How AI is Reshaping Retail Demand Planning in 2025
Consumer expectations are driving retail strategy
Shoppers today have more options than ever, and their expectations are high. The rise of hyper-personalization, seamless omnichannel shopping and instant product availability has raised the bar for retailers. If a retailer can’t meet their shopping needs, customers will quickly turn to a competitor who can, meaning retailers can no longer afford to rely on traditional demand forecasting and manual inventory management.
During the latest episode of Innovate with invent.ai, Chief Revenue Officer, Tav Tepfer, and VP of Strategic Accounts, Jonathan Alves, explored some of the biggest trends shaping retail this year. Unsurprisingly, AI is the major focus as retailers look to enhance forecasting and inventory optimization to keep up with shifting consumer demand.
Retailers are drowning in data without the right tools
Retailers have never had more data at their fingertips, so why do so many struggle to translate it into meaningful action? It’s not a lack of information that holds them back—it’s the absence of the right tools to make sense of it. Without AI-driven solutions, having more data doesn’t automatically lead to better decisions.
Rather than just generating reports, AI-decisioning tools interpret real-time data, identify patterns and recommend actions retailers can take immediately. This means inventory levels, pricing and replenishment strategies are based on live market conditions rather than static, rule-based planning.
Moving beyond manual planning
To keep up with demand—and stay ahead of the curve—retailers must shift from reactive decision-making to proactive inventory strategies, and AI enables them to do just that. Instead of relying on spreadsheets and legacy systems where decisions are managed by humans who often rely on intuition, gut feelings and personal bias, AI-powered demand forecasting leverages historical sales data, consumer demand trends, external market signals and real-time inventory levels to make more precise, data-driven predictions.
With the right AI-powered solutions in place, retailers can:
- Predict shifts in demand with greater accuracy
- Reduce excess inventory and stockouts in real time
- Align supply chain planning with actual consumer behavior
Agentic AI: The next step in AI-powered retail
AI in retail is advancing beyond simple automation and predictive modeling. Agentic AI takes AI-driven forecasting a step further by automating decision-making and recommending real-time adjustments to inventory, pricing and replenishment strategies.
Unlike traditional AI, which provides insights that still require human action, Agentic AI can act on insights automatically, ensuring retailers stay ahead of demand fluctuations. This means:
- AI actively recommends and executes inventory adjustments based on current sales patterns
- Retailers can react instantly to changing market conditions without manual intervention
- Forecasting models continuously improve, refining decision-making over time
Retailers that embrace this level of automation will be positioned for long-term success, while those relying on outdated processes risk falling behind.
The path forward: Where retail AI is headed
AI is no longer an experimental technology in retail. It’s an essential tool for demand planning, inventory management and supply chain optimization. Retailers that fully integrate AI into their demand planning processes will gain a clear competitive advantage, improving both forecast accuracy and operational efficiency.
If you're reading this and unsure where to begin, you're not alone. Adopting AI can feel overwhelming, but taking the right first steps makes all the difference. Here are three quick tips to help you get started:
- Start with high-impact areas like inventory allocation and replenishment
- Focus on AI solutions that deliver measurable results quickly
- Leverage Agentic AI to automate and scale demand forecasting
Retailers that take a strategic approach to AI adoption will be in the best position to meet consumer expectations, optimize operations and stay ahead in an increasingly data-driven industry.
Want to hear more insights from our industry experts? Watch the full Innovate with invent.ai webinar here.