The landscape for local retail in 2025 is expected to be shaped by a mix of technological advancements, evolving consumer behaviors, and a growing emphasis on sustainability and community connection. Here are some key trends, including example solutions and technology tool options, to anticipate:
1. Increased Adoption of Omni-channel Models
Local retailers will continue blending in-person and digital experiences. Features like click-and-collect, live video shopping, and AI-powered personalization (such as Visional Commerce's AI agents) will grow in popularity. These models allow businesses to cater to modern shoppers who value both convenience and tactile shopping experiences.
Example: A local bookstore integrates its in-store experience with an app that allows customers to reserve books for in-store pickup. During holiday seasons, it also offers virtual author events where customers can ask questions and make purchases directly through a live video interface.
Tools:
- Shopify POS: To integrate in-store and online inventory and sales systems seamlessly.
2. Enhanced Community-Centric Strategies
Consumers increasingly value local, community-driven retail experiences. Local retailers may leverage their unique position by emphasizing authenticity, supporting local causes, and offering experiences that differentiate them from larger chains.
Example: A family-owned bakery partners with local schools to host fundraising events and offers discounts to residents of the neighborhood. It also uses social media to highlight customer stories and its role in the community.
Tools:
- Hootsuite: To schedule, manage, and analyze social media campaigns focusing on community engagement.
- Donorbox: For easy management of school fundraising campaigns and tracking contributions.
3. AI Agents as a new Customer Acquisition Channel
A specific application will be in the Product, store and brand recommendations in the Gen AI responses and conversations will be the new form of customer acquisition. Expect this new channel to grow extensively as new shopping agents are brought to market in 2025.
Example: (Note this is from the Visional Commerce app)
Customer: "Hi, I'm looking for a comfortable pair of sneakers for everyday use. I walk a lot, so they need to have good support."
Visional AI Shopping Agent: "Got it! Comfort and support are key. Let me ask a few quick questions to narrow it down. Do you prefer a particular brand or style, or are you open to recommendations?"
Customer: "I'm open to recommendations, but nothing too flashy—something neutral."
Visional AI Shopping Agent: "Understood. How about fit? Do you typically need a wide or narrow size, or is standard fine for you?"
Customer: "Standard works for me."
Visional AI Shopping Agent: "Great! Lastly, do you have a budget in mind for these sneakers?"
Customer: "Around $100, but I could stretch a little if they’re really good."
Visional AI Shopping Agent: "Perfect. Based on what you've shared, I’ve found three great options from local stores near you:
- Nike Revolution 6 – Lightweight, with responsive cushioning and available in neutral colors. $95.
- Adidas Ultraboost Lite – Excellent arch support and a sleek, understated design. $120.
- New Balance Fresh Foam 1080v12 – Known for comfort during long walks. $110.
Would you like more details on any of these, or perhaps compare their features?"
Customer: "Can you tell me more about the New Balance ones?"
Visional AI Shopping Agent: "Sure! The New Balance Fresh Foam 1080v12 sneakers offer a plush foam midsole for exceptional cushioning, ideal for long-distance walking. They have a breathable mesh upper to keep your feet cool and come in a neutral gray color. They’re in stock at [Local Store Name] just 3 miles from you.
Would you like me to reserve a pair, or are you interested in a live video preview from the store?"
Customer: "A live preview would be great. Can you arrange that?"
Visional AI Shopping Agent: "Absolutely! I’ll connect you with a shopping agent at [Local Store Name] for a live video. They can show you the sneakers, answer any questions, and even help you with sizing. Let me arrange it now—this should only take a minute!"
Note, this last part is where transition is made to purchasing from local stores, not just listing online links the user can already find on a Google search.
Tools:
- Visional Commerce: New local AI shopping agent helping consumers find products and purchase from local retail stores.
- Perplexity AI Buy With Pro: (paid sub required) replicates the Google Shopping experience providing links to websites and no improvements in personalization, but a time saver over the Google search.
4. AI and Data Analytics Integration
AI-powered tools will help local businesses analyze customer preferences, optimize inventory, and create hyper-personalized marketing strategies. Generative AI will likely revolutionize customer engagement, from virtual try-ons to AI-curated wishlists and shopping agents.
Example: A boutique clothing store uses AI to recommend outfits to its customers based on their past purchases and browsing history. The system notifies customers when similar styles are back in stock, increasing retention and loyalty.
Example: A local home goods store introduces a program where customers can return used furniture for recycling or refurbishment in exchange for store credit. It prominently displays certifications from sustainable suppliers, attracting eco-conscious shoppers.
Tools:
- Bluecore: An AI platform that creates personalized recommendations and automates notifications.
- Google Analytics 4 (GA4): For advanced customer behavior insights and omnichannel tracking.
5. Sustainability as a Core Value
Shoppers are gravitating toward businesses that prioritize environmental and social responsibility. Local retailers will likely adopt practices such as using eco-friendly packaging, offering repair services, or sourcing from sustainable suppliers.
Example: A local home goods store introduces a program where customers can return used furniture for recycling or refurbishment in exchange for store credit. It prominently displays certifications from sustainable suppliers, attracting eco-conscious shoppers.
Tools:
- Sustain.Life: A platform to track and optimize sustainability efforts, from emissions to recycling programs.
- LoopReturns: To streamline product returns and implement a circular economy model.
6. Immersive In-Store Experiences
To compete with online shopping, physical stores will transform into experiential hubs, offering workshops, pop-ups, and exclusive events. Integrating AR and VR into in-store experiences can further attract tech-savvy consumers.
Example: A toy store sets up interactive play areas where children can try out the newest toys. It uses AR technology to allow kids to interact with digital versions of characters, enhancing their experience and driving in-store traffic.
Tools:
- ZapWorks: For creating AR experiences that enhance in-store engagement.
- Eventbrite: For managing in-store events like product demos and toy launches.
7. Growth of Buy-Local Campaigns
Economic and social shifts are driving renewed interest in supporting local businesses. Retailers can capitalize on this trend by highlighting their community contributions and fostering customer loyalty through localized branding and rewards programs.
Example: A coalition of small businesses in a city creates a “Shop Local Passport” program, encouraging residents to shop at multiple local stores to earn discounts or rewards. Each stamp on the passport represents a visit to a participating local retailer.
Tools:
- Nextdoor: A platform to promote the campaign and engage local residents effectively.
- Stamp Me Loyalty App: To create and manage digital stamp cards for participating retailers.
8. Evolving Payment and Checkout Systems
Retailers will adopt cashless and seamless payment solutions, such as digital wallets and self-checkout systems, to provide a smoother customer experience.
Example: A local coffee shop introduces a loyalty app that allows customers to order ahead, pay with a digital wallet, and earn points for each purchase. The app also supports QR code scanning for seamless in-store payments.
Tools:
- Square: For digital payment processing and integrated loyalty program management.
- Yotpo Loyalty & Referrals: To enhance the app with robust reward options and referral tracking.
9. Micro-Fulfillment Centers
Small, urban warehouses will help local retailers fulfill online orders faster, reducing delivery times while staying competitive with larger e-commerce platforms.
Example: A local florist partners with a nearby logistics provider to set up a micro-fulfillment hub. This hub ensures same-day delivery of floral arrangements, making the florist competitive with larger online flower retailers.
Tools:
- ShipBob: A fulfillment service that integrates with local businesses to optimize last-mile delivery.
- Gorillas Technology: For hyperlocal delivery management, focusing on speed and efficiency.
These trends suggest that local retailers in 2025 must be agile, leveraging technology while staying true to their community roots to remain competitive in an increasingly digitized world.