Defining the future of retail: AI, ESG and new rules

Retail has always been defined by people’s needs, behaviors and tendencies. Long before the dominance of digital platforms and artificial intelligence (AI), retail was built upon a deep understanding of the human being on the other side of the counter.

The National Retail Federation’s NRF 2025: Retail’s Big Show Asia Pacific trade show at Singapore’s Marina Bay Sands Expo & Convention Center last June 3 to 5 2025 explored how these concepts can be complemented by emerging technologies. The trade show’s overarching theme, “Retail Unlimited,” emphasized the importance of keeping the human-centric principles of retail close to heart while navigating through our contemporary landscape’s data-enabled AI technology, sustainability goals and generational perspectives.

AI has found a use case in most world industries. AI has been used to streamline processes, supplement tasks and decipher large amounts of data. Despite the aversion that some perspectives harbor when it comes to the discussion of AI’s implications on job security and other perceived risks, there are more positive implications than negative ones.

A key highlight of the conversation was the introduction of Microsoft’s “Agentic AI” for retail. These are systems with the autonomy to complete specific tasks, as opposed to generative AI models that require prompts and commands from humans. The dialogues at the NRF 2025 trade show ascertained that AI isn’t here to replace us. Rather, AI is being engineered to empower us to be more productive at work and expedite output. The widespread adoption of AI across various sectors is a testament to its usefulness. The retail sector can benefit greatly from AI-driven applications such as personalized shopping experiences, demand forecasting and security. There is a trend toward the hyper-personalization of the customer experience, in which the user’s overall experience is curated and tailored according to users’ preferences, interests and buying behaviors.

This is especially relevant in the Philippines, where Gen Z spends significant time online and shops through mobile devices. They expect personalized experiences and support brands that align with their values, particularly around sustainability. As Gen Z is projected to make up 40 percent of global consumers, understanding their expectations is critical.

Sustainability remains central to retail strategy. The NRF trade show reinforced the importance of Environmental, Social and Governance (ESG) goals, with retailers working to meet growing consumer demand for ethical and eco-friendly practices. Innovations and circular economy models were highlighted as ways to reduce impact and cut costs.

In the Philippines, new legislation will require companies to disclose emissions and ESG metrics by 2026. Businesses must adopt sustainable practices and monitor their impact, securing sustainability’s place in both the economy and the national conversation.

We must acknowledge that there are challenges along the way. With some companies worrying about not being able to catch up with the transition toward AI utilization, we need to recognize the impacts that complex AI processes have on our environment through the emissions and water consumption of necessary data centers that enable AI. Just like any AI-enabled industry, the retail sector must perform an intricate balancing act to ensure that progress doesn’t impede our shared ESG goals. The proper integration of AI processes and tools is an immediate destination in the horizon for industries across the globe.

Embracing AI automation technology can create more engaging retail experiences if applied thoughtfully. Instead of implementing these technologies out of fear of falling behind, retailers must ensure data quality and clear use cases for specific objectives to maximize its value.

We must make sure that the activities that AI automation will supplement are directly aligned with organizational objectives. It will also serve us well to keep an open eye for any future developments in technology that we need to be fully informed of to recognize relevant applications and potential avenues of growth. Gen Z will continue to be a demographic that will significantly define the economic and digital landscape of the coming years. While what is deemed as valuable to previous generations may not be as valuable in the Gen Z consciousness, all generational demographics will directly benefit from digital transformation. Through the proper application of data-enabled technology, we can create greater value for both companies and consumers through better processes, security and speed.

At the end of the day, retail has always been about people and that hasn’t changed. Fast-moving trends have a relative effect on consumer demand, requiring more personalized, sustainable and digital-first experiences. One of the most important takeaways from the NRF 2025 trade show is how the most successful retailers will most likely be the ones who meet these demands by marrying innovation with intention, ensuring that the way forward is paved intelligently and ethically with a human-centric perspective. Because it’s not just about keeping up with the oncoming future, it’s also about building a future that works better for everyone.

Jerome Andrew Garcia is a Deal Advisory principal and the Consumer and Retail Sector head at R.G. Manabat & Co. (KPMG in the Philippines), a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. For more information, you may reach out through [email protected], social media or visit www.home.kpmg/ph.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or R.G. Manabat & Co.