strategies for retailers to navigate 2025

Karen Keylock, national retail services manager at Nedbank Commercial Banking. Image supplied

Here are three trends that should be on your to-do list for 2025 if you want your retail business to prosper.

Number 1: Artificial Intelligence

Yes, it’s become the buzziest of buzzwords – but for good reason. When it comes to retail, its applications are almost endless and the impact it can make on profitability is significant.

Thanks to AI, the days of one-size-fits-all recommendations are behind us, and the customer experience has become intuitive, relevant, and personalised.

Karen Keylock, national retail services manager at Nedbank Commercial Banking says that, by analysing shopping history, demographic information, social media engagement, browsing habits and more, AI analyses vast amounts of data to get to know each customer’s preferences and personalised needs.

“Then, instead of bombarding shoppers with random product suggestions, AI enables brands to recommend items that make sense based on previous interests, making customers feel understood – and more likely to buy again.”

The 2022 Salesforce State of the Connected Customer Report found that 73% of customers expect retail offers to be personalised, so the pressure is on. But the rewards make the cost of implementation worth it:

According to Swiftly, personalisation nets retail businesses a 40% increase in revenue.

At a recent franchising mentorship event hosted by Nedbank and Franchise Coaches, Kauai business development director, Guy Le Ray Cook, shared how Kauai has invested significantly in their digital platforms to provide customers with an enhanced brand experience.

“By offering incentives ranging from instant gratification via cash back rewards to gamification and longer-term tier points, hyper-personalisation and the use of data to benefit and drive customer engagement has significantly boosted customer loyalty in our stores and driven higher engagement and lifetime value.”

Members of the audience, which included franchisers and franchisees across numerous retail sectors, shared similar experiences, proving that AI is being widely deployed in South African retail to personalise and curate relevant customer experiences.

At the event, Le Ray Cook and members of the audience agreed that data driven insights have also proven highly valuable in evaluating the best locations for new stores, and driving profitability by analysing production variances in minute detail and forecasting demand.

In fact, according to a McKinsey paper published in 2022, AI demand forecasting can reduce supply chain errors by 20 to 50% and reduce lost sales by up to 65%.

Number 2: Omnichannel Retail

A strategy that offers a consistent shopping experience across all channels, whether a customer is shopping online, in-store, or via an app, omnichannel retail is designed to make it easy for customers to switch between channels without encountering any challenges.

Salesforce reports that 71% of customers prefer omnichannel experiences, meaning that omnichannel is effectively essential if you want your brand to remain relevant. But the upside is substantial: Salesforce also reports that companies with omnichannel customer engagement strategies retain 89% of their customers, and 83% of shoppers are more loyal to these companies.

“Although in-person shopping appears to be back in vogue, mobile devices are now the dominant force in online shopping, accounting for 34% of shopping in South Africa, while Nedbank’s transactional data for Black Friday 2024 showed a 14% increase in the number of customers transacting online. At the same time, social commerce continues to gain global traction,” says Keylock.

VML’s Future Shopper Report 2024 revealed that 78% of South Africans have bought through social commerce. The unrivalled reach of social commerce alongside the immediacy of purchase are two reasons why it should be right at the top of the agenda for consumer brands.

Number 3: Systems to support AI and omnichannel

So you’re investing in artificial intelligence and omnichannel experiences, but can your systems support them? Even if your existing systems are working as planned, it may be difficult to take advantage of the full potential of these technologies if you don’t modernise.

“Point-of-sale systems, for example, are one of the most valuable tools for generating the wealth of data that AI needs to analyse the buying habits of customers, personalise customer experiences and better forecast demand and manage inventory,” says Keylock.

“However, it can only function in this way and provide seamless omnichannel experiences if the systems are interconnected. This is important, not just for tracking inventory and forecasting, but also for customer trust. If you provide stock and pricing information for products online, accurate and real-time data contributes toward customer confidence in your brand. This data can also be used to upsell, suggest promotions, and encourage customers to buy other items that they are likely to want based on their unique profile.”

Similarly, app modernisation isn’t just about keeping up with the pack. It’s also about enhancing security, increasing flexibility, and improving the performance of your business.

Le Ray Cook concurs: “We were possibly a little ahead of the curve when we introduced our app as the technology wasn’t quite up to speed with what we wanted to achieve when we developed it. We had to go back to the drawing board to develop and enhance the performance we needed but it was worth it. We now have 340,000 Kauai app users and it’s one of our most powerful tools, allowing us to truly understand our customers and engage with them in a meaningful, authentic way.” be on your to-do list for 2025 if you want your retail business to prosper.