Profound changes in politics, the economy, and society are having a direct impact on how companies successfully do business and steer their prices.
We see 5 retail pricing trends for 2025 that will (continue to) impact pricing strategies – most of them driven by the rapid advancements in technology. Companies that leverage these trends early and boldly will be better equipped to cope with economic uncertainties in the coming years and secure a competitive advantage.
AI-powered predictive pricing: The new standard
The hype is over. Artificial intelligence is becoming the new normal in pricing. 63 percent of retailers already use predictive analytics to optimize their pricing strategies, according to our market research. And the number will likely grow in the coming month. Retailers that leveraged AI or Machine Learning grew by 14.2 percent in sales from 2023 to 2024, according to a Statista report. In comparison, companies that didn’t leverage AI only grew by 6.9 percent. The impact of AI is undeniable, especially in price optimization.
By analyzing thousands of data points, predictive algorithms are able to adjust prices for specific outcomes in near real-time. They anticipate changes in demand and price elasticity based on past developments and allow retailers to leverage even short-term dynamics on the market – a crucial tool in volatile times. More and more cost-efficient SaaS solutions enter the market and will make AI in retail pricing accessible not only to global corporations but every retailer.
Complex but effective: Hyper-personalization in pricing
Although market researchers expect consumer behavior to recover in 2025, they will be more conscious of their spending and only buy what is necessary and meaningful to them. Hyper-personalization is the best chance for retailers to create attractive customer experiences at an acceptable price point for the individual. These irresistible personal offers reliably increase sales and recurring revenue.
There are lots of tracking solutions available to create personalized customer experiences. However, in the European Union, strict data regulation is the biggest challenge to implement hyper-personalization. GDPR and the Omnibus Directive limit how personal data may be stored, processed, and shared. As long as retailers get and document prior consent from customers, they are, however, allowed to use individual data, i.e. browsing behavior or purchasing history, for personalized pricing.
Sustainability-driven pricing models are a win-win model
In 2025, sustainability-driven pricing models are going to gain traction as consumers increasingly prioritize eco-conscious shopping and are willing to pay a premium price for sustainable products. However, retailers benefit not only because they generate higher sales with green products, but also because a positive eco-balance pays off economically and positions them as an in-demand brand.
Sustainable-driven pricing models come in many forms. Some retailers offer discounts or rewards for customers choosing eco-friendly options, like refillable packaging or bulk purchases, to reduce waste. Others create loyalty programs or rebates for recycling or opting for environmentally friendly shipping.
Omnichannel pricing synchronization
It’s not a new trend, but one that is gaining relevance: omnichannel shopping. Customers find out about products on their smartphones, browse in stores, and then buy on their laptops. In order not to gamble away customer trust, it is extremely important to synchronize pricing across all platforms.
Retailers need powerful pricing software to maintain price alignment while following a dynamic pricing strategy as they deal with critical, media-savvy customers and an increasing number of digital channels. Omnichannel price optimization solutions have made massive strides in the last few years. Modern tools that leverage predictive pricing and synchronize marketing and pricing decisions are the best options to create a trustworthy customer experience while maximizing profitability.
Rise of subscription and membership pricing models
As part of the shift towards more customer-centric shopping experiences, subscription-based pricing and membership models have gained traction and will continue to do so in the future. For customers, subscriptions are extremely convenient: Often used products get delivered regularly without the hassle of actively ordering again. The model can be widely used for food, cosmetics, but also for streaming offers or leisure activities. With predictive pricing, retailers can easily simulate the effects of potential price changes on customer lifetime value and determine how to best implement subscription pricing.
Combined with special discounts or benefits like early access, subscriptions have gotten more and more popular among customers as they help navigate everyday overwhelm, mitigate decision fatigue and instill a feeling of community people are longing for. If retailers succeed in establishing an attractive membership or subscription model, they gain sales stability and increase customer loyalty.
Flexibility in pricing stays paramount amid economic uncertainty
Whatever pricing strategies retailers choose, flexibility is key to remain competitive in 2025 and beyond. Faced with ongoing economic uncertainty, fluctuating costs, and changing consumer demand, adapting quickly to change becomes a matter of survival.
Dynamic pricing tools and AI play an essential role in retail to create predictability in an (humanly) unpredictable market. Using data to forecast trends and consumer behavior, allows retailers to keep up with the pace of change and adjust prices in near real-time. This reduces risk, improves inventory planning, and helps retailers stay profitable. However, technological solutions must be complemented by agile processes and a corporate culture that supports innovation and experimentation in order for tech to make the biggest impact.
Preparing for 2025's pricing landscape
Pricing best practices for retailers will continue to shift in 2025. While some strategies are already widespread, like sustainability pricing or subscription-based pricing models, latest developments in technology offer new opportunities for retailers to utilize them to their advantage. Other trends like hyper-personalization and AI-driven predictive pricing are still in their emergence phase due to exponential technological progress.
Retailers should review their existing pricing strategies and use AI and technology to optimize them to be better prepared for a future of ongoing uncertainty. One thing is sure: Those who do not capitalize on technological innovation will fall behind.
