The Future of Retail: Harnessing AI for Competitive Edge, Strategic Pricing, and Personalization in 2025
In 2025, retail and eCommerce will undergo profound change. With advancements in AI, the ways we understand competition, pricing, and shopper personalization are evolving rapidly. Here’s what I see—informed by Engage3’s thought leaders as well as conversations with leaders from our global customer base which includes 8 of the top 10 largest retailers in the world—as the key trends that will define the future of retail from a pricing and customer loyalty perspective.
AI-Powered Competitive Intelligence & Pricing: The Next Frontier
In the ever-competitive retail market, standing still is not an option. Retailers must stay ahead, and AI is becoming a powerful tool in this race. AI enables real-time competitive monitoring, with predictive capabilities as the game-changer. With the right data models, training data, workflows, and guardrails, LLMs will improve product attributes for deeper matching. This, in turn, then supports algorithmic price optimization and better automated insights to help users better leverage competitive data.
In 2025, we’ll see retailers moving beyond reactive strategies. They will leverage AI to predict competitor actions and market trends, enabling them to adjust their strategies proactively. This shift from reactive to proactive intelligence will redefine how businesses approach competition, providing a significant edge to those who adopt early.
The New Value Paradigm: Price Image and Personalized Value Finds the Shopper
Match or beat pricing strategies will no longer suffice. The key to success lies in understanding behavioral price-value fit at the most granular levels of shopper segmentation. Retailers must understand consumer behavior to design personalized value propositions.
Just as the introduction of UPCs, point-of-sale systems, and data warehousing in the 1990s revolutionized retail decision-making, a new data and AI-driven backbone is emerging. This backbone will support context-driven price-value fit decisions, allowing retailers and brands to design segmented value propositions with predictive confidence.
As part of a recent trip to our European offices, I was also able to meet with several of our most innovatively minded retail customers and was impressed by the commitment they had to driving massive changes to their pricing and loyalty strategies to drive better experiences for their customers. They were all-in on evolving their approach to their pricing and promotions strategies, which is key because:
- The value paradigm for shoppers is shifting, driven by generative AI and increasing price transparency. Today’s consumers often spend time searching across channels for the best value, but this is about to change.
- In the near future, shoppers won’t need to search for value—personalized value will find them.
With minimal effort, consumers will have near-perfect insight into all marketplace value propositions, tailored to their location, time, channel, brand, and preferences. This evolution will render traditional mass-market value propositions and go-to-market strategies ineffective if they lack the behavioral context necessary to understand price-value fit.
Our value activation roadmap for our customers involves:
- Establishing a strong baseline for competitive intelligence
- Understanding Price Image relative to market and by ‘Strategy Group’
- Price Image optimization to secure sales growth, gross profit, and price perception goals
- Personalizing Price Image to drive win-win outcomes at the shopper group or even shopper-level to improve both relevance and ROI of offers in partnership with your suppliers
In 2025, personalized value will find shoppers—consumers will no longer search for deals, as AI tailors near-perfect insights to their preferences, location, and timing.
Looking Ahead: Key Predictions for 2025 and Final Reflections
Consumers are becoming increasingly price-aware, making Price Image management more crucial than ever. AI offers powerful tools to help retailers navigate this challenge. By analyzing market data and consumer behavior, AI can enable dynamic pricing strategies that balance competitiveness with profitability.
In 2025, AI will refine these models by incorporating psychological and emotional factors, offering a more holistic approach to the management of one’s Price Image. Retailers who master this will build stronger, more loyal customer relationships.
Generic promotions are quickly becoming a thing of the past. Consumers today expect promotions that speak to their specific needs and preferences. AI is the key to delivering these personalized experiences at scale.
AI can analyze vast amounts of data to create highly targeted promotions that are personalized and contextually relevant. In 2025, AI will integrate data from sources like social media and smart devices to provide a holistic view of customers and their marketplace price perceptions.
As we move into 2025, several trends are set to shape the industry:
- AI as a Strategic Driver: AI will evolve from being a tool to becoming a central driver of strategic decisions. From inventory management to customer engagement, AI will enable retailers to operate more efficiently and innovatively.
- Omnichannel Integration: The distinction between online and offline shopping will continue to blur, with AI ensuring a seamless experience across all touchpoints.
- Hyper-Personalization: Personalization will become even more granular, setting new standards for customer satisfaction and loyalty.
Companies are pivoting from static strategies to agile, data-driven decisions, keeping pace with trends and market changes.
At the same time, AI on its own is not enough. AI modeling enhances granular what-if analysis, but it floods executives with micro decisions. Executives need the right data infrastructure, the right business user workflows, and proper macro-level oversight. Other great use cases that we’re focused on include, for example:
- Streamlining vendor-retailer collaboration on promotions
- True incrementality measurement to better understand promotion ROI
- Strategic control over collaborative planning & forecasting
As CEO of Engage3, I’ve observed how retailers who adopt AI and personalization strategies are better positioned to navigate the challenges and opportunities ahead. The retail landscape is changing rapidly, and those who leverage AI to understand their competition, optimize pricing, and personalize customer engagement will lead the charge into a new era of retail. Retail is evolving. Embrace AI now to stay ahead. The opportunity is here—seize it and lead the future of retail.
The State of the Retail Industry 2025
JAN 2025
Edris Bemanian is the CEO and a Board Member of Engage3, a leader in helping retailers and brands profitably grow revenue and drive store trips by tracking and optimizing their Price Image. 8 of the top 10 largest retailers in the world trust Engage3 to power their pricing intelligence. Bemanian has 15+ years of retail technology and marketing experience, was named as one of Business Journal’s “40 Under 40”, and holds a B.A. in Economics and a B.S. in Environmental Policy from the University of California, Davis.