Retail Proposition Index 2025

The return of loyalty schemes

Gradual easing of inflation and pricing pressure presents an opportunity for retailers to focus on broader elements of the proposition. Customer repeat is once again front of mind, and loyalty schemes across markets are being revamped and relaunched to drive habitual behaviours and enhance returns on investment.

Well-executed, and highly-rated loyalty programmes can become a material driver of customer loyalty and repeat. Best-in-class loyalty should ‘go with the grain’ of underlying brand position and customer base, with a clearly defined set of outcome behaviours

In grocery, value is a key anchor of propositions and there is an industry-wide transition from earn-and-burn rewards to instant payback gated promotions which both enhance the appeal of the loyalty scheme and restrict overall discounting investments.

participating in the resale revolution

Second-hand is booming, driven by both mass market adoption and increasing frequency across generations and categories. Disruptive second-hand platforms, such as Vinted, have rapidly built consumer trust and perceptions of quality, closing the gap with incumbent first-hand retail propositions.

The resale market is here to stay and further disruption is yet to come particularly in slower adopting non-fashion categories. Given the structural threat to first-hand volumes, retailers and brands should act now to participate in the shift to second-hand – either through serving consumer demand or facilitating the value chain.

marketplaces 2.0

Marketplaces have been a long-term driver of Ecommerce growth globally, underpinned by an attractive and efficient operating model that delivers a compelling and competitive consumer proposition. Incumbent retailers have been playing catch up against leading marketplaces but have been closing the propositional gap over time while retaining a credible point of difference online anchored on trustworthiness of products, reviews and recommendations.

Retailers are increasingly launching in-house marketplace propositions to enhance range authority and drive the next wave of Ecommerce growth. There are multiple examples of retailers successfully managing the tensions between the two models, but mismanagement of assortment and seller quality can erode overall customer experience and impact.

Retailers launching marketplace models need to build upfront clarity on how the model intersects with and complements the core offer and ensure that the launch is well considered and resourced to ensure maximum benefit and lowest risk.

The future role of agentic ai

AI adoption is progressing fast and has potential to fundamentally re-shape digital customer acquisition channels. While the role of AI assistants in shopping journeys remains small, there is potential for a rapid step-change in customer adoption as functionalities develop – particularly around integration of imagery, product information and linkages to transactions.

Retailers should expect a market-wide recalibration of customer acquisition channels and costs, although the impacts will be felt unevenly across retailers depending on their existing mix of acquisition channels and customer mindsets/missions (e.g. functional vs emotional, browsing vs planned etc).

Given the pace of technology development, the near-term priority for retailers is identifying and monitoring the key bell-weather indicators for their model/category which would signal a need to accelerate.

accessing the retail media opportunity

Retail Media continues to be high on retailer agendas as a potential solution to the structurally lower profit pool in retail compared to 10 years ago. Growth in media spend continues at pace, and early leaders (e.g. Amazon, the grocers) have proven that the size of the prize can be material.

Models and propositions are now undergoing the next stage of evolution, with increased focus on capturing income from non-endemic brands/suppliers and applying retailers’ wealth of customer data to Adtech environments.

The next wave of Retail Media development presents a prime opportunity for retailers to re-evaluate the opportunity and either unlock the next stage of growth or find an alternative way to maximise their customer data and access.