SINGAPORE: As Asia-Pacific brands gear up for 2025, artificial intelligence (AI)-powered personalization is poised to be a major driving force in the retail sector.
However, according to the latest report from Retail Asia, experts warn that brands must navigate rising consumer demand for authenticity and relevance in their customer experiences.
Andrea Ng, a Singapore-based Asia-Pacific insight director at Canvas8, highlighted the evolving role of AI, emphasizing that it is no longer just about offering tailored recommendations.
Instead, sophisticated AI systems are set to redefine how businesses understand their consumers and engage with them in more human-like and dynamic ways.
Authenticity is key
Consumers, particularly in markets like Hong Kong, are increasingly intolerant of generic or inauthentic personalized experiences. A striking 90% of Hong Kong consumers stated they would abandon a brand if its customer experience felt impersonal or irrelevant.
Brands now face the challenge of building interactions that resonate on a deeper level, combining AI capabilities with a human touch.
“Consumers want more control over their interactions with brands,” said Ng, stressing that customer engagement agencies will play an essential role in delivering this personalized, seamless experience.
Platforms like GCash in the Philippines, for instance, have transformed the banking sector by offering highly customizable financial services that meet diverse consumer needs.
Balancing speed, simplicity, and consumer values
Retailers must also adjust to shifting consumer expectations in 2025 as the focus moves from hyper-convenience to the importance of speed, efficiency, and simplicity.
Ng warned that while speed is vital, brands must also ensure their offerings are easy to navigate.
“If it’s not efficient and too complicated, people will reject it,” she said.
In this environment, personalization must strike a balance with financial pressures, as consumers—especially Gen Z—seek flexibility in both their personal and professional lives.
Financial pragmatism will guide purchasing decisions, with shoppers prioritizing how their money works smarter rather than harder.
At the same time, while consumers desire to uphold idealistic values like sustainability, practical constraints—especially rising living costs—make it challenging for many to act on these values.
This tension will influence how brands craft their messaging and offerings, ensuring they meet both ethical standards and consumers’ financial realities.
AI, trust, and the future of retail
The role of AI in reshaping retail is undeniable.
According to a study by IBM, 60% of consumers want AI to play a greater role in their shopping experience, with 52% desiring more personalized products.
However, trust remains a critical factor in this AI-driven transformation. With growing concerns over scams, deepfakes, and data privacy, 56% of consumers in the Asia-Pacific region stated they would avoid buying from brands they don’t trust.
As AI continues to permeate the retail landscape, brands must carefully navigate the balance between embracing new technology and maintaining consumer confidence.
Retail strategies are also evolving, with a blend of online and offline experiences driven by AI and innovations like virtual reality.
This shift is especially evident in markets such as India, where the retail industry is projected to reach $2 trillion by 2032.
However, physical stores must adapt to changing consumer behaviour, as the rise of “ghost malls” signals the growing importance of seamless omnichannel experiences.
While brands that integrate AI thoughtfully into their strategies will have a competitive edge, this transition should be mindful and carefully planned.
Additionally, social media and virtual influencers are set to play an even greater role in shaping purchasing decisions.
In China, brands are already investing heavily in virtual influencers, and in Japan, IKEA has collaborated with a digital personality to enhance in-store experiences.
As digital personalities continue to influence consumer behaviour, brands must stay ahead of the curve by leveraging the power of AI to forge deeper connections with their audiences.
As consumer behaviour remains in flux due to economic uncertainties, balancing caution with indulgence will remain a key consideration for retailers.
In South Korea, gamified shopping platforms are already helping consumers maximize the emotional and monetary value of their purchases, offering insights into how brands can integrate fun and practicality into their retail strategies.