What: Retail media spending is set to increase by USD 10 billion in 2025, yet brands face significant challenges in measuring performance and proving ROI across multiple retail networks.

Why it is important: This measurement gap represents a pivotal moment for retail media networks, as their ability to prove ROI will determine whether they can sustain growth and justify their position as a primary marketing channel.

The retail media landscape is experiencing unprecedented growth, with 92% of brands ranking it as their most important marketing channel. This surge in importance has led to significant investment increases, with brands now managing an average of six retail media networks, expected to grow to 11 by 2026. However, this rapid expansion has created substantial challenges in measuring and proving return on investment.

The IAB reports that 62% of retail media buyers cite lack of measurement standards as a primary obstacle to continued growth, while one-quarter of marketers struggle with integrating retail media alongside other digital channels. The complexity is further compounded by annual trade negotiations and joint business plans that often commit brands to specific spending levels with certain retailers, limiting their ability to shift budgets based on performance data. Despite these challenges, organisations are making progress, with 56% now reporting proficiency in measuring incrementality, a significant improvement from 30% in the previous year.

IADS Notes: The current challenges in retail media measurement highlighted in the article reflect a broader industry transformation throughout 2024-2025. As noted in March 2024, retail media advertising was already projected to reach USD 100 billion in the US market by 2027, setting the stage for today's rapid growth. This expansion is exemplified by Walmart's success, which reported in May 2024 a 9.6% increase in operating income from its retail media operations. The industry's measurement challenges are being actively addressed, as highlighted in July 2024, when research showed retail media networks could potentially double retailers' margins from 1.7% to 4.3%.

This potential has driven widespread adoption, with October 2024 seeing major retailers like Boots and Co-op expanding their digital screen networks in high-footfall locations. The trend culminated in January 2025 with Currys' successful expansion into in-store retail media, projecting 40 million annual impressions. These developments demonstrate how retailers are working to overcome the measurement challenges while capitalizing on the growing opportunity in retail media.

As retail media spending soars, brands struggle to prove results

What:Fashion brands and retailers are rebranding or rolling back diversity, equity, and inclusion (DEI) programmes in response to political pressures and social backlash.

Why it is important: This pivot raises questions about corporate commitments to inclusivity, with potential impacts on brand founders from marginalised communities, workplace culture, and consumer trust, as companies risk alienating diverse perspectives and sacrificing long-term competitiveness.

In the wake of executive orders issued by President Donald Trump targeting corporate DEI initiatives, major companies like Target and Walmart have restructured or scaled back their diversity efforts. These moves reflect a broader trend in corporate America to navigate political and social pressures by reframing inclusivity efforts as “for everyone” while avoiding terms like DEI. However, critics worry this shift could legitimise workplace discrimination and hinder progress made since 2020. Some businesses, including Apple, Costco, and fashion brands like Glossier, have reaffirmed their DEI commitments, recognising the importance of tangible actions beyond public statements. Black-owned beauty brands like Chéribé and The Honey Pot, while benefiting from retailer partnerships, express concerns over the rollback’s implications. Experts caution that companies abandoning DEI risk losing diverse talent and alienating global consumers, potentially stalling innovation. Moving forward, scrutiny will focus on whether companies maintain meaningful inclusivity efforts despite foregoing DEI terminology.

IADS Notes: The retail industry's approach to DEI has undergone a significant transformation since late 2024. Walmart led the change in November 2024 by maintaining inclusion practices whilst removing explicit DEI language, achieving its strongest market performance since 1998. Target's recent announcement follows Amazon's January 2025 rebranding of its initiatives as "Inclusive eXperiences and Technology". The contrasting approaches are particularly evident in the luxury sector, where brands have maintained their DEI commitments despite market pressures. The emergence of the FAIR framework (Fairness, Access, Inclusion, and Representation) in early 2025 offers retailers a new way to balance inclusive practices with business performance, demonstrating how the industry is adapting to complex political and social pressures.

Can fashion be inclusive without saying ‘DEI’?

What: The evolution of retail media networks is driving brands to integrate traditional shopper marketing expertise with digital capabilities rather than treating them as separate disciplines.

Why it is important: The success of pre-planned television partnerships is creating new revenue streams and marketing opportunities for both entertainment platforms and luxury retailers.

The retail media landscape is undergoing a significant transformation as brands adapt to the growing complexity of consumer engagement. According to the IAB Australia report, 70% of retail media spend is being diverted from traditional advertising channels, while 30% comes from trade retail budgets. This shift is prompting organizations to restructure teams and bridge crucial knowledge gaps between retail veterans and digital specialists.

Companies like Tillamook County Creamery Association are maintaining separate budgets for trade funds and retail media, while others like Goodman Fielder are implementing integrated planning models. The evolution extends to team structures, with many organizations rebranding from 'retail marketing' to 'omnishopper' or 'omnichannel marketing' to reflect changing consumer behaviours. This transformation is particularly evident in measurement capabilities, with digital channels offering unprecedented tracking of sales performance compared to traditional shopper marketing activities.

IADS Notes: As observed in January 2025, retailers like Currys expanded their retail media offerings into physical stores, projecting 40 million annual impressions. This trend gained momentum in October 2024, when major retailers like Boots and Co-op enhanced their media networks to leverage customer data and improve brand engagement. By July 2024, industry research showed retail media networks could potentially double retailers' margins from 1.7% to 4.3%, while March 2024 data indicated retail media advertising was projected to reach USD 100 billion in the US market by 2027.

Retail media forces brands to rethink shopper marketing—not replace it

What: Baby boomers emerge as overlooked luxury powerhouse, holding 50% of US household wealth while demonstrating distinct shopping behaviors and category preferences.

Why it is important: This analysis reveals a significant opportunity for luxury retailers to better serve a wealthy demographic through targeted strategies combining heritage messaging with personalised service.

Baby boomers, holding half of the US's USD 140 trillion in household wealth, represent an underserved opportunity in luxury retail. Despite their significant spending power, which exceeds Gen X's wealth by more than double and millennials' by fourfold, this generation has been largely overlooked in luxury marketing. Their shopping behavior shows strong brand loyalty and preference for in-store experiences, though they're increasingly adopting digital channels, with TikTok usage growing 128% since 2020. The generation demonstrates distinct category preferences, shifting from fashion to experiences, travel, and wellness spending. Their connection to luxury's "golden era" of the 1990s drives preferences for heritage, craftsmanship, and quality, while demanding high-touch clienteling services and personaliSed experiences.

IADS Notes: The revelation that baby boomers hold 50% of US household wealth (USD 140 trillion) while being largely overlooked by luxury marketers signals a significant opportunity in the sector. The generation's distinct shopping behaviours, including strong brand loyalty and preference for in-store experiences, mirrors November 2024's analysis of retailers balancing traditional approaches with new engagement strategies. Their shift toward experience-based luxury spending and wellness, combined with the need for heritage-focused messaging and high-touch clienteling, reflects August 2024's observations about the importance of creating unique shopping experiences while maintaining brand heritage.

Understanding the baby boomer consumer

What: Myer and David Jones are reimagining the department store model through consolidation, experiential retail, and omnichannel innovation amid shifting consumer preferences.

Why it is important: This strategic shift demonstrates how legacy retailers can leverage their heritage while embracing modern retail practices, particularly significant given Myer's recent AUD 864 million merger and the sector's broader digital transformation.

Australia's department store sector is undergoing a fundamental transformation as it adapts to the digital age and evolving consumer behaviours. Once dominant retail destinations, these stores now face intense competition from online platforms, specialty retailers, and discount chains. While recent data shows some positive signs, with a temporary uptick in department store sales in November, the overall trend indicates ongoing challenges, as evidenced by September 2024's 0.5 per cent decline in sales. The sector's response has been multifaceted, combining strategic consolidation with digital innovation. Department stores are reimagining their role as brand houses, learning from past experiences like Myer's handling of Sass & Bide, while simultaneously developing robust e-commerce capabilities. The challenge lies in balancing traditional strengths with modern retail demands, particularly as consumers increasingly seek seamless shopping experiences across both physical and digital channels. The future success of Australian department stores hinges on their ability to create compelling hybrid experiences that leverage both online convenience and in-store engagement, while maintaining strong brand partnerships and unique customer experiences.

IADS Notes: The current challenges facing Australian department stores, as outlined in the article, are being met with significant strategic responses, as evidenced by recent industry developments. In January 2025, Myer's landmark AUD 864 million merger with Premier Investments marked a decisive move to combat digital disruption and changing consumer preferences. This consolidation follows Myer's September 2024 announcement of ambitious digital transformation goals, including a target of AUD 1 billion in annual e-commerce sales. The strategy aligns with broader industry trends identified in November 2024's NuOrder report, which emphasised the critical role of personalisation and AI-driven operations in modern retail. The rightsizing initiatives observed in June 2024, with both Myer and David Jones strategically reducing their physical footprint, demonstrate the sector's adaptation to new market realities. These transformative actions suggest that while Australian department stores face significant challenges, they are actively evolving their business models to remain relevant in an increasingly competitive retail landscape.

What does the future hold for Australian department stores?

What: As consumer spending on fashion declines across major markets, retailers at all price points must increasingly demonstrate their value beyond price alone, with luxury brands particularly challenged to justify premium pricing amid heightened competition and changing consumer priorities.

Why it is important: This evolution in consumer attitudes forces retailers to adapt their strategies across all price points, balancing the need to demonstrate value while maintaining profitability in a market where shoppers are increasingly selective about their purchases.

The retail landscape faces a fundamental shift as consumers conduct increasingly rigorous internal negotiations about purchase value. With over 40% of shoppers in major markets reducing fashion spending in 2024, brands must work harder to justify their pricing. At the luxury level, brands face pressure from new competitors attempting to undercut prices, while mass-market retailers must differentiate themselves among numerous affordable options. Success requires a clear market position, differentiated products that cultivate desire, marketing that emphasizes quality and distinctiveness, and a rewarding sales experience. Retailers like Uniqlo focus on convenience and efficiency, while luxury brands emphasize personalization and service. The key lies in understanding and delivering what specific customer segments value most, whether that's customization, rarity, or experience.

IADS Notes: Recent market analysis reveals significant shifts in consumer spending patterns. According to BoF and McKinsey reports, over 40% of shoppers in major markets are reducing fashion expenditure, while luxury retail faces particular challenges in justifying premium pricing. This aligns with broader industry trends showing consumers becoming more discerning about value, forcing retailers across price points to demonstrate clear value propositions beyond mere pricing strategies.

BoF's complete guide to communicating value to shoppers

Access the full report here

What: "Constructive board disagreements are essential for effective corporate governance and long-term retail success."

Why it is important: "As retail undergoes rapid transformation, recent examples from Macy's, Costco, and John Lewis demonstrate how constructive board conflicts drive innovation and protect stakeholder interests."

Professional disagreements within corporate boards play a vital role in ensuring organizational success, particularly in the retail sector. The article emphasizes that periodic, thoughtful conflicts over major financial, management, or leadership issues are not just healthy but necessary for proper board functioning. While some CEOs might prefer compliant boards that rubber-stamp management decisions, the most effective boards maintain cordial relationships whilst being prepared to engage in serious debates when necessary. This balance is particularly crucial as boards fulfill their legal and ethical responsibilities to shareholders and other stakeholders. Board members' key responsibilities include filling management expertise gaps, bringing fresh perspectives, and planning CEO succession. The text highlights how constructive disagreement can lead to better decision-making, especially during critical moments that could impact a company's long-term success. This professional tension, when properly managed, serves as a vital mechanism for corporate oversight and strategic development, ultimately benefiting all stakeholders involved.

IADS Notes: Recent retail boardroom developments validate the importance of constructive disagreement. Early this month, Macy's appointment of former Hermès CEO Robert Chavez  demonstrates the value of diverse perspectives in board composition. This gains significance as the latest Edelman Trust Barometer  reveals declining confidence in corporate leadership. Costco's recent unanimous stance on maintaining DEI initiatives  and John Lewis's October 2024 decision to eliminate its CEO role  exemplify how principled board disagreements can drive innovative governance solutions and stronger corporate oversight.

When Boards clash, everyone wins

What: Technology and data dashboards reinforce sedentary management styles, despite evidence supporting the value of in-person leadership through workplace wandering.

Why it is important: This trend highlights how technological advancement, while essential for modern retail, must be balanced with traditional management practices that maintain human connection and operational insight.

The modern workplace increasingly tethers managers to their desks, with email demands and data dashboards creating a magnetic pull that keeps leaders sedentary. This trend has intensified with the normalization of video calls and real-time analytics, allowing managers to monitor operations without leaving their chairs. However, Management by Walking Around (MBWA), popularized by Tom Peters in the 1980s, remains valuable for identifying and solving problems at the source. Research shows that MBWA can boost sales productivity and morale, though benefits may be temporary without proper follow-through. The practice requires discipline and commitment, particularly in solving identified issues, but offers irreplaceable insights that screens cannot provide.

IADS Notes: The tension between technology and raditional management practices reflects significant workplace transformation trends. The IADS 2025 White Paper "Middle managers: remnants of the past or tomorrow's unicorns?" emphasizes that middle managers remain essential leaders, connecting top management's vision with frontline operations. While Gartner's predictions suggest AI will eliminate 50% of middle management positions, the CXG Report reveals workforce transformation challenges in the luxury retail sector, and Central Retail's experience shows how companies are addressing multigenerational workforce challenges. However, Raconteur's leadership trends emphasize the importance of balancing AI with human interaction, supporting the article's argument for maintaining direct workplace engagement despite technological advances.

The Economist on the virtues of Management by Walking Around

What: Autonomous AI shopping agents are emerging as retail's third wave of AI innovation, with 32% of consumer goods companies already implementing generative AI and moving towards complete shopping journey automation.

Why it is important: This evolution represents a critical turning point in retail, as autonomous agents reshape traditional retail media strategies and content requirements, while addressing the 73% of consumers who feel overwhelmed by online shopping choices.

The retail industry is witnessing a significant transformation as it enters the third wave of AI innovation through autonomous shopping agents. Following the evolution from predictive AI to generative AI, these autonomous agents can now complete entire shopping journeys with minimal human intervention. Salesforce's research reveals that 32% of consumer goods companies have already fully implemented generative AI, primarily focusing on digital commerce applications. This transition marks a fundamental shift in capabilities, moving beyond simple question-answering to autonomous action-taking. Major retailers like Saks and SharkNinja are already implementing these technologies through platforms like Agentforce, enabling sophisticated customer interactions and automated shopping processes. The impact extends to retail media networks, where traditional advertising approaches are being reconsidered as AI agents begin influencing purchasing decisions. For brands and retailers, this shift necessitates a recalibration of their digital presence, content strategy, and retail media approach. The emphasis is moving towards structured data and standardised attributes that AI agents can effectively process, potentially transforming how products are discovered and purchased. Despite concerns about outcome quality and employee acceptance, the technology's rapid adoption suggests its transformative potential is being widely recognised.

IADS Notes: The retail industry's transition to autonomous AI shopping agents, as discussed in the article, is strongly supported by recent market developments. In January 2025, research revealed that 38% of global consumers were already actively using AI tools for shopping, with an impressive 80% reporting positive experiences. This consumer readiness coincides with significant operational improvements, as demonstrated by Klarna's AI assistant reducing customer resolution times from 11 to 2 minutes. The impact on retail media is particularly noteworthy during the 2024 holiday season, where AI influenced USD 229 billion in spending through targeted offers. These developments validate the article's prediction of a fundamental shift in retail, especially considering that 87% of companies implementing AI reported revenue increases of 6% or more. The transformation is particularly timely, as 73% of consumers report feeling overwhelmed by traditional online shopping experiences, suggesting that autonomous AI agents could address a significant market need.

How autonomous AI shopping agents will transform retail

What: The widespread erosion of trust in corporate leadership is prompting companies to seek transformative executives, as demonstrated by Nike's recall of Elliott Hill from retirement and Berkshire Hathaway's preparation for Greg Abel's succession of Warren Buffett.

Why it is important: This shift towards experienced, trusted leaders reflects a critical moment in corporate governance where companies must balance innovation with stability, particularly as the retail industry faces unprecedented challenges in maintaining stakeholder confidence.

The latest Edelman Trust Barometer reveals a concerning decline in trust across institutions, with people increasingly skeptical of media, corporations, governments, and NGOs. This trust deficit is driving significant leadership changes across major companies. Nike's decision to bring Elliott Hill out of retirement after 36 years with the company represents a strategic move to "re-energize the base," as noted by industry executives. Similarly, Berkshire Hathaway's carefully planned succession, with Greg Abel set to follow Warren Buffett, demonstrates a preference for proven internal leadership. These transitions come at a time when more than 60 national elections worldwide have shown a clear pattern of incumbent losses, reflecting a broader societal demand for leadership change. The emphasis on selecting leaders with deep institutional knowledge and proven track records suggests companies are prioritising stability and trustworthiness over external disruption in their efforts to rebuild stakeholder confidence.

IADS Notes: Recent retail leadership changes reflect this broader trend toward trusted executives. In October 2024, several major retailers underwent significant leadership transitions , while others like John Lewis restructured their governance to focus on core retail expertise . Harvey Nichols' appointment of experienced luxury retail veterans  and Macy's addition of former Hermès CEO Robert Chavez to its board  further demonstrate the industry's emphasis on proven leadership during uncertain times.

The trust factor: why companies are changing leaders

What: The People's Union USA's planned February 28 economic blackout targeting major retailers could inadvertently harm small businesses while aiming to protest corporate practices and rising prices.

Why it is important: With recent data showing inflation at 3% and prices surging 20.7% over four years against 19.3% wage growth, this consumer activism reflects broader tensions between corporate profits and community economic health, particularly as small businesses serve as vital community pillars.

The People's Union USA has called for a 24-hour economic blackout on February 28, targeting major retailers and chains in protest of corporate practices and rising prices. While aimed at large corporations like Amazon and Walmart, small business owners warn of potential collateral damage to independent retailers. Ann Cantrell of Annie's Blue Ribbon Store emphasises how local shops serve as community pillars, citing examples of collective community support such as raising USD 15,000 for wildfire victims. The initiative comes amid concerning economic indicators, with January's CPI rising 0.5% and inflation remaining at 3%. The organisers plan to follow the one-day boycott with targeted week-long actions against specific companies, particularly those that have reduced their DEI initiatives. However, experts note that consumer boycotts typically fail unless companies' actions are particularly egregious.

IADS Notes: The economic blackout initiative emerges amid significant shifts in consumer behavior and retail dynamics. January 2025 data shows a growing "buy less" movement, while recent surveys indicate 73% of consumers feeling overwhelmed by online shopping choices. This activism coincides with broader economic pressures, as European consumers demonstrate increased caution in spending, with 73% experiencing higher prices for goods and services. The timing is particularly significant as retailers already face challenges from changing consumer preferences, with data showing 67% of consumers seeking simplified lifestyles. These developments suggest that while the boycott targets corporate practices, it reflects deeper changes in consumer attitudes toward consumption and corporate responsibility.

How the economic blackout could backfire on Main Street

What: Amazon marketplace sellers report a 144% surge in fraudulent returns, threatening business viability and operational efficiency.

Why it is important: The surge represents a broader crisis in e-commerce operations, where rising return fraud threatens the viability of small and medium-sized sellers while challenging Amazon's customer-first approach.

Independent sellers on Amazon's marketplace are grappling with an alarming increase in fraudulent returns that significantly impacts their profit margins. Trucking Depot, a cargo control products seller, projects a 144% year-over-year increase in fraudulent returns for 2024, despite stable sales volumes. The fraud typically manifests in two primary patterns: customers returning damaged or used items whilst claiming they arrived in that condition, and returning entirely different items while claiming they're the original product. The situation is particularly challenging for sellers using Fulfillment by Amazon (FBA), who have limited ability to inspect returns. Complogics, a car charger seller, reports the number of repeat offenders has doubled in recent years, forcing them to raise prices to offset losses. While Amazon emphasises its commitment to preventing return fraud through specialised teams and investigation processes, sellers argue that current systems inadequately address sophisticated forms of abuse, especially as competition intensifies from low-cost Chinese entrants.

IADS Notes: Recent data paints a stark picture of the returns challenge facing retailers. The National Retail Federation's December 2024 report revealed an unprecedented surge in returns reaching $890 billion, while fraudulent returns alone accounted for $103 billion in 2024. This aligns with the current article's findings about increasing return abuse. The scale of the problem is further illustrated by Narvar's September 2024 study showing 39% of consumers return online purchases monthly. Amazon's January 2025 decision to end its 'try before you buy' service demonstrates how major platforms are re-evaluating their customer-centric policies in response to these challenges.

Amazon sellers report rising concerns over fraudulent returns

What: Generative AI moves beyond the 2024 hype cycle as retailers report concrete results, with 87% of early adopters seeing revenue increases and operational efficiency improvements of up to 30%.

Why it is important: This transition from experimentation to implementation marks a critical turning point for retail, as successful AI adoption becomes essential for maintaining competitive advantage in an increasingly technology-driven market landscape.

The retail industry's approach to generative AI has evolved significantly, moving from exploration to measurable implementation in 2025. This transformation is evidenced by widespread adoption, with 70% of retail executives planning to implement the technology. Major retailers are seeing substantial results: Victoria's Secret has transformed its email marketing with AI personalisation, achieving double-digit increases in revenue per email, while Swarovski's AI-driven recommendations now account for 10% of website sales.

The competitive landscape has intensified with President Trump's executive order removing barriers to American AI innovation, while China's development of cost-effective solutions like DeepSeek-R1 demonstrates the global race for AI supremacy. Companies are leveraging AI across multiple fronts, from enhancing search functionality to improving customer service response times. However, the technology's implementation requires careful planning and strategic execution, as demonstrated by retailers focusing on maintaining brand integrity while leveraging AI's capabilities for growth and efficiency.

IADS Notes: The retail industry's transition from AI exploration to implementation is evidenced by significant developments throughout 2024 and early 2025. As reported in December 2024, China's retail AI adoption reached 230 million users, while BCG's analysis showed 87% of early AI adopters experiencing revenue increases of 6% or more. The competitive landscape intensified with Trump's executive order removing AI regulatory barriers, while China's DeepSeek-R1 demonstrated how cost-effective AI solutions (USD 5.5 million vs. billions spent by US companies) could reshape market dynamics. Customer experience has seen remarkable improvements, with Victoria's Secret reporting double-digit increases in email marketing performance and Swarovski's AI-driven recommendations accounting for 10% of website sales. Operational efficiency gains are equally impressive, with retailers achieving 15-30% improvement in customer service operations. However, implementation challenges persist, as evidenced by July 2024 data showing only 10% of companies successfully scaling their AI applications, suggesting that while the technology's potential is clear, strategic execution remains crucial for success.

Generative AI hits a fashion acceleration point

What: The EU launched the EUR 200bn InvestAI initiative, including EUR 20bn for AI gigafactories to advance Europe's AI capabilities and strengthen its position in the global AI race.

Why it is important: Amid intense competition with the US and China, the EU's massive investment underscores its commitment to fostering AI innovation, infrastructure, and accessibility, boosting Europe's competitiveness in future technologies.

The European Commission announced InvestAI, a EUR 200bn programme aimed at bolstering Europe's AI capabilities. It includes EUR 20bn to fund four AI gigafactories designed to train large-scale AI models, equipped with advanced chips to provide computing power to European companies. Positioned as a "CERN for AI," the initiative exemplifies a public-private partnership fostering AI innovation and accessibility. Funds will come from EU programmes like Horizon Europe, alongside contributions from member states. With heightened global competition, France and the EU's additional EUR 150bn "EU AI Champions Initiative" highlight a shift from regulation to innovation. The EU's 'competitiveness compass' aims to make the region more competitive globally.

IADS Notes: The EU's AI initiative marks a pivotal shift in Europe's technology strategy, coming at a critical time for retail transformation. While 87% of companies implementing AI report revenue increases , only 10% successfully scale their applications , highlighting the need for better infrastructure support. This initiative aligns with France's EUR 109bn AI investment commitment  and complements the private sector's EUR 150bn "EU AI Champions Initiative" , creating a comprehensive ecosystem for retail innovation. The focus on AI gigafactories addresses a crucial gap in computing power access, particularly relevant as European retailers increasingly adopt AI for hyper-personalisation . Major retailers' development of proprietary AI solutions  demonstrates the industry's readiness to leverage this enhanced infrastructure. This coordinated public-private approach represents Europe's strategic response to growing competition with the US and China , potentially establishing the EU as a key player in retail AI innovation.

EU launches EUR 200bn initiative to back AI and gigafactories

What: Anthropic's Economic Index reveals AI adoption is concentrated in mid-to-high wage occupations, with 36% of jobs using AI for at least a quarter of their tasks, whilst favouring augmentation (57%) over automation (43%).

Why it is important: The findings challenge assumptions about AI's impact on employment, offering evidence-based guidance for retailers as they balance automation with human capabilities, especially given that only 10% of companies successfully scale their AI applications.

The Anthropic Economic Index provides groundbreaking insights into AI's impact on the labour market through analysis of millions of anonymised conversations. The research reveals that AI adoption follows a nuanced pattern, with over one-third of occupations incorporating AI into at least 25% of their tasks, whilst only 4% use it extensively across 75% of their work. Notably, the study finds that AI implementation leans towards augmentation rather than automation, with 57% of use cases involving human-AI collaboration. The concentration of AI adoption in mid-to-high wage occupations, particularly in software development and technical writing, suggests a strategic rather than wholesale approach to implementation. This pattern reflects both current technological limitations and practical adoption barriers. The study's task-based analysis methodology offers a more precise understanding of AI's integration into the workforce, moving beyond simple job displacement predictions to reveal a more complex picture of workplace transformation.

IADS Notes: The Anthropic Economic Index's findings about AI's impact on labor markets strongly align with retail industry developments over the past year. While the Index shows AI use leaning towards augmentation (57%) over automation (43%), this mirrors practical implementations in retail, where in June 2024, nearly half of retailers reported increased revenue from AI initiatives that enhanced rather than replaced human capabilities. The Index's task-based analysis approach is particularly relevant given October 2024 findings showing how retailers are targeting specific functions like demand forecasting and fraud detection rather than wholesale job replacement. The focus on mid-to-high wage occupations reflects the industry's strategic approach to AI deployment, exemplified by Walmart's August 2024 initiative processing 850 million product catalog data points. However, the implementation challenges highlighted in the Index are evident in January 2025 data showing that while 70% of retailers plan to implement AI, only 10% successfully scale their applications, underscoring the complexity of this transformation.

The Anthropic Economic Index, Press release

Which economic tasks are performed with AI - full report here

What: Energy software startups are transforming retail operations through innovative solutions that optimise power consumption and enable the transition to renewable energy sources.

Why it is important: As retailers face mounting pressure to reduce their carbon footprint and manage energy costs, these technological advances offer crucial tools for achieving sustainability goals while maintaining operational efficiency.

The retail industry is witnessing a fundamental shift in energy management as software startups develop sophisticated solutions to address the challenges of transitioning to renewable energy sources. These innovations come at a critical time when major retailers are setting ambitious sustainability targets and facing pressure to reduce their environmental impact. The emergence of specialized software tools, ranging from household energy management to grid-level planning, enables retailers to optimize their energy consumption, reduce costs, and meet their carbon reduction goals.

Companies like Tibber and Trawa are pioneering customer-facing solutions, while others focus on helping businesses manage their energy assets more efficiently. This technological evolution coincides with the retail sector's broader sustainability initiatives, as evidenced by major players investing in renewable energy infrastructure and smart building systems. The integration of AI and advanced analytics further enhances these solutions, offering retailers unprecedented control over their energy usage and environmental impact.

IADS Notes: The retail industry has made significant strides in energy management since late 2024. Major retailers are implementing comprehensive energy solutions, with Unibail-Rodamco-Westfield leading the way by announcing a 90% carbon emission reduction target by 2050 .

IKEA has expanded its clean energy initiatives through solar installations and renewable heating systems , while Thai retail giants have committed to net-zero emissions and 100% renewable energy usage by 2030 . These developments are supported by technological innovation, with retailers increasingly adopting AI-driven energy management systems to optimize operations and reduce costs .

The energy software startups powering Europe’s green transition

What: France’s AI Action Summit repositions Europe as a proactive advocate for AI growth, shifting from regulation-heavy strategies to fostering innovation and investment.

Why it is important: This summit marks a pivotal moment for Europe as it competes with global AI leaders like the US and China, aiming to balance innovation with ethical development. Europe's EUR 150bn AI investment initiative demonstrates its ambition to develop an influential AI ecosystem.

Summary: The AI Action Summit in Paris marked a strategic shift for Europe, with leaders like French President Emmanuel Macron and European Commission President Ursula von der Leyen emphasising the need to push beyond regulation and towards innovation in AI. Macron announced a EUR 109bn investment dedicated largely to data centre construction, likening it to the US's USD 500bn Stargate project. Additionally, the "EU AI Champions" initiative secured EUR 150bn from private investors over five years, with EUR 50bn added by the EU. While this represents a clear ambition to establish Europe as a competitive AI hub, scepticism remains regarding the long-term implementation and measurable outcomes of these investments. The summit concluded with a global AI declaration advocating ethical development, though the UK and US abstained from signing due to concerns about national security and governance.

IADS Notes: The timing of the AI Action Summit aligns with critical developments in retail technology adoption across Europe. Recent implementations have shown promising results, with Intime Department Store achieving a 15% increase in counter sales through AI deployment in July 2024, while Klarna's AI assistant reduced customer resolution times from 11 to 2 minutes. The focus on infrastructure development through AI gigafactories addresses a crucial gap in computing power access, particularly relevant as European retailers increasingly adopt AI for hyper-personalization. The summit's collaborative approach between public and private sectors suggests a more pragmatic strategy, moving beyond regulatory frameworks to foster innovation. This shift comes as global competition intensifies, with China reaching 230 million retail AI users in December 2024 and US companies maintaining their technological edge through deregulation.

France's AI Action Summit highlights Europe's new approach

What: Gen AI could add $9-10 billion to the global beauty industry by transforming product development, marketing, packaging, and customer experience through four key use cases.

Why it is important: As demonstrated by early adopters like Estée Lauder with 240 custom GPTs, gen AI is becoming essential for beauty retailers to maintain competitiveness, improve operational efficiency, and deliver personalised customer experiences at scale.

The beauty industry stands at a pivotal moment as generative AI emerges as a transformative force across multiple operational dimensions. Four key use cases demonstrate particular promise: hyperpersonalised targeting, which can improve conversion rates by up to 40%; experiential product discovery, enhancing both online and in-store shopping experiences; rapid packaging-concept development, which has shown to reduce development time by 60%; and innovative product development, potentially saving up to 5% on raw materials costs. The technology's implementation requires careful consideration of approach, whether through off-the-shelf solutions for smaller brands or customised platforms for larger enterprises. Success depends on maintaining human oversight while leveraging AI's capabilities to accelerate processes and enhance decision-making. Beauty players must also establish robust risk frameworks to protect brand integrity and consumer trust, particularly given the industry's emotional connection with customers. The transformation extends beyond mere automation, promising to reshape how beauty brands develop products, engage with consumers, and compete in an increasingly digital marketplace.

IADS Notes: Recent market data strongly validates the article's projections about gen AI's impact on the beauty industry. As observed in January 2025, the broader retail sector has already witnessed significant returns, with 87% of AI-adopting companies reporting revenue increases of 6% or more. The widening gap between leaders and laggards is already evident, as demonstrated by Estée Lauder's deployment of 240 custom GPTs across its brands, showcasing how early adopters are gaining substantial advantages. The urgency for implementation is underscored by current market inefficiencies, with retailers losing 4.5% of gross sales due to operational shortfalls. However, success stories like Intime Department Store's 15% boost in counter sales through AI implementation demonstrate the technology's tangible benefits. The customer experience revolution is particularly noteworthy, with a 304% year-over-year increase in AI-tool-directed traffic, indicating strong consumer acceptance of AI-powered solutions in beauty retail.

How beauty players can scale gen AI in 2025

What:European venture capitalists are focusing on AI agent startups, innovating automation in workflows, customer service, industrial processes, and more.

Why it is important: AI agents, capable of automating complex tasks without constant human intervention, represent a transformative shift across industries. This technology is seen as a key driver of efficiency and innovation in 2025, attracting significant investment and reshaping business operations globally.

AI agent startups in Europe are gaining significant attention from venture capitalists, as tools powered by AI aim to automate entire workflows and enhance efficiency. These startups span industries ranging from HR and customer service to financial services and industrial automation. Notable examples include France's Maki People, which uses conversational AI for talent acquisition, Germany's Cognigy for customer service agents, and Switzerland's Unique for financial workflows. Other unique startups include H Company with its web agent Runner H, and Juna.ai, which innovates in optimising industrial manufacturing processes with live sensor data. AI-driven startups such as Pigment, Synthesia, and CausaLens showcase how AI agent technologies are revolutionising planning, video production, and data science workflows. With Silicon Valley's enthusiasm and predictions from OpenAI's CEO Sam Altman regarding AI agents' transformative business potential, Europe is emerging as a hotspot for cutting-edge AI agent development.

IADS Notes:The emergence of European AI agent startups comes at a critical moment in retail transformation. Recent data shows that 87% of companies implementing AI have achieved revenue increases of 6% or more , while AI agents have dramatically reduced customer resolution times from 11 to 2 minutes . This efficiency gain is particularly significant as 73% of consumers report feeling overwhelmed by online shopping choices . However, implementation challenges persist, with only 10% of retailers successfully scaling their AI applications , despite 70% planning implementation . The technology's evolution is reshaping core retail functions, from product discovery to purchasing , with companies achieving 15-30% productivity improvements . As European startups develop specialized AI agents for specific retail functions, they address a growing market need while navigating concerns about cybersecurity, with 76% of executives acknowledging room for improvement .

AI agent startups: 18 companies VCs are watching in Europe

What: The beauty industry faces significant challenges in scaling AI adoption, with issues ranging from data bias in skin analysis to infrastructure limitations, despite promising innovations in personalisation and automation.

Why it is important: With McKinsey reporting that personalisation can reduce acquisition costs by 50% and increase revenues by 5-15%, the beauty industry's successful AI integration is crucial for future growth, particularly as companies like L'Oréal and Estée Lauder lead technological transformation.

The beauty industry stands at a critical juncture in AI adoption, balancing promising innovations with significant implementation challenges. While companies like SmartSkn showcase AI-driven skincare robots and Umia demonstrates automated manicure services, these remain isolated examples rather than industry standards. The sector faces crucial challenges in data quality, particularly in skin tone analysis, where bias remains a major concern. Companies like Haut.AI and Renude are working to refine skin analysis systems, while L'Oréal's dedicated generative AI committee demonstrates corporate commitment to technological advancement. The transformation requires substantial infrastructure changes, from advanced data sets to reimagined operational flows, with successful implementation promising significant benefits including reduced acquisition costs and increased marketing ROI. However, the industry must address both technical challenges and consumer education to achieve widespread adoption.

IADS Notes: Recent developments underscore the beauty industry's AI transformation journey. In February 2025, L'Oréal introduced lab-grade skin analysis to beauty counters, while Estée Lauder deployed 240 custom GPTs across its brands. This technological push comes as McKinsey reports that personalisation can reduce acquisition costs by 50% and increase marketing ROI by 10-30%. However, challenges persist in data quality and bias mitigation, particularly in skin tone analysis. The industry's evolution is further evidenced by the success of early adopters, with 87% of AI-implementing companies reporting revenue increases of 6% or more, demonstrating how beauty retailers must balance technological innovation with practical implementation challenges to remain competitive.

Is beauty ready for AI?

What: Bain-Altagamma Luxury Study reveals first contraction in personal luxury goods market in 15 years, highlighting fundamental shifts in consumer behavior and retail channels while projecting 4-6% annual growth through 2030.

Why it is important: This comprehensive market analysis reveals how luxury retail must transform to address changing consumer preferences, channel dynamics, and digital capabilities while maintaining brand value.

The 23rd edition of the Bain-Altagamma Luxury Study reports a 2% decline in personal luxury goods to EUR 363 billion in 2024, marking the first contraction in 15 years excluding Covid. The luxury customer base shrunk by 50 million over two years, while top customers now account for 45% of global purchases, up from 35% in 2021. Channel dynamics show significant shifts, with outlet stores outperforming full-price retail and online sales normalizing at 20% market share. Only one-third of luxury brands achieved growth in 2024, compared to 95% in 2021-22. Looking ahead, the study projects 4-6% annual growth through 2030, reaching EUR 460-500 billion, but success requires brands to rethink their strategies, embrace digital transformation, and rebuild luxury foundations through quality, creativity, and meaningful customer connections.

IADS Notes: The Bain-Altagamma Luxury Study's revelation of the first contraction in personal luxury goods in 15 years marks a fundamental shift in the luxury retail landscape. This aligns with broader industry trends observed in November 2024, where department stores implemented significant transformations in their luxury offerings. The report's finding of a 50 million reduction in luxury customers, coupled with top customers accounting for 45% of purchases, reflects the market polarization identified in December 2024's analysis of changing consumer behaviors.

The outperformance of outlet channels over full-price retail and the normalization of online sales at 20% market share mirrors August 2024's observations about the need for retailers to balance experiential offerings with operational efficiency. This comprehensive transformation of the luxury market, with projected 4-6% annual growth through 2030, demonstrates how luxury retailers must fundamentally rethink their strategies to align with evolving consumer preferences and digital capabilities.

Bain-Altagamma luxury goods worldwide study forecasts long-term growth

Bain & Company, luxury in 2024 and beyond

Bain & Company luxury report

What: India's IT sector grapples with a 51% AI skills gap despite contributing 58% to global outsourcing, revealing a pressing need for structured GenAI implementation strategies.

Why it is important: The disconnect between recognition and implementation reveals systemic challenges in training and support systems, requiring immediate attention as the industry transitions from GenAI to more advanced AgenticAI capabilities.

India's position as the global IT powerhouse faces a critical challenge as it navigates the GenAI revolution. Despite generating USD 250 billion in technology trade and employing over 5 million professionals, the country faces a widening talent gap, with AI-skilled talent demand outstripping supply by 51%, projected to grow further by 2026. The research reveals a complex adoption landscape where implementation lags despite high awareness. Only 27% of the workforce receives advanced, proficiency-based training, while 66% of delivery leads report client concerns about security and IP protection. The adoption conundrum is particularly evident in next-generation skills such as LLM fine-tuning, cloud computing, and cybersecurity. To maintain its competitive edge, the industry must deploy a multi-faceted approach, including customized training programs, scientific outcome tracking, and robust client communication frameworks. This transformation becomes increasingly urgent as the sector moves towards AgenticAI, requiring strong foundations in current GenAI capabilities.

IADS Notes: BCG's January 2025 survey confirms the report's central thesis, showing that while 75% of executives prioritize AI, only 25% achieve meaningful value . The implementation gap is stark - December 2024 data reveals just 10% of retailers successfully scale their AI applications . Yet, success stories are compelling, with October 2024 findings showing 87% of GenAI implementers achieving 6%+ revenue growth . The technical hurdles identified in the report align with March 2024 research, where nearly half of retailers struggle with data integration despite high adoption rates .

The GenAI adoption conundrum in India

What: Saks Global faces significant operational and financial challenges just months after its USD 2.7 billion merger with Neiman Marcus.

Why it is important: The challenges highlight the complexities of luxury retail consolidation and the delicate balance between cost-cutting and maintaining brand value.

The newly formed Saks Global is encountering substantial challenges in its post-merger integration with Neiman Marcus. The company's vendor payment schedule has been extended to July 2026, raising concerns about liquidity despite earlier assurances of financial stability. Strategic restructuring includes significant store closures, notably the historic downtown Dallas Neiman Marcus location and the Palm Beach Saks store, whilst simultaneously announcing a GBP 100 million investment in the NorthPark Center location.

The company faces mounting pressure from brand-owned stores and online competitors, compelling a comprehensive reset of its business model. This includes reducing brand partnerships by 25% from its current 3,000 vendors and implementing new payment terms. The loss of key personnel, including super-seller Catherine Bloom to Nordstrom, further complicates the transformation. Despite these challenges, Saks Global maintains its vision of creating a technology-driven luxury retail powerhouse through partnerships with Amazon and Salesforce.

IADS Notes: The transformation of Saks Global has evolved significantly since the merger's announcement in July 2024, when it promised to create a USD 10 billion luxury powerhouse. By December 2024, the company secured USD 2.2 billion in bond financing and established partnerships with technology giants. However, February 2025 brought significant changes, including store closures and vendor payment restructuring, indicating the complex reality of post-merger integration. This evolution mirrors broader industry challenges, as luxury department stores struggle to balance traditional retail models with digital innovation and changing consumer preferences.

Is the Saks/Neiman’s merger already in trouble?

What: Faced with rising costs from fraudulent returns, retailers are tightening policies, but new AI-driven tools in 2025 enable tailored approaches that protect margins while maintaining customer satisfaction.

Why it is important: Strict return policies risk alienating loyal customers, but AI technologies offer a solution by identifying and rewarding trustworthy shoppers while curbing abuse, allowing retailers to sustain long-term loyalty and profitability.

As online retail stabilises post-Covid, the once-generous return policies that drove customer loyalty are now a financial burden due to widespread abuse, often amplified by dark web forums and fraud kits. Retailers have responded with stricter measures, such as shorter return periods, return fees, or offering credits instead of refunds, but these changes frustrate loyal customers and risk damaging long-term relationships. In 2025, advanced AI technologies are emerging as a viable alternative, enabling retailers to adopt personalised return policies.

These systems analyse customer behaviours to reward dependable shoppers with flexible return options while limiting abusive behaviour. Collaborative platforms further integrate insights across teams, optimising customer experience and fraud prevention simultaneously. Retailers who embrace these innovations can deliver a seamless, trust-based experience for loyal customers while safeguarding profitability and protecting against abuse.

IADS Notes: As reported in January 2024, US retailers faced USD 743 billion in merchandise returns, with online purchases showing a significantly higher return rate of 17.6%. By December 2024, this figure had escalated to USD 890 billion, demonstrating the rapid growth of the problem. The trend is particularly concerning given that September 2024 data revealed that 39% of consumers return online purchases monthly, with each return costing retailers USD 25-30. These findings underscore the urgency of implementing sophisticated, AI-driven solutions to manage returns while maintaining customer loyalty.

The returns and refunds saga: how can retailers regain control?