Mastering effective mass up to the micro
Reducing costs and finding efficiencies are essential as the industry moves towards microphone massdigital model. Reducing costs was the second most cited priority by retail executives surveyed for 2025,46 a pressing problem for those who rely on outdated systems. This legacy technology debt can challenge those trying to transform and compete in this hyper-personalized environment. Updating or replacing existing systems can be burdensome, both in terms of workload and investment costs. As a result, some retailers find themselves faced with complex choices: digitize at the expense of margins or risk losing customers and competitive advantage with stopgap solutions.
Some accept the transformation. For example, a shoe retailer is making significant technology upgrades to deepen its relationship with its customers, create a better omnichannel experience, and improve loyalty. Improvements can also enable employees to make data-driven decisions about merchandising, marketing and the overall consumer experience.47
As retailers aim for growth in 2025, they should focus on optimizing costs rather than simply reducing them. This approach could involve reinvesting savings into improving productivity, acquiring or outsourcing new capabilities and exploring new revenue streams.
People and productivity
Two-thirds of retail executives surveyed plan to allocate moderate to major investments in workforce recruitment, retention and future readiness in 2025.48 Labor costs remain a concern for retailers, who struggle with high turnover rates, particularly among front-line workers like store associates, managers and distribution center employees. Expectations of employees for long-term retention, even at management levels, have changed for some.49
Ultimately, high turnover can impact buyers. Attracting the right people, getting them up to speed quickly, and ensuring they are productive as quickly as possible is critical to business success and the consumer experience. AI tools can guide employees through upcoming tasks or provide quick answers to operational questions, reducing the need for extensive training and allowing staff to operate more efficiently. As an added benefit, this can also allow associates to engage directly with customers. For example, one grocer implemented a task management platform that helped more than 80% of stores see increased task completion rates while achieving double-digit productivity gains on average.50
Forward-thinking retailers can improve their productivity and business results through outsourcing, moving them away from traditional transactional approaches with their partners. Through such partnerships, retailers can improve core capabilities (e.g., space management, omnichannel services, and in some cases, data privacy and cybersecurity) and shed expensive talent.
Optimize the supply chain
Three in ten retail executives plan to make significant technology investments to modernize their supply chain,51 such as unifying merchandising, supply chain and store operations. These investments in technology and innovation are expected to enable more effective decision-making and operational efficiencies and meet the demands of a fragmented consumer. For example, a lighting company uses AI to manage seasonal demand, reduce costs and maintain low inventory across its network. In stores, AI helps improve item picking and routing, streamline workflows, and improve the customer experience.52
Retail sector executives surveyed focus their investments on:
- AI predictions: Demand planning, inventory management, and delivery and supply routes
- Warehouse automation: Removing human touchpoints with robotic systems
- Real-time inventory visibility: Tracking systems to monitor shipments and inventory across channels
Mergers and acquisitions
More than half (53%) of retail executives said they plan to make moderate to major M&A investments in 2025 (up from 30% in 2024).53 These investments may be partly due to fears of bankruptcy and the increasing costs of running a complex digital operation. Retailers are looking to expand through mergers or acquire diversified revenue streams to create a more efficient path to profitability.
These acquisitions also have the added benefit of helping retailers meet their microphone mass objectives by acquiring technology players or logistics companies to help them create personalized experiences (figure 3). For example, a mass marketer recently purchased a television and advertising platform, creating opportunities to collect consumer data, tailor advertising to individual households, and generate additional revenue through ad sales.54
Such acquisitions are part of a broader trend where retailers are seeking access to additional points in the customer lifecycle beyond core retail. For example, an agricultural and gardening supply chain agreed to purchase an online pet pharmacy, expanding its potential market by US$15 billion.55