UK retail 2025: Loyalty, AI, and experience take centre stage,

As UK fashion retail enters the second half of 2025, a wave of cautious optimism is reshaping the sector’s strategy, marked by a clear shift from transactional quick wins to deeper consumer engagement. According to American Express’s latest annual study of 500 senior retail executives, 82 percent of UK retailers plan to grow their business in the coming year, a 10-point rise from 2024, driven by a concerted focus on loyalty, innovation, and a recalibrated in-store experience.

Loyalty reimagined

Nearly 90 percent of retailers surveyed are prioritising loyalty and sales initiatives, with 45 percent set to launch or enhance loyalty programmes in 2025. While these numbers suggest a strong customer-first orientation, fashion observers warn of a growing disconnect between generic point-based schemes and the emotional nuance required in fashion, particularly in the luxury segment. As symbolic rewards—such as exclusive events, personalised service, and intimate brand storytelling—often prove more resonant than discounts, the industry faces the task of designing loyalty mechanisms that go beyond simple perks and instead reflect brand identity and consumer aspiration.

AI as the next-gen retail assistant Retailers are doubling down on technology, with AI adoption accelerating sharply. In 2024, only 14 percent of retailers used AI for online customer experience; this has surged to 46 percent in 2025. Generative AI—used for search assistance, styling, and customer service—is emerging as the most heavily invested technology, deployed by over two-fifths of businesses. But while AI enables personalisation and operational efficiency, its long-term value will depend on how meaningfully it engages consumers, rather than simply optimising consumption. A critical concern remains: will AI amplify mindful shopping, or inadvertently stoke hyper-consumption?

Experiential retail’s revival

The physical store is far from obsolete. Almost 40 percent of UK retailers are planning new store openings in 2025, with 88 percent citing "experiential retail" as essential to driving footfall. From immersive brand activations to AR-enhanced spaces, brick-and-mortar fashion retail is positioning itself as a site of cultural relevance, not just commerce. Yet, the success of this revival hinges on authenticity, retail experiences must do more than entertain. They must tell a compelling story that aligns with consumers’ evolving values around wellness, aesthetics, and identity.

The checkout experience

Often overlooked, the checkout experience is emerging as a critical part of the customer journey. With 74 percent of retailers recognising rising customer expectations around payments, and 32 percent admitting their systems are outdated, there is growing urgency to invest in seamless, flexible payment solutions. These backend improvements, though less visible than AI chatbots or in-store events, are essential to maintaining the curated brand experience expected in modern fashion retail.

Connection over oonsumption

While this strategic pivot suggests a maturing retail model—anchored in customer-centricity, digital fluency, and experiential touchpoints—a deeper tension remains. As brands race to personalise and incentivise, questions around sustainability and meaningful engagement persist. The fashion sector’s failure to meet key climate goals—63 percent of brands are off-track on decarbonisation—casts doubt on whether loyalty is being pursued in substance or style.