Square, the technology company that makes commerce and financial services easy and accessible, has today released early insights from its forthcoming annual Future of Commerce report, providing a unique look at the restaurant, retail and beauty industries across the UK, US, Canada and Australia.
The full report will launch on February 4th and will be published on the Square website.
Square surveyed thousands of UK business owners and found that businesses intend to turn to innovative, tailored technology in 2025, as they face the triple challenge of sustained high inflation, shrinking consumer wallets and the need to raise prices across the board.
As UK businesses seek routes to greater efficiency, Square’s research shows that 85% of restaurant leaders plan to invest in technology, such as new AI and automation tools, to help improve their companies this year. Unsurprisingly, in the face of a tumultuous period in the labour market, 73% of leaders say they are spending more time on hiring than they did a year ago, whilst 75% are spending more time on business operations over the past 12 months too.
Square seller, Gordon’s Wine Bar in London, for example, was able to integrate its systems, improve service and save a lot of money using Square’s technology. Amanda Whiteside, Administration Manager at Gordon’s Wine Bar, said: “Square has been an innovative product for us. The ability to have a system that is truly integrated – it allows us in the office to look at sales trends, it allows our people who are working on front-of-house to have the information at their fingertips literally, and to provide great customer service.”
Two-thirds of UK restaurant leaders believe AI or automation will improve their business in each of the 15 areas we asked about, the most popular of which are staff marketing and promotions (77%), inventory management (77%), payments (76%), and menu optimisation (76%).
While introducing automation is a key focus for operators, so is connecting with the consumer. More than three-quarters of restaurant leaders (71%) are planning to increase investment in their loyalty or reward programs to keep customers close over the next 12 months. This reflects the positive impact loyalty programs have on driving revenue, with 83% of restaurant leaders saying their loyalty program successfully drives up order size, repeat visits and delivers return on investment.
UK restaurant leaders are also ready to adapt and diversify in 2025 to expand their business, with 48% intending to grow their menu and 36% planning to expand their brick-and-mortar locations. Meanwhile, the majority of restaurant leaders (76%) stated that non-core offerings, like memberships and merchandise, are essential to business growth.
Samina Hussain-Letch – executive director, Square UK says: “As businesses continue to face economic pressures, we’re seeing them invest in growth and experimentation as they find new, streamlined ways to work and deliver exceptional customer service – particularly through using time-saving and experience-enhancing technology. At Square, we strive to be the best digital partner we can be to our portfolio of sellers, giving them the time back to focus on growth, and our ecosystem is here to support UK businesses as they innovate, adapt and expand in 2025.”
When it comes to consumers, 63% said they’ve cut spending on restaurant purchases, including in-person, takeaway or delivery, in the past 12 months. It’s likely that this trend will continue into 2025, with 71% of restaurant leaders saying they plan to increase their prices over the next 12 months. Consumers do however understand the restaurant experience is changing with the arrival of technology and are open to it. 74% of consumers are keen for automation to be embraced in at least one area to fill critical gaps when a restaurant isn’t fully staffed.
In addition to its data on restaurant businesses, Square’s Future of Commerce report also looked at the global and UK beauty and retail sectors:
- Beauty businesses are relying on technology to save time, better focus on customers and improve the one-to-one service they provide. When it comes to the UK, 84% of beauty businesses are looking to use AI and automation to aid marketing and inventory management over the next 12 months.
- Customers appreciate and expect personalised experiences from the beauty salons and spas they patronise. More than half (55%) of global consumers said they purchase products or adopt practices their beauty specialist recommends, showing how beauty businesses can expand revenues beyond their core service offering.
- Retailers’ priority for the year ahead is to better meld the physical and digital together, at a time when consumers increasingly crave in-store experiences powered by seamless technology.
- 78% of UK retail leaders believe in-store experiences like product demos or classes are critical for business growth, and a third (33%) think they should offer more in-store events to keep up with the competition. This is mirrored by UK consumers, with 78% seeing in-store experiences and interaction as important to the future success of the retail store.
- One sign of retailers’ growth plans for 2025 is that 68% of retail leaders globally say they will invest in an online store over the next 12 months.
Rich Bayer – UK country manager, Clearpay, says: “Whether it’s an in-store or an online business, or both, consumers want a seamless journey from start to finish. A critical part of that journey is the checkout, where cart abandonment continues to be a retailer challenge. By offering a suite of payment options, customers can choose the payment method that best suits their needs, thus reducing the risk of them walking away without completing their purchase. With the UK BNPL market forecast to grow from £30B in 2024 to £47B by 2029 retailers should be looking to maximise choice and flexibility at checkout.
