Learnings from RTS 2025: How retailers are balancing economic pressures and digital priorities in a challenging environment

When I see Richard Lim, CEO of Retail Economics, on any conference agenda, I always make a detour to hear his insights. They have recently published a new piece of research, which coincided perfectly with this year’s Retail Technology Show, and is compellingly titled, “Unlocking Retail Profitability: Transforming a Cost Crisis into a Competitive Edge.”

So, I took a seat in the packed Spotlight Headline Stage to grab the highlights from his presentation.

Richard Lim’s key pillars for retail operational excellence

Analysing the impact of last year's budget on the UK retail industry, and combining this with research from over 100 UK retailers, the presentation offered an entertaining and truly insightful snapshot of the impact across the sector. Lim revealed a range of mitigation levers retailers can pull to navigate their businesses through this pivotal period of change.

"Whether it's the volatile economic environment, technology that's evolving at warp speed like Gen AI, or the wave of rising costs, there's a collision happening at the moment between all these different factors,” shared Lim, “There's going to be winners and losers that emerge over the next 12 months and businesses are really looking at where they can find their competitive edge".

Apadmi partners with many omni-channel retail brands, each navigating the current climate with their own combination of challenges; so it was interesting to hear the strategies Richard outlined under five key pillars of frontline operational excellence. These included:

• Training and development

• Task automation

• Communication and feedback loops

• Employee engagement and motivation

• Customer experience optimisation

When tactics from each pillar are combined across the customer journey, Retail Economics found that the operational investments offer tangible growth opportunities and customer benefits – from initial brand awareness through to post-purchase service and loyalty. Richard was keen to point out, however, that there is no "single solution".

It was positive to note that a number of the solutions highlighted align with roadmap initiatives that we are supporting our clients to deliver, especially in the areas of employee engagement and customer experience.

Enhancing staff well being and incentivising performance to reduce turnover and improve service quality is one of the investment areas outlined by Retail Economics in their report. A key initiative in our Roadmap with Asda in 2024 was the upgrade of their much loved colleague discount card.

Asda values its colleagues and recognises hard work by offering staff 15% discount on their shopping in-store and online. As part of their 'Future' roadmap Apadmi upgraded the colleague discount card to be a digitally hosted card that now lives in the Asda Rewards App.

Below are some additional insights that Lim shared, which I found to be highly relevant.

Cost optimisation

"Passing on increased operating costs is going to be difficult. Taking a hit to margins will be difficult. Cost optimisation will be difficult,” explained Lim, “It's going to be the preserve of retailers that have really good pricing power, loyalty and a point of differentiation."

This rang true to me - Apadmi’s clients are also keen to ensure their digital products aren't just delivering customer experience, but also operational value. From app-based memberships that increase repeat purchasing for the likes of Co-op, to cost optimisation through operational efficiency and faster delivery for the likes of Asda, technology is already delivering measurable impact for our retail partners.

For us, we find it is key to automate processes, reduce customer service overheads with smart solutions, and create frictionless digital journeys that retain customers and contribute to healthier margins, even in turbulent times.

Profitability & Physical Estate

16% of retailers told Retail Economics that they were looking to reduce their stores. Lim suggested other retailers should really take notice of is Next. He revealed, “They've got a laser-like focus on profitability and they’re taking a forensic look at their cost base and portfolio on a store by store basis; they're going to open 10 stores this year but close nine. So it's about shifting the portfolio.”

Additionally, the research revealed 14% of retailers are looking at reducing the size of stores, 14% are looking at merging stores to find the right footprint , 13% are investing in the store environment and 7% are looking to close stores.

As store footprints evolve in this way, the role of digital channels becomes even more critical. For us here at Apadmi, this shift presents an opportunity to support clients in building more connected retail ecosystems. Optimising store profitability is no longer just about square footage; it's about experience per square foot, and digital is a key lever in that calculation.

Financial engineering

Richard commented, "CFOs are really earning their keep right now, 39% are leaning into working capital optimisation, 30% into asset monetization, 90% into debt restructuring. And while these efforts don't necessarily boost and generate revenue, what they can do is unlock trapped capital to help fund transformations”.

It can also give retailers a larger operational runway. Richard added, “ A good example of this is Fraser Group. They've actively monetised their portfolio, freeing up liquidity to give them options, and they've also introduced things like Fraser Plus, which is their consumer finance platform, which is a great example of financial engineering."

A trend that we’re noticing for our retail clients is that digital products are increasingly being treated as strategic assets in their own right. Clients are looking at ways to monetise their platforms, whether through embedded finance tools, loyalty programs, retail media platforms, or data insights that offer value to third parties.

Efficiency and productivity

Richard drove home a key message, "Whether it's automating warehouses, partnerships with workforce productivity platforms, 3PLs, there's lots of different areas where retailers can scale their output with speed, accuracy and agility. This shift towards efficiency is really what's going to define competition within the retail sector over the next few years."

Tech Enablement

61% of retailers cited this as one of their top priorities. Richard outlined that the reality is, technologies like Gen AI are touching every single part of the retail value chain and, from his experience and wider industry connections. He has identified three key areas that really stand out when it comes to implementing AI; firstly to drive efficiency and supply chain optimisation, secondly for customer experience, and finally for personalisation.

Whether it’s using machine learning to improve product recommendations and search functionality in apps, or deploying AI to analyse buying behaviour and reduce supply chain waste, we’re also seeing real, measurable outcomes with AI at Apadmi HQ. The challenge now is not whether to adopt new technologies, it’s how to do it in a way that’s fast, secure and delivers ROI. That’s where our strategic and technical teams are helping retailers make the leap.

Richard wrapped up on the key point that the best retailers will focus on short term financial discipline but without ignoring the long term roadmap to restructure their businesses to make them more adaptable because the reality is, businesses still need to invest in digital transformation if they don't want to be left behind.

If you are looking for a partner to help you unlock more value from your investment in mobile channels, we would love to hear from you.