HFS Analysts’ 2025 Forecasts

2025 is set to be a transformative year across multiple industries, and our HFS Research Analysts have unveiled their most comprehensive predictions yet—these insights are essential for staying ahead in a disruptive business landscape.

Brace yourself—2025 is on the brink of unleashing seismic shifts across every major industry. Our HFS Research Analysts have unveiled their most comprehensive predictions yet—from AI revolutions and quantum breakthroughs to supply chain upheavals and regulatory takeovers. If you’re not prepared for these monumental transformations, you’ll be left in the dust.

Phil Fersht
CEO and Chief Analyst

  • The smoldering platform to embrace AI finally catches fire. I predict the biggest year yet for AI, cyber, embedded software, microchips crypto and quantum.
  • The growth in GCCs will force the outsourcers to focus on the value they bring beyond supplying labor.
  • Political burnout leads to real progress.
    • Read more

    The smoldering platform to embrace AI finally catches fire. I predict the biggest year yet for AI, cyber, embedded software, microchips crypto and quantum.

    2025 will be the biggest year ever for technology driven business transformation, with real investment coming from ambitious enterprises looking to survive and thrive in the new AI era.

    The growth in GCCs will force the outsourcers to focus on the value they bring beyond supplying labor.
    We’ve talked for years about the services firms providing value at scale in a non-linear fashion, now the opportunity is staring them in the face. The need to scale services without scaling people is upon us, and with it comes a massive opportunity, provided both ambitious enterprises and service providers are prepared to change how they buy and sell routine services and professional expertise.

    Political burnout leads to real progress.
    The biggest problem with politics in the US (and many other countries) is this ridiculous partisan behavior where people get forced into all sorts of weird behavior when only one thing really matters: what is best for our country. We may have supported the candidate that lost, but ultimately, you need to refocus on what’s best for you, your family and the country in which you live. The real debate has only started now: how best do we tackle immigration, government wastage, growing the economy, driving innovation and start-ups, winning the AI war, fixing a broken healthcare system and creating a more equitable society. We don’t care about who’s in power, we care about these issues being addressed. Many people we engage with share the same mindset – let’s focus on exploiting times of change to create a better future for ourselves, our enterprises and our families. Let’s pray we don’t ever get another polarizing and depressing election cycle like the one we have just experienced.
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Saurabh Gupta
President, Research and Advisory Services

  • The Great Blur—Software and tech services are one now.
  • GCCs will turn India into the world’s innovation powerhouse.
  • Blockchain will emerge as the unsung hero.
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    The Great Blur—Software and tech services are one now.

    Forget everything you knew about traditional software and services. It’s all blending into one. Service providers are turning into the new software vendors, offering everything from shiny new apps to managing and optimizing them like pros. Meanwhile, software companies are elbowing their way into the service game, making themselves a permanent part of the experience, not just the tool you ignore after installation.

    Driven by agentic AI and a mountain of data, this shift is flipping the IT services rulebook. No more separating vendors from service providers—businesses will demand end-to-end, real-time solutions that actually do something measurable, not just fill up your inbox with busywork. Sure, People Management still matters, but by 2025, Product Management and Ecosystem Orchestration will be the real stars of the show, as companies merge development, delivery, and ongoing innovation into sleek, scalable machines. By 2025, the line between software and services? Gone. It’ll all be one big, integrated monster—“Services-as-Software.”

    GCCs will turn India into the world’s innovation powerhouse.
    By 2025, India will no longer just be the world’s favorite place to outsource grunt work—it’ll be the global innovation machine. Thanks to the rise of Global Capability Centers (GCCs), India is going from cost arbitrage to innovation arbitrage.

    Forget about India being the cheap labor powerhouse; this is where the next wave of AI, R&D, and disruptive tech will be scaled at a fraction of the cost of Silicon Valley. So, if you’re still thinking of India as a back-office solution in 2025, you’re already late to the party.

    The future is happening in India, and if you’re not tapping into it, you’ll be missing out on the biggest competitive advantage of the decade.

    Blockchain will emerge as the unsung hero.
    The hype cycle is over, but blockchain is far from finished. It’s maturing and finding its true purpose in industries where trust, traceability, and transparency are critical—like food safety, pharmaceuticals, and cross-border payments. In 2025, blockchain will no longer be a buzzword, but a foundational technology that works seamlessly with AI to tackle the trust deficit in both private and public sectors. Whether it’s tracking goods in real-time or ensuring the authenticity of luxury products, blockchain’s real-world impact is only just beginning. So, if you thought blockchain was a passing trend, think again—it’s the quiet force behind the scenes.
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Elena Christopher | HFS Research

Elena Christopher
Chief Strategy Officer

  • Your AI strategy IS your business strategy.
  • Enterprises and their partners must think bigger than productivity as the primary benefit of AI.
  • Services firms must become value-added ecosystem orchestrators to help enterprises unlock new forms of value.
  • There is no singular UI for AI.
    • Read more

    Your AI strategy IS your business strategy.
    In 2025, the enterprises that take the lead with AI will be those that define and execute enterprise-wide AI strategies that align AI use with planned business strategy. AI execution can and should happen bottoms up, but without overarching guidance from the C-Suite (and not just the CIO) bottoms-up execution only fulfills the immediate project purpose. Top-down enterprise-wide AI strategies inform the direction and purpose of bottoms-up AI execution. Critically, your AI strategy is your business strategy.

    Enterprises and their partners must think bigger than productivity as the primary benefit of AI.
    Productivity is the low-hanging fruit of generative and agentic AI. Enterprises that successfully leverage AI in 2025, must adopt a “productivity AND” mindset. Productivity is inherently a bottom-line benefit and most organization do not know how to effectively harness enhanced productivity. It must be complemented by topline pursuits aligned to enhanced customer experience, new products or services, enhanced sustainability, or more effective risk mitigation.

    Services firms must become value-added ecosystem orchestrators to help enterprises unlock new forms of value.
    As IT and business process services (literally think any function that requires a human to execute it) increasingly become software-driven, the purpose of services firms will begin to shift from horizontal consult, build, and run capabilities to verticalized expertise and ecosystem orchestration and governance. Commercial-off-the-shelf software will satisfy a broader array of needs, eclipsing many bread and butter capabilities of services firms. The ability to curate specialized domain and industry expertise combined with an array of meaningful tech, capital, and academic partners to address changing needs and morphing industries will emerge as a top need for enterprises and a critical next chapter for the services sector.

    There is no singular UI for AI.
    Despite Microsoft and Saleforce’s willful insistence, 2025 will not yield a singular UI for AI. This may never happen, not because it’s impossible, but because each vendor is far too focused on perpetuating its respective market share and legacy stranglehold on its installed base. APIs, middleware, and lots of custom development is building the bridges across enterprise applications, data and clouds today – enabling the next wave of AI. Enterprises should interpret any vendor claims of being the UI for AI as being specific to that vendor’s product set.
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Tony Filippone
Chief Research Officer

  • ​​2025 will be the year of AI and algorithm regulation in the US—and the rise of guardrails-as-a-service.
  • In 2025, the fixation by company executives on ROI and cost reduction will flank creaky FTE deals, driving revenues downward for services companies long reliant on headcount.
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    2025 will be the year of AI and algorithm regulation in the US—and the rise of guardrails-as-a-service.
    While many industries will expand as a result of deregulation, the FCC intends to add additional regulations requiring the disclosure of algorithms. While it may be narrowly targeted at consumer platforms, like Google and Facebook, due to Elon Musk’s distaste for DEI and political biases, the replacement of search by OpenAI, Google, and Meta places the backbones of many industry solutions in regulators’ crosshairs. In 2025, the FCC will issue a regulation requiring the government, government contractors, many supporting software and services companies, and possibly whole industries to disclose algorithms that may contain biases that conservative regulators will seek to eliminate. This will impact the products and services most companies widely use. Rather than rely on internally devised guardrails and toxicity training, companies will form to issue configurations of guardrails-as-a-service that meet government standards.

    In 2025, the fixation by company executives on ROI and cost reduction will flank creaky FTE deals, driving revenues downward for services companies long reliant on headcount.
    2024’s death by 1,000 pilots will turn into service providers’ death by 1,000 GenAI automations, eviscerating IT and business process headcount. As large software companies fully deploy built-in, configurable GenAI and agentic solutions, smart service providers will jump at the opportunity to help clients implement this functionality to the despair of service providers’ operations teams. Look for stalled and shrinking revenues to results by year-end.
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David Cushman | HFS Research

David Cushman
Executive Research Leader

  • We may be traveling through uncertain times.
  • 2025 will be the breakthrough year for GenAI—the year when GenAI is applied beyond point solutions.
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    We may be traveling through uncertain times.
    I’ve lost count of the times I’ve heard folk say ‘change is the new normal’ this year (me among them). I’ve also lost count of the times I’ve heard the mantra that we don’t like change. We fear it. Thousands of years of survival on the savannah have trained us to be wary of new things in our field of vision, etc. Resistance!

    I also keep hearing the wise refrain: “Interesting times, my friend,” often accompanied by some sage nodding of heads.

    This brings us to my prediction. Every year since I can remember, conversations have ended with “interesting times” (sage nodding). The rise of the internet, social media, mobile, mobile web, digital, cloud, AI, globalization (and now AI… again) made us reflect that we were living through interesting times as new technologies challenged how we work and live.

    My prediction is that we will be living in interesting times once more. And we will respond as we have always responded—by adapting to change. We may not ‘like’ change, some of us may ‘resist’ change, but as sure as the Earth continues to spin around the Sun, we will adapt to it.

    Adaptation to environments is what makes all species successful, and I have faith in humankind that we will continue to apply our ingenuity, wit, and wisdom to adapt to whatever direction these latest ‘interesting times’ lead us in. I predict change. And I predict we will adapt.

    2025 will be the breakthrough year for GenAI—the year when GenAI is applied beyond point solutions.
    The rise of agentic will deliver cross-silo, self-improving processes that provide exactly the value the enterprise has been waiting for. GPT5 will have us all thinking again about the possibilities unleashed as early as January.
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Joel Martin
Executive Research Leader

  • Organizational General Intelligence will boom. I predict in 2025 enterprise IT will look to their services partners to aid in aligning their people and agents.
  • Quantum-as-a-Service will be linked to major breakthroughs in cancer, resilient supply chains, and cybersecurity. I predict that we’ll see a large jump in the use of quantum computing in life sciences, supply chain and logistics, and high-tech.
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    Organizational General Intelligence will boom. I predict in 2025 enterprise IT will look to their services partners to aid in aligning their people and agents.

    This will boost ‘organizational general intelligence’ (OGI) as they combine what the people augmentation of ITS firms with the automation, data, and AI efforts of the enterprise and their technology-led capabilities. The productivity boost of automation, AI, and low-code will lead to scalable, measurable AI-enabled business capabilities.

    Quantum-as-a-Service will be linked to major breakthroughs in cancer, resilient supply chains, and cybersecurity. I predict that we’ll see a large jump in the use of quantum computing in life sciences, supply chain and logistics, and high-tech.

    a) In life sciences quantum computing will make a large leap in how we customize proteins to address cancers. Being able to successfully model the application of proteins to specific genomes in specific cases to predict health outcomes will lead to new treatments, cures, and the ability to extend and improve life.
    b) In supply chain & logistics QaaS will be used to map alternatives scenarios crucial for global supply chain management, adaptability, and resiliency become critical concerns for both nation states and private sector value chains. The critical areas mapped will be food, critical materials and mineral supplies, and dependence on diversified manufacturing across the emerging markets supplying western economies.
    c) In high-tech QaaS will be applied alongside AI to boost cybersecurity threats, surveillance, and data protection solutions. Large financial organizations and telecommunications firms will adopt NIST new security algorithms and use QaaS solutions to discover, access, and apply protection and monitoring tools to mitigate and protect against bad actors and protect essential monetary and communications services.

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Melissa O’Brien
Executive Research Leader

  • In 2025, multilingual GenAI will disrupt the global contact center industry, rendering traditional labor-arbitrage models obsolete.
  • Real-time language translation will eliminate the need for large, globally dispersed operations, enabling AI-first upstarts to challenge incumbents with scalable, multilingual solutions.
  • Established BPOs must embrace AI-driven transformation or risk being outpaced in a rapidly evolving market.
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    In 2025, multilingual GenAI will disrupt the global contact center industry, rendering traditional labor-arbitrage models obsolete.

    GenAI’s capabilities for real-time language translation and enhanced natural language understanding (NLU) are set to disrupt traditional operating models and redefine competitive dynamics. Providers providers no longer need a large global footprint to fulfill clients’ language requirements. This reduces the dependency on hiring and maintaining a multilingual workforce in high-cost or niche markets. New entrants, often tech-savvy upstarts, will leverage GenAI to compete with established players, bypassing the need for costly infrastructure or large labor pools. These upstarts can offer multilingual capabilities from day one, leveling the playing field and driving fierce competition.

    Clients will increasingly demand AI-powered solutions as part of their service contracts, expecting both cost efficiencies and enhanced customer experience.

    Traditional providers must adapt or risk losing market share to competitors that embrace AI more effectively.

    Real-time language translation will eliminate the need for large, globally dispersed operations, enabling AI-first upstarts to challenge incumbents with scalable, multilingual solutions.
    With routine and language-dependent tasks automated, human agents will focus on complex, high-empathy scenarios where AI alone cannot suffice. This will require upskilling existing workforces to handle more strategic, value-driven roles.

    Established BPOs must embrace AI-driven transformation or risk being outpaced in a rapidly evolving market.
    GenAI represents a paradigm shift in how the global contact center industry operates. By 2025, it will fundamentally alter the competitive landscape, enabling new entrants to disrupt traditional labor-arbitrage models and pushing established players to evolve or risk irrelevance. The future of the industry lies in a hybrid approach, where GenAI augments human capabilities, driving efficiency, scalability, and exceptional customer experiences on a global scale.
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Suhas A R
Associate Practice Leader

  • The year of tariffs and supply chain disruptions.
  • Hyperscalers focus on chips and sustainable infrastructure.
  • The shift in news consumption.
    • Read more

    The year of tariffs and supply chain disruptions.

    2025 will mark the resurgence of tariffs as a key strategic tool for countries pursuing geopolitical objectives. In a climate of escalating geopolitical tensions—particularly between the U.S. and China, and as Europe advances its tech sovereignty goals—tariffs will disrupt global supply chains, particularly in critical technologies like semiconductors, telecom infrastructure, and raw materials for tech manufacturing.

    To mitigate risks, companies will accelerate efforts to diversify supply chains away from dependency on any single geography. While a complete overhaul will not occur overnight, diversification of supply chains will gain significant momentum. Governments will incentivize local production with government incentives, creating opportunities for enterprises to capitalize on. However, balancing the cost implications of such diversification will remain a key challenge.

    Hyperscalers focus on chips and sustainable infrastructure.

    Generative AI’s explosive growth will drive unprecedented demand for computing power in 2025. Hyperscalers like AWS, Microsoft Azure, and Google Cloud will accelerate investments in custom AI chips (e.g., AWS Trainium, Azure Maia, Google Trillium) to gain a competitive edge and reduce dependency on NVIDIA. Sustainability will emerge as a critical focus area as the energy footprint of AI workloads continues to grow. This will spur innovation, such as Microsoft Hyperscalers, which will likely prioritize energy-efficient data centers (e.g., Microsoft’s announcement on zero water data centers that won’t need fresh water supply) and AI chips to address these concerns.

    The shift in news consumption.
    The ongoing transformation in news consumption will accelerate in 2025, driven by younger audiences’ preference for short-form content. Social media platforms will cement their position as the primary news source, overtaking traditional TV and broadcast news. As platforms like TikTok, Instagram Reels, and YouTube Shorts dominate, legacy media companies face existential threats to their business models unless they adapt to this new paradigm.

    While AI-driven content curation and personalized news feeds can enhance user engagement, misinformation, and credibility concerns will challenge media companies. The proliferation of AI-generated content, including deepfakes, can prove to be a source of misinformation spread by vested interests. Success will depend on the platform’s ability to produce concise, engaging, and credible content while mitigating the dangers of misinformation and adhering to data privacy requirements.
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Hridika Biswas
Senior Analyst

  • There will be a huge push for responsible AI.
  • There will be a huge push toward a more AI-skilled and pre-emptive talent base, led by the investments made by most service providers in 2024.
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    There will be a huge push for responsible AI.

    In the “AADA Quadfecta Services for the Generative Enterprise, 2024” Horizons report, we saw that major service providers are already embedding this into their offerings. However, a large number of service providers have just started scraping the edge in terms of adoption, and there’s going to be significant movement forward with all the ethical considerations posing issues across enterprises.

    There will be a huge push toward a more AI-skilled and pre-emptive talent base, led by the investments made by most service providers in 2024.
    The talent skill gap that was a problem across industries and functions last year should start to close. With employees and employers understanding the need for talent that is not only skilled in AI but also skilled in understanding where human tasks cannot be replicated, the balance between these will be key in building a solid workforce.
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Dana Daher | HFS Research

Dana Daher
Practice Leader

  • AI Agents will start to weaken hierarchies.
    • Read more

    AI Agents will start to weaken hierarchies.

    Traditional experience-based advancement is dying. By 2025, AI agents will eliminate the gap between junior and senior roles by democratizing expertise across organizations. First-year employees with AI co-pilots will match or exceed 20-year veterans in productivity and decision quality. This will force a restructuring of compensation models and career advancement. Organizations clinging to experience-based hierarchies will struggle against competitors who embrace AI-augmented workforces.

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Niti Jhunjhunwala

Niti Jhunjhunwala
Senior Analyst

  • In 2025, we will see more large deals involving technology, cloud, data, and AI.
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    AI will be a small part of the deals and the larger chunk of it will be dedicated to overcoming the 5 debts.

    • With the lowering of interest rates in the USA there were green shoots in BFSI deals and discretionary spending in 2024, expect the same in 2025.
    • In 2023, service providers declared that they are going to invest billions of dollars in AI, data, and analytics over the next 3-to-5-year period. In 2024, GenAI use cases went into production helping enterprises achieve greater productivity, higher efficiency, and cost savings. Next year, we might see a shift towards creative use of AI for value creation beyond productivity gains and point solutions, as well as more implementation of agentic AI, and multi-agent systems.
    • The service providers are increasingly drinking their champagne by using AI / GenAI internally such as augmenting SDLC for improved productivity. Some companies are developing assistants and platforms that will help junior-level employees make decisions that would normally be taken by someone with higher experience. As the workforce becomes smarter and more productive, will this lead to a slowdown in headcount growth even further?
    • There might be some uptick in SLMs (for example tsuzumi of NTTDATA, Infosys’ NT-Java SLM). SLMs are more cost and energy-efficient, can run on-premises not releasing proprietary data, and are more accurate than LLMs.
    • Greater shift towards non-traditional commercial models in AI deals such as performance or outcome-based models.
    • The top-tier service providers are going to increase investments or alliances with large tech companies and AI/data start-ups to co-innovate and co-develop AI solutions with them.
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Josh Matthews
Practice Leader

  • Sustainability will be a differentiator in 2025—but businesses must choose.
  • No matter your industry or geography, deprioritizing sustainability in 2025 would be a massive risk.
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    Sustainability will be a differentiator in 2025—but businesses must choose.

    Every business leader, from the CEO to the board, must decide whether to be clear, unashamed sustainability champions in 2025—or whether to make silent progress. The long-term direction of sustainability hasn’t changed. Businesses can’t stop that change. But they can be a part of how that change happens. And individual leaders still have time to both lead and futureproof themselves.

    Sustainable finance, regulation, and executive priority all flow in one direction. But the next few years will be bumpy. It’s impossible to think that Trump’s reelection will not significantly affect an increasingly uphill battle facing the climate and broader sustainability emergency. But as businesses or a planet, we weren’t doing enough anyway. Most data points toward sustainability still being a differentiator. It’s time for business leaders to be brave.

    No matter your industry or geography, deprioritizing sustainability in 2025 would be a massive risk.
    Boards, CEOs, and all their leaders must individually and collectively decide whether they want to be loud sustainability champions in 2025 or make more silent progress. The long-term direction hasn’t changed, but the next few years will be turbulent.

    The climate and sustainability emergency is about to become an even greater battle. The 2024 COP29 UN summit showed in no uncertain terms that international agreements are, at best, guidelines—and aren’t even ambitious guidelines. The fossil fuel and defense industries are looking at green lights over the next four years, at least. However, the vast majority of businesses across sectors, including finance, continue to move in a positive—albeit too-slow—direction.

    Find as many partners as possible and act on your spheres of influence. Align around shared outcomes. Bring banking, insurance, and the whole financial services industry into your ecosystem where possible. Find your way into policymaking, especially if you’re a senior leader. Create and lobby for aligned transition plans. Whatever your company or industry, break down the global context and figure out your part in the systems-changing success story and where the work is needed to embed sustainability more methodically in your strategies and day-to-day business.

    At HFS Research, we’ll work with you to build that critical mass and embed sustainability in 2025 and beyond. You can read more here: https://www.hfsresearch.com/research/sustainability-differentiator-2025-role/
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Industry Outlook

Banking

Elena Christopher | HFS Research

Elena Christopher
Chief Strategy Officer

In 2025, banks must better leverage AI to diversify revenue. As interest rates decline but the cost of deposits remains competitive, banks will get roasted on declining net interest income.
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Long has the lure of revenue diversification existed, but to combat this, banks tend to do more of the same in other ways. Or they complement deposits and lending with wealth management capabilities. Banks need to consider how AI can help do more than drive productivity returns. Banks must consider how AI-enabled analytics can help create a meaningful 360 understanding of customers and actually do something meaningful with the data—better offers and the equivalent of volume discounts are not a bad start. Externally, banks can consider cross-industry services that complement their offerings—insurance is obvious. The next best action can extend to complement banking services—think of interesting ecosystems of offerings that complement major purchases.
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Healthcare

Rohan Kulkarni | HFS Research

Rohan Kulkarni
Executive Research Leader

  • Healthcare economy unlikely to shift.
  • Obamacare will be under a new threat.
  • Bye-bye vaccinations.
  • Adios nutrition regulators.
  • Getting rid of GMOs.
  • Out with food chemicals.
  • No fluoride in our water.
    • Read more

    • Healthcare economy unlikely to shift: The incoming US administration is highlighting “Make America Healthy Again” as the theme to address US healthcare but its commercial implications will be muted in relation to the narrative.
    • Obamacare will be under a new threat: The exchange markets are growing due to federal subsidies to help those less fortunate amongst us to afford health insurance. The new administration will constrain and restrict those subsidies and slowly kill the exchange market without legislative action.
    • Bye-bye vaccinations: There will be efforts to revisit the schedule and types of vaccination by the new HHS leadership, but will likely go nowhere in blue states but will be embraces in red states given Vaccines are in the state domain, which will further polarize vaccine management and complicate regulations. However, it may shift pharma pipelines and further drive demand for care.
    • Adios nutrition regulators: Nutrition labels are key to product positioning. While there may be an opportunity to relook at it, it likely won’t move the commercials anytime soon.
    • Getting rid of GMOs: It will take a generation to truly eliminate GMOs from our farms and foods. There will be no short-term impact, but it could trigger a longer-term movement with new needs for transportation and storage.​
    • Out with food chemicals: The best opportunity to move the needle that could trigger transforming the market for testing and validation in the near term.​
    • No fluoride in our water: A local water management issue that could impact local commercials and healthcare needs but won’t really move the financial needle.
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Insurance

Divya Iyer
Practice Leader

Global events will continue to reshape the insurance risk landscape, making disciplined underwriting essential to navigate and prepare for multiple scenarios. To remain competitive, insurers will adopt innovative approaches to measuring risks, adjusting premiums, and delivering exceptional service.
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In 2025, success will hinge on integrating real-time data, driving automation to enhance efficiency and lower costs, and embedding AI into core operations. AI’s transformative potential dominated conversations in 2024 and will likely do so in 2025. However, avoiding AI-washing will be critical as insurers take a thoughtful approach to implementation, ensuring AI investments don’t distract from addressing foundational priorities, particularly around cyber risk and regulations. Insurers will prioritize demonstrating AI through business impact in high-value areas such as claims handling, underwriting, and customer touchpoints while steering clear of less impactful applications.

They will also proactively engage customers, leveraging data-driven risk mitigation, intelligent modeling, and deeper connections to address extreme weather-driven disasters. At the same time, the proliferation of distribution models has led to a race to the bottom, with a greater focus on price. The industry will shift toward advisory value, stronger customer relationships, and differentiated offerings to counter this trend.
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Retail

Ashish Chaturvedi
Practice Leader

In 2025, the ‘physical’ store in the US will undergo a major overhaul. First, there is likely to be a 50% surge in store-based fulfillment as retailers increasingly repurpose physical locations into hybrid spaces.
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Many stores will serve dual roles, operating both as traditional shopping destinations and as micro-fulfillment centers. This shift will see a portion of the retail floor converted into “dark stores,” effectively reducing the size of the customer-facing shopping area and on-display inventory.

Meanwhile, in the remaining shoppable space, artificial intelligence will take center stage. Retailers will deploy AI-driven tools to optimize planograms, enable seamless automated checkouts, streamline inventory replenishment, and enhance theft prevention measures. These innovations promise to significantly lower labor costs while improving operational efficiency—a critical response to rising wage pressures and evolving consumer expectations.
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