AI in Retail: 10 Breakthrough Trends That Will Define 2025

Retail is at a crossroads in 2025. 

In an era shaped by evolving consumer behaviors, fierce eCommerce competition, and supply chain disruptions, brands are turning to artificial intelligence (AI) not just as a tool but as a competitive necessity. 

Many retailers are increasingly adopting AI to create personalized, efficient, and seamless experiences that meet the ever-growing expectations of consumers. 

According to Stanford’s AI Index, 78% of organizations reported using AI in 2024, up from 55% the year before. At the same time, Adobe reports a 1,950% year-over-year increase in retail site traffic from chat interactions during 2024’s Cyber Monday, indicating that consumers are ready to embrace more advanced AI agents.

Put simply, AI has officially set a new standard for brands as customers demand tailored experiences across all touchpoints.

Additionally, the investments in AI continue to grow as the need for real-time decision-making, hyper-personalization, and intelligent automation increases. 

That’s why we believe that 2025 will be remembered as the year AI reshapes the retail industry via agentic experiences, visual search, predictive inventory management, and much more. 

In this article, we explore the 10 breakthrough AI trends that are redefining how brands market, sell, and support in the digital age. 

Why retailers are rushing to adopt AI in 2025

Before diving into the 10 trends, it’s worth exploring why the push to adopt AI is so prevalent in retail. 

The pressure to integrate AI stems from three key forces:

1. Surging consumer expectations: Shoppers now expect personalized recommendations, seamless omnichannel experiences, and near-instant support. AI, and specifically Agentic AI, unlocks tons of opportunities in this regard.
2. eCommerce competition: With digital sales still growing, there’s naturally a ton of competition in the industry. Add to that the constantly rising acquisition costs and economic uncertainty and it’s clear why many businesses must reinvent how they engage, convert, and retain customers online.
3. Supply chain strain: Demand fluctuations and logistics challenges have made real-time forecasting, inventory optimization, and cost reduction critical.

Also, many retailers have already used AI over the last 10 years to deliver personalized product recommendations, optimize campaigns, and predict customer behaviors. 

The massive popularity of ChatGPT and other Generative AI solutions only sped up this trend because it unlocked new horizons for shopping experience optimization, customer support, analytics, and much more.

With that in mind, let’s dive into the 10 AI-led trends that will define retail in 2025:

1. AI shopping assistants and virtual agents

AI shopping assistants (sometimes called virtual agents or just agents) help users discover, compare, and purchase products more efficiently. 

In 2025, they’ve evolved far beyond the capabilities of traditional chatbots. Instead of just reacting to user prompts, these new AI-powered assistants are the new digital front-line workers — they guide users, answer product questions, and deliver highly personalized product recommendations across all stages of the customer journey.

More importantly, they can do so autonomously while perceiving, learning, and adapting in real-time. This is what defines the next generation of “agentic” commerce — autonomous, learning-based agents that act with intelligence and empathy.

Take Insider’s Agent One™ Shopping Agent as an example. This agent integrates deeply with our Customer Data Platform (CDP), site search solution, and Smart Recommendation models to deliver emotionally intelligent, one-on-one shopping experiences. Its capabilities include:

• Intent prediction and personalization: Rather than waiting for prompts, the Shopping Agent anticipates what a customer needs, based on behavioral cues and contextual data.
• Real-time product guidance: Using site search inputs, purchase history, and smart recommendations, it provides dynamic suggestions that increase confidence and accelerate conversions.
• Omnichannel integration: The agent can be embedded across websites, mobile apps, and messaging interfaces to help brands meet customers where they are.

Put simply, Insider’s Shopping Agent proactively guides users through discovery, reducing search friction and bounce rates which helps increase average order value (AOV) and customer lifetime value (CLTV).

2. Hyper-personalization and predictive customer engagement

Personalization is no longer about addressing customers by name in an email. In 2025, AI enables deep, real-time personalization at scale using behavioral, transactional, and contextual data to deliver tailored content, messaging, and offers across all channels.

Again, we can use Insider as an example as brands have used our AI-powered solutions for years to achieve all sorts of business goals. For example, Insider helps retailers:

• Deliver dynamic product recommendations based on past behaviors, preferences, and real-time browsing context.
• Segment audiences based on standard and predictive characteristics to target users with hyper-specific messages at the right time and place.
• Automatically optimize omnichannel campaigns with AI-powered features like Send-Time Optimization (STO) and Next-Best Channel predictions.
• Streamline campaign creation and optimization with Sirius AI™ — our patent-pending Generative AI solution that drives efficiency and productivity.

For a real-life example, check out our case study with Slazenger. This sportswear brand used personalized omnichannel messaging and AI-powered automation across email, web push, and SMS to create tailored customer experiences, which led to a 49x ROI and a 700% increase in customer acquisition.

They also plan to experiment with back-in-stock campaigns, expand price drop notifications, and leverage Sirius AI to generate copy and images. This would help them enhance team agility and productivity while driving them closer to their ultimate goal —  delivering seamless 1:1 omnichannel experiences.

3. Conversational commerce and voice shopping

Conversational commerce — the intersection of messaging apps, voice assistants, and shopping, where customers and brands interact through text or voice-based conversations — is rapidly becoming the norm in retail. 

In 2025, more consumers are shopping through voice and text than ever before, whether through smart assistants like Alexa or embedded AI chat in brand-owned apps.

This trend is about more than convenience — it’s about accessibility, speed, and removing friction from discovery and purchasing. New developments in Generative and Conversational AI are only speeding up this trend across the globe as they enable:

• Hands-free interactions, which are especially valuable for mobile-first or visually impaired users.
• Personalized, real-time support driven by context-aware dialogue that boosts confidence and conversions.
• End-to-end engagement from product discovery to purchase and post-sale support, all through a single place.

For example, Insider’s Conversational CX toolkit lets brands leverage AI-powered, two-way customer conversations at scale across WhatsApp, Facebook Messenger, and many other messaging channels. 

Avis used these capabilities to launch an AI-powered digital assistant on WhatsApp. As a result, 70% of customer queries are handled by the assistant, leading to 39% cost savings in one year. 

4. AI-powered visual search and image recognition

For many customers, visual search is replacing keyword search as a more intuitive alternative for finding products. By uploading a photo or screenshot to AI-powered tools, shoppers can now instantly discover products that match or closely resemble what they’re looking for.

This can be game-changing for brands in fashion and home décor, for example. Tons of retailers have integrated visual recognition to reduce bounce rates and increase product discovery.

Behind the scenes, this relies on computer vision, image tagging, and AI-powered visual matching. These technologies enable platforms to analyze photos and return accurate results.

For retailers, this shortens the path to purchase, lowers cart abandonment, and adds a layer of convenience that aligns with Gen Z and millennial browsing habits.

5. Smart inventory and demand forecasting

Retailers lose billions each year due to overstocking, stockouts, and missed promotional opportunities. AI changes that by providing real-time demand forecasting, automated replenishment, and hyper-local stock optimization.

By analyzing historical data, weather patterns, holidays, and local events, AI models can help predict what products to stock, when, and where.

This extends beyond customer-facing operations. In B2B and supply chain contexts, AI:

• Minimizes warehouse delays.
• Improves vendor relationships.
• Reduces spoilage or dead stock.

When integrated with IoT and robotics, smart forecasting becomes even more powerful, fueling automated restocking and fulfillment.

6. AI in dynamic pricing and competitive intelligence

AI-powered technologies can change product prices based on real-time data such as demand, competition, inventory, and even customer behavior.

Industries like air travel and electronics have long embraced this, but in 2025, even fashion and fast-moving consumer goods (FMCG) brands are adopting AI-driven pricing engines as they ensure:

• Higher profit margins through better price elasticity modeling.
• Faster response to market shifts, i.e., no more waiting for manual repricing.
• Customer-centric strategies, like loyalty-based discounts or urgency-driven offers.

AI also provides competitive intelligence by scanning competitor sites, product catalogs, and promotions, enabling brands to adjust positioning in real time.

7. Fraud detection and transaction security with AI

AI has become indispensable in fraud prevention. It flags anomalies, identifies suspicious patterns, and helps secure transactions without compromising user experience.

This is possible thanks to features like:

• Biometric verification (voice, face, fingerprint).
• Real-time transaction monitoring using AI-trained models.
• Predictive risk scoring to prevent chargebacks and fraud attempts before they occur.

8. AI-enhanced omnichannel experiences

Today’s consumers move fluidly between devices and platforms. AI helps retailers create cohesive experiences across mobile, desktop, in-store, and post-sale channels.

For example, Insider’s eCommerce CDP lets brands unify customer data from all of these touchpoints in one convenient database. Then, AI models and agents can use this information — like preferences, behaviors, and interactions — to fuel:

• Consistent messaging: Regardless of platform, our AI ensures each customer gets context-aware content. 
• Real-time personalization: Whether a customer browses on mobile and buys in-store, or shops via social then returns via web, the experience is always tailored to their needs and interests.
• Omnichannel orchestration: Our omnichannel personalization and automation tools let brands build flows across web, mobile apps, email, SMS, WhatsApp, and many other channels. 

Put simply, AI makes true omnichannel engagement possible by leveraging the right data and algorithms to deliver consistent messaging across the entire customer journey — something legacy platforms struggled to do effectively.

9. AI in retail sustainability and waste reduction

Sustainability is no longer optional — it’s a strategic imperative as retailers are under pressure to cut emissions, reduce waste, and embrace circular economy practices. 

This is fueled by both regulators and customers looking to create more efficient and sustainable shopping environments in the long run.

AI technologies can help in several ways:

• Optimizing routes to reduce fuel consumption (i.e., smart logistics).
• Demand forecasting to prevent overproduction and excess inventory.
• Packaging optimization that recommends the right-sized packaging for each order.
• AI-powered sustainability scores in product listings, enabling customers to make more eco-conscious decisions.

10. Generative AI and the future of creative retail

Lastly, Generative AI is completely redefining retail creativity. New technologies can now create product descriptions, marketing content, entire outfits, room designs, and even 3D models or AR/VR environments.

That’s 2025, retailers are using generative AI to:

• Simulate virtual fitting rooms or interior layouts.
• Design product variations, reducing time-to-market and cost.

Auto-generate social media ads, email copy, and landing pages. For example, Sirius AI™ can automatically generate anything from customer segments, omnichannel journeys, copy, and images using simple text prompts.

In short, Generative AI marks a shift toward the co-creation of experiences between brands and shoppers. It also enables marketers to work much more efficiently and productively by automating time-consuming tasks.

The road ahead: AI as the retail operating system

As retailers move deeper into 2025, one thing is clear: AI is no longer optional — it’s foundational. Retailers that adopt AI early will be best positioned to lead in a rapidly evolving landscape that combines voice, visual, and conversational interfaces.

At Insider, we’ve built the industry’s most aggressive AI roadmap to help brands stay ahead. From autonomous shopping agents to predictive analytics and omnichannel orchestration, our AI-native platform powers retail experiences that convert, retain, and delight.

Our purpose-built AI agents can:

• Anticipate customers’ needs, understand the intent behind their queries, and provide relevant product recommendations.
• Turn your web search engine into an intelligent answer engine that delivers personalized conversations.
• Integrate with relevant data sources, including 360-customer profiles from our enterprise CDP.
• Incorporate Insider’s predictive AI and Smart Recommendations to show relevant products and deliver more cross-sell and upsell opportunities.
• Manage front-line support by answering customer questions accurately 24/7, powered by CDP, CRM, and other relevant data sources.
• Uncover campaign risks, make recommendations and optimizations autonomously, and anticipate trends to improve performance. 

To learn more about how Insider can help you tap into the full potential of AI, schedule a free demo with our team.