The 3 trends defining retail innovation in 2025

February 03, 2025

As retail and consumer packaged goods industries navigate a rapidly evolving landscape, 2025 marks a turning point. AI agents are no longer experimental tools but operational cornerstones. App ecosystems are reclaiming their status as the primary engagement hubs, and loyalty programs are being reshaped to deliver emotional, value-driven connections.

NRF 2025 underscored these trends, showcasing actionable insights and transformative strategies from brands like Foot Locker, Bath & Body Works, Nestlé, Heineken, L’Oréal and more.

The lesson? Technology is no longer a supporting actor. It’s the driver of innovation and scalability.

For brands, the challenge is twofold: Leverage these advancements for differentiation, and ensure they translate into tangible business outcomes.

From AI prototypes to operational scale

The rise of autonomous intelligence

AI agents are the driving force behind 2025’s retail transformation. What began as proof-of-concept initiatives have now matured into scalable systems that optimize customer interactions, streamline operations and create predictive insights.

At NRF, Foot Locker’s FLX Loyalty program demonstrated the power of AI in delivering hyper-personalized experiences. By using AI agents to analyze shopping behaviors, the program can dynamically offer curated rewards and exclusive event invitations, fostering deeper engagement. 

Similarly, Bath & Body Works leveraged AI and augmented reality at scale, utilizing predictive modeling to deliver personalized product recommendations and dynamic promotions. They also used AR to enhance the sensory experience of their fragrances in-store, seamlessly bridging the gap between digital and physical retail experiences.

Quantifiable business outcomes with AI

The integration of AI-powered technologies into retail and supply chain operations is driving measurable business value across industries:

• Conversational AI agents are revolutionizing personalized customer support at scale. Bath & Body Works, led by Chief Digital and Technology Officer, introduced their Generative AI tools, delivering predictive recommendations and dynamic promotions. This innovation enhances customer engagement and loyalty through seamless, personalized interactions.
• Digital twins, as seen in applications by Nvidia and retailers like Lowe’s, are revolutionizing operational efficiency. By simulating supply chain processes and in-store layouts, businesses can test improvements without operational risks. Lowe's digital twin stores have resulted in enhanced inventory accuracy and reduced waste, underscoring the potential of predictive analytics in logistics optimization.
• Generative AI is unlocking new efficiencies. Nestlé's use of AI-powered tools like the Brand Assistant enables consistent messaging at scale, streamlining operations for faster campaign execution. 

These examples illustrate how technology partnerships, like Nvidia’s Omniverse platform or Google Cloud AI-powered Solutions  are not just future-proofing businesses but also generate immediate cost savings and customer experience enhancements.

The return of the app ecosystem

Centralizing customer engagement

In 2025, apps are reclaiming their role as the central hub of customer engagement.

Once seen as transactional tools, apps are now critical for delivering integrated experiences across the customer journey. Foot Locker exemplified this shift with their mobile app, which seamlessly connects product discovery, real-time inventory updates and loyalty features. This app-centric strategy addresses one of retail’s persistent pain points: frictionless fulfillment.

Bath & Body Works demonstrated how app ecosystems enhance customer engagement and loyalty. Recent updates to their app include login improvements, enhanced accessibility for non-registered users and a streamlined store locator feature. These updates are part of a broader strategy to align their award-winning loyalty program with personalized, seamless shopping experiences.

While the app's loyalty members account for over 80% of U.S. sales, Bath & Body Works continues to innovate by integrating technology to deepen customer connections and improve the shopping journey. For example, augmented reality features to express and showcase fragrances in store via the app let consumers interact with their product both in the physical and digital space.

These developments underscore how investing in app ecosystems can help retailers drive omnichannel growth while fostering stronger emotional connections with customers.

Generative AI: A game-changer for apps

Generative AI further elevates app ecosystems by creating anticipatory experiences. For example, apps powered by generative AI can predict customer needs based on behavioral patterns, offering personalized upselling opportunities or tailored content. L’Oréal’s virtual try-on app exemplifies this, using AI to create immersive shopping experiences that can increase conversion rates up to 35%. 

Strategic takeaways for brands

• Invest in composable ecosystems. Build apps that act as omnichannel hubs, integrating digital and physical touchpoints seamlessly.
• Enable real-time personalization. Leverage AI tools to ensure relevance at every customer interaction.
• Think beyond transactions. Position apps as relationship-building platforms that drive engagement and loyalty. 

Loyalty reinvented: Building emotional value

Moving beyond transactions

The reinvention of loyalty programs was another standout theme at NRF. Heineken’s AI-powered approach crafting personalized messaging across customer touchpoints illustrates how loyalty programs can drive deeper emotional connections. By focusing on curated rewards and experiential benefits, Heineken has created a loyalty program that transcends traditional mechanics.

Emotional connections: The new loyalty currency

Unlike traditional points-based systems, modern loyalty programs focus on creating emotional connections. Foot Locker’s FLX program, for example, offers members access to exclusive sneaker drops and events, fostering a sense of community among sneaker enthusiasts.

Recommendations for success

• Design loyalty programs that offer meaningful, personalized benefits.
• Use consent-driven data to create hyper-relevant customer experiences.
• Incorporate generative AI to deliver dynamic rewards and tailored content.

Retail innovation roadmap: Takeaways for 2025

NRF 2025 reinforced the need for brands to move from experimentation to execution. Here are three key strategies to capitalize on emerging opportunities:

1. Leverage AI agents for scalability. Use generative AI and agentic platforms to optimize customer service, logistics and supply chain operations.
2. Invest in app ecosystems. Transform apps into omnichannel hubs that integrate data streams and deliver seamless experiences.
3. Reinvent loyalty with emotional value. Build programs that prioritize emotional connections, leveraging first-party data for precision targeting.

Innovating for the future

NRF 2025 provided a clear roadmap for the future of retail and CPG. The stories of brands like Foot Locker, Bath & Body Works, Nestlé, Heineken and L’Oréal demonstrate that success lies in leveraging technology to create scalable, customer-centric solutions.

At Valtech, we are committed to helping businesses navigate this transformation. Whether it’s embedding AI agents into operations, designing next-generation app ecosystems or redefining loyalty programs, we work alongside our clients to turn innovation into measurable impact.

The future of retail is here. Let’s make it real together.