Retail industry trends & challenges in 2025
Tomas Novotny
Sustainability Expert
23 Apr 2025
About 8 mins
Economic shifts, tariff increases, and geopolitical tensions are creating immediate challenges for retail supply chains in 2025. Recent US tariff increases now exceed 25% on many consumer goods, including apparel, footwear, and electronics—presenting particular challenges for fast-moving goods and just-in-time supply chains. According to Mintel’s recent sustainability study, these economic pressures are contributing to consumers deprioritising sustainability, with 67% of shoppers unwilling to pay premium prices for sustainable products unless they also deliver on value, convenience, and quality.
Against this backdrop, technological advancements and changing consumer expectations continue to transform retail industry trends. Forward-thinking retailers are adapting by implementing transparent, resilient supply chains that protect both their business and brand reputation while meeting evolving consumer demands. Let’s explore the specific retail industry trends for this year.
What are the retail trends in 2025?
Navigating logistics disruptions in retail supply chains
Broader geopolitical tensions have created significant logistics challenges specifically impacting retail inventory management and pricing strategies. Shipping disruptions through the Red Sea have added 7-10 days to typical Asia-Europe transit times and increased container costs by up to 300% on some routes according to Drewry’s World Container Index.
For retailers, particularly those selling seasonal or trend-sensitive merchandise like fashion and home goods, these delays directly impact product availability and margin planning. Major retailers are responding by adjusting their ordering timelines and implementing advanced supply chain visibility tools to predict disruptions before they impact store shelves.
According to McKinsey’s Supply Chain Resilience report, 93% of supply chain executives in retail specifically plan to increase resilience through technology investments in 2025, focusing on real-time inventory visibility and predictive analytics.
Strategic tariff management for retail profitability
Recent US tariff increases on Chinese imports are creating specific challenges for retailers’ merchandise planning and sourcing strategies. Tariffs now exceed 25% on key retail categories including toys (up to 35%), electronics (25%), and apparel and footwear (25-30%), directly impacting consumer pricing and margin structures.
These tariff changes are compressing profit margins on China-sourced merchandise and increasing inventory carrying costs due to longer lead times when shifting to new suppliers. According to Kearney’s Reshoring Index, 92% of retail executives are actively pursuing reshoring or nearshoring initiatives, with Mexico, Vietnam, and India emerging as primary alternative sourcing destinations for consumer goods production.
For retailers looking to maintain margin while navigating tariff challenges, supply chain risk assessment tools can help identify alternative sourcing options while maintaining ethical standards and compliance.
Shifting regulatory landscape for retail due diligence
The regulatory landscape continues to evolve, though with some recent shifts in timeline and scope. While the EU Corporate Sustainability Due Diligence Directive (CSDDD), CSRD and EUDR has seen implementation delays and a narrowed scope under recent amendments, the fundamental requirement for supply chain due diligence remains.
For retailers specifically, these changes mean larger enterprises (those with more than €450 million in net turnover and more than 1,000 employees) will still face stringent requirements, while smaller retailers benefit from more time to prepare. However, even retailers below the threshold will likely face pressure from larger business partners to provide comprehensive supply chain data.
Meanwhile, other regulations like the German Supply Chain Due Diligence Act (LkSG) and US Uyghur Forced Labor Prevention Act (UFLPA) continue to require retailers to implement robust due diligence processes with site-level visibility for imported goods.
Greater focus on sustainability
Sustainability in retail has evolved beyond compliance to become a strategic priority. Customers are increasingly aware of environmental impacts, with 76% of consumers stating they intend to shop more with retailers that offer environmentally friendly products and services, according to ReBound and Pollfish.
To address visibility challenges and meet requirements, retailers are implementing footprint tracking, offering climate-impact scores alongside nutritional information, and creating circular economy business models.
Food waste is a particular concern, with the world wasting approximately 2.5 billion tons of food every year. Reducing food waste is becoming a key focus area for grocery retailers, with many implementing AI-powered inventory management systems to predict demand and minimise waste.
Unified commerce for seamless retail shopping
In a Google study, omnichannel shoppers have a 30% higher lifetime value compared to single-channel shoppers—a metric of particular importance to retailers focused on building customer loyalty and maximising revenue per customer.
Leading retail brands like Primark are implementing unified commerce strategies that integrate online, in-store and mobile experiences into a cohesive customer journey. Technologies including centralised inventory management and mobile point-of-sale systems are providing retail associates with real-time information to better serve customers regardless of shopping channel.
According to Harvard Business Review, retail customers who engage across multiple channels spend an average of 4% more in-store and 10% more online than single-channel customers—directly impacting retailers’ bottom line.
Balanced environmental and social sustainability for retail growth
While economic pressures are influencing consumer spending, sustainability remains important for specific retail stakeholders, including investors, regulators and a segment of conscious consumers. According to PwC’s 2024 Voice of Consumer Survey, 58% of consumers are still willing to pay a premium for products with transparent ethical and environmental credentials, representing a valuable market segment for retailers who can authentically communicate their sustainability efforts.
Today’s retail sustainability encompasses both environmental and social dimensions. While environmental initiatives like carbon footprint reduction remain important, social sustainability focusing on fair labour practices and ethical working conditions throughout retail supply chains has gained equal prominence.
To address these dual sustainability demands, leading retailers are implementing comprehensive approaches using tools like Sedex’s Environment Self-Assessment Questionnaire to gather environmental data alongside social compliance information.
The food waste challenge presents a specific opportunity for grocery retailers, with approximately 2.5 billion tons of food wasted globally every year. Innovative grocers are implementing AI-powered inventory management systems that predict demand accurately to minimise waste while maintaining shelf availability.
Circularity as a retail profit driver
The circular economy represents a significant revenue opportunity for retailers, extending profit margins beyond initial purchases while creating environmental benefits. According to McKinsey’s Fashion on Climate report, implementing circular business models could reduce the fashion industry’s greenhouse gas emissions by 143 million tons by 2030 while generating new revenue streams for retailers through resale, rental, and repair services.
“Pre-loved” fashion searches surged 400% on Ebay in the summer of 2024, and according to ThredUp’s 2024 Resale Report, the secondhand market is projected to double by 2026, reaching $82 billion—growing 11 times faster than traditional retail clothing sales.
For retailers, circularity offers a compelling path to increased customer engagement, additional revenue streams, and enhanced brand loyalty while contributing to sustainability goals. Leading retailers including H&M, Patagonia and REI are establishing dedicated resale platforms to capture this growing market segment.
Social commerce and personalisation for retail customer acquisition
Gen Z represents a vital retail spending segment, with estimates placing its global customer value at US$9.8 trillion in 2024. For retailers looking to capture this market, social commerce has become essential. According to eMarketer, 62% of Gen Z say they’re on TikTok daily, which has helped fuel a 156% year-over-year surge in TikTok Shop transactions—creating a significant new sales channel for retail brands.
For multi-channel retailers, personalisation continues to drive growth across all consumer segments. Boston Consulting Group research shows that retailers using advanced personalisation methods could see 20% improvements in net promoter scores and 10% revenue growth—providing a compelling business case for investing in customer data capabilities.
The Pymnts Relationship Commerce report found that 90% of consumers are likely to buy more from brands they believe understand their preferences, suggesting personalisation should be a core strategy for retailers seeking to maximise customer lifetime value.
Strengthening supply chain due diligence
With increasing regulatory requirements, retailers must implement robust supply chain due diligence processes to identify, assess and mitigate risks effectively.
Map and identify risks proactively
Effective due diligence begins with comprehensive risk mapping to identify potential issues throughout your supply chain. This involves assessing suppliers based on geographic location, industry sector, and product type.
Retailers should implement digital risk assessment tools that can efficiently screen suppliers and provide accurate risk scores. According to Harvard Business Review, companies with strong supply chain risk assessment processes are 73% more likely to avoid major disruptions.
Enhance supply chain transparency
New regulations require site-level transparency that headquarters data alone cannot satisfy. Retailers must obtain verified site-level supplier data throughout their value chain to identify facility-specific risks.
Implementing standardised self-assessment questionnaires (SAQs) allows retailers to collect consistent data directly from supplier facilities, covering labour practices, health and safety, environmental management, and business ethics.
Verify compliance through trusted audits
While self-assessments provide valuable baseline information, third-party verification through established audit frameworks like SMETA (Sedex Members Ethical Trade Audit) delivers the credibility needed for regulatory compliance and stakeholder trust.
According to the Association of Supply Chain Management, companies with verified ethical supply chains experience 30% fewer disruptions and recover 50% faster from those that do occur.
Streamline for efficiency
Managing supplier compliance across multiple regulations can be resource-intensive. Retailers should consolidate supplier data into a centralised platform, automating compliance tracking to reduce administrative burden.Standardised processes and digital tools can significantly reduce costs.
Conclusion: The path forward
Retail trends in 2025 are being driven by a renewed focus on sustainability, regulatory compliance, and technological advancements. By focusing on comprehensive due diligence, supply chain transparency, and consumer-centric innovations, retailers can build resilient businesses that meet both regulatory requirements and evolving expectations.
The future of retail will belong to those who embrace transformation, choosing to be proactive rather than reactive in their approach to supply chain management and sustainability.
For retailers looking to build more transparent, resilient supply chains, Sedex provides a comprehensive due diligence platform that helps businesses map, assess, identify and mitigate risks while streamlining compliance. With solutions including risk assessment tools, supplier self-assessment questionnaires, and the globally-recognised SMETA audit framework, Sedex delivers the site-level visibility retailers need to meet regulatory requirements and protect their brand reputation.
