UK retailers are expected to see a late surge in Christmas trading, with “panic weekend” forecast to generate £3.4bn in spending, up more than 12% year on year, despite broader signs of subdued demand in the run-up to Christmas.
Against that backdrop, a new report from Eversheds Sutherland, produced in collaboration with Retail Economics, suggests retailers are planning to step up investment in artificial intelligence (AI) and related automation over the medium term.
The research is based on surveys of 250 retail businesses and economic modelling across five markets (France, Germany, the United Arab Emirates, the UK and the USA).
In the report, titled Retail Workforce Reimagined: The Transformative Power of AI, three-quarters of retailers (74.8%) said they expect to increase investment in AI over the next five years, with more than two-thirds (68.8% net balance) expecting higher investment within the next two years.
The report also states that more than half of companies investing in AI expect to achieve return on investment within two years.
The research points to AI investment being embedded within wider modernisation programmes.
On average, retailers are “typically allocating 30% of their budgets towards digital transformation and innovation aligned to AI”, with larger and medium-sized businesses allocating a higher proportion, according to the report.
It adds that online and hybrid retailers’ budgets for AI are around 50% higher than predominantly store-based retailers.
On workforce impact, the report records high levels of optimism among retail leaders. It reports that the UK had the strongest agreement among the surveyed markets that AI enables “more meaningful and value-added work”, at 94%, alongside 86% in the USA.
It also found that 82.4% net balance of retail leaders expect jobs to become more customer-centric, while 66.8% net balance agree that AI will increase the proportion of higher-skilled, better-paid roles.
Retail Economics’ modelling within the report forecasts a step-up in productivity as AI moves from pilots into broader operational integration.
It projects sales per employee growth attributable to AI integration rising from 4% to 6% per year between 2025 and 2030, increasing to between 6% and 9% per year from 2030 to 2035 as AI matures.
The report also highlights barriers that could slow adoption. It identifies data privacy concerns and integration with existing systems as leading issues, each cited by 42% of respondents, alongside skills shortages (40%) and the cost of technology (39%).
Commenting on the findings, Andrew Todd, retail and wholesale sub-sector lead at Eversheds Sutherland, said retailers are “backing it up with serious investment” but argued there remains a gap between investment and understanding.
“It’s striking that half still struggle to explain how algorithms influence hiring, pay, and scheduling,” Todd said, adding that retailers need governance models that connect technology, people and ethics, alongside clearer ownership, policies and accelerated upskilling.
The report’s release comes as UK online holiday spending is forecast to reach a record £26.9bn between 1 November and 31 December 2025, according to Adobe Digital Insights, underlining the continued shift in retail activity towards digital channels.
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