According to a research report from the retail team at Bain & Co., nominal U.S. retail sales are pegged to see a 4 percent increase, year-over-year, in 2025 — “barring major macroeconomic or geopolitical shocks,” the firm noted. The report also included “resolutions” that successful retailers are focusing on this year.
“That equates to around $5.2 trillion in estimated total sales in 2025,” the authors of the report said. “It’s a strong outlook, given a stagnant consumer outlook, tempering inflation, negative [year-over-year] employment trends, diminishing consumer savings, rising credit card delinquencies, elevated nondiscretionary costs and potential trade disruptions.”
The Bain advisers said they expect growth will be fueled by a 10 percent increase in non-store sales, “while in-store sales will see modest 2 percent gains, led by general merchandise, apparel, and health and personal care stores.”
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The report was written and compiled by Bain partners Aaron Cheris, Kurt Grichel, Marc-André Kamel and Darrell Rigby as well as Stephanie Koszyk, practice director.
“Retailers face a pivotal moment in 2025,” the report’s authors said. “The challenges of shifting consumer behaviors and demands, economic volatility, regulatory changes and trade complexities persist, reshaping the retail game. Successful businesses will go beyond the familiar, tapping into cutting-edge technologies, reimagining loyalty programs and fortifying supply chains against an unpredictable global backdrop.”
The report said that while headwinds remain, “opportunities such as potential interest rate cuts, tax incentives and momentum from a strong 2024 holiday season suggest 2025 may be a year in which innovative moves can set the stage for lasting success.”
Regarding resolutions for success, the Bain report said companies should take cues from “scale players” such as Walmart and Amazon (with large assortments, along with Costco). The report’s authors said these brands “have become the go-to for many shoppers, accounting for 57 percent of retail growth over the last three quarters and 17 percent of total U.S. retail sales in 2024 — a 6-percentage-point increase from 2014.”
The firm said competing directly with these giants is harder than ever. “But by crafting a unique value proposition, retailers can carve out a winning position alongside them and capture significant rewards.” Bain said a clear and compelling value proposition starts “with the fundamentals, be it fast shipping, consistent quality or reliable digital experiences. Miss here, and irrelevance is almost inevitable.”
The fundamentals include having balanced assortments that cater to customer preferences, which can boost sales by 2 to 5 percent. “Private brands are becoming an especially powerful tool, adding value through exclusivity,” Bain said noting that the firm’s research shows high-performing private brands can boost grocer share of wallet by 12 percentage points.
Pricing and promotions will also be a key to success. “Strong value perception doesn’t always mean chasing the lowest price,” the report stated. “Retailers with a competitive advantage build structured pricing architectures that align with their customer and product strategies, balancing margin growth and market share. Personalized promotions tailored to individual preferences can further enhance value perception and influence buying behavior — ultimately improving ROI.”
With the supply chain, Bain recommends diversifying supplier sourcing, which involves retailers adopting “right-shoring strategies” to optimize operations balancing cost, resilience and speed. The firm said the focus is not on shifting entirely to one region, but creating a flexible system capable of addressing priorities such as response times, market proximity, or resource access during volatility.
Bain said its research showed that about 70 percent of retailers said they intend to augment onshoring or nearshoring in the next three years, with many U.S. companies lessening dependence on China in favor of regions such as India or North America. For example, Steve Madden plans to cut imports from China by 40 percent to 45 percent next year by establishing alternative production and sourcing in different countries. The footwear brand was one of the first to act in response to an announcement of possible tariffs on China from the administration of President Donald Trump.
The report’s authors said optimizing networks with “digital twins” can also mitigate sourcing challenges. Digital twin platforms are virtual models that use real-time data to test the impact of different variables. Retailers are adopting these platforms to simulate disruptive scenarios such as weather or labor shortages, allowing for quick network adjustments and long-term strategic planning. Integrated with real-time tracking for comprehensive visibility, digital twins help pinpoint vulnerabilities, enhance processes and strengthen supply chains.
In addition, predictive analytics are increasingly used for smarter inventory management, enabling retailers to anticipate demand shifts and optimize stock levels effectively.
“Amid fast-changing consumer preferences and frequent disruptions, precise forecasting is crucial,” the report’s authors said. “AI-powered tools can help analyze demand in real-time, allowing retailers to dynamically adjust inventory placement to reduce transit times, lower costs and prevent costly stockouts or excess inventory. Bain’s experience shows custom AI forecasting models can cut excess inventory by 40 percent and boost accuracy by nearly 50 percent compared to manual planning.”
