As we look toward the year ahead, we naturally anticipate AI to continue to improve and influence retail loyalty programs.

In this prediction piece, experts from Eagle Eye take a look at what retailers need to be across for 2025 to be the year to thrive.

Expansion of reward partnerships

In the field of loyalty program design, Eagle Eye communications and propositions director, Sarah Jarvis says that a significant shift would take place the strategic expansion of third-party redemption partnerships, moving beyond traditional single-brand rewards.

“This trend is expected to accelerate as programs seek to increase everyday engagement and attract ‘burn chasers’, highly engaged customers who actively accumulate points for specific partner redemptions,” she says.

“Modern examples show innovation in this space: recent examples include Westpac partnering with Woolworths to allow its customers to convert their loyalty rewards into Everyday Rewards points, and Asda’s digital ‘Cashpot for Schools’ program. These partnerships demonstrate how loyalty programs are evolving from simple point collection to creating broader ecosystems of redemption options.

“The primary drivers are customer demand for more flexible redemption options and the success of programs like Tesco Clubcard, which saw significant sales boosts after partnering with Airmiles. However, this trend comes with increased operational complexity and costs, suggesting that successful programs will need sophisticated real-time partner management systems to handle these expanded ecosystems effectively.

“Looking ahead, we can expect to see more diverse and innovative partnership models, particularly those focusing on everyday redemption opportunities that keep members actively engaged between larger redemptions.”

Approaching true real-time retail marketing

One major shift Eagle Eye CEO, Tim Mason expects to see is increasingly refined real-time marketing and customer engagement. This will affect issuance and redemption of offers, making loyalty marketing more immediate and effective.

“Advances in cloud computing and AI have increased businesses’ ability to collect and analyse data in real-time, enabling the creation of contextually relevant offers tailored to individual customer needs,” he says.

“Real-time issuance refers to the immediate creation and delivery of offers to customers based on their current behaviour, location, or context. These offers are generated and sent when the business detects a trigger, such as a customer entering a particular physical location, browsing a website, or making a specific purchase.

“Real-time redemption refers to the immediate execution of an offer at the point of sale (POS), in-store or online, so the offer or discount is instantly applied before the transaction is completed and payment is made.

“Given this is now possible, we expect to see the speed of the delivery of offers increasing and we are likely to see more brands take on true real-time marketing.”

Greater integration of personalised loyalty with retail media

Another trend in the retail landscape according to Eagle Eye vice president for Asia Pacific, Jonathan Reeve concerns integrating personalised loyalty programs with retail media, the marketing to consumers at or near their point of purchase, like in-store or online advertising.

“The top retail media performers, those generating more than 0.5% of sales through retail media, are differentiated by their strategic use of loyalty program data and personalisation capabilities,” he says.

“This integration is being driven by three key factors: the ability to deliver precision targeting across both physical and digital channels, access to rich first-party customer data, and the capability to optimise campaigns in real-time.

“Examples like Woolworths’ Disney Collectibles campaign and Southeastern Grocers’ SEGConnects program demonstrate how loyalty data can enhance retail media effectiveness.

“Looking ahead, AI-driven technologies will enable even more sophisticated use of real-time loyalty data for campaign optimisation. The future winners in retail media will likely be those retailers who can fully leverage their loyalty programs to create more targeted, personalised advertising experiences while measuring actual sales impact.”

Coalition and traditional loyalty programs must adapt to strategic partnerships

Another trend Eagle Eye regional director for Asia, Aaron Crowe expects to see in the loyalty industry is more strategic partnerships and a move away from traditional coalition loyalty programs.

“With Loyalty New Zealand closing earlier this year and more organisations having access to technology and capabilities allowing them to create their own programs, traditional models appear to be under threat,” Crowe says.

“This trend signals a critical challenge: coalition loyalty programs that fail to adapt to the changing landscape are at risk. While the focus used to be on building scale by adding more ‘earn’ and ‘burn’ partners, today’s consumers expect more, including personalised and timely rewards that reflect their individual preferences.

“We expect coalition programs around the world will prioritise creating strategic partnerships. Instead of just increasing the number of participating brands, coalitions are aiming to enhance the overall customer experience and add tangible value to their offerings. For instance, a partnership between a fashion retailer and a travel company can deliver curated offers that align with the lifestyle and interests of their shared customers.

“These partnerships will include data sharing for enhanced personalisation, will balance immediate and long-term rewards, and strive to create seamless customer journeys”

The rise of gamification and challenge offers

Eagle Eye’s Jonathan Reeve says loyalty program challenge offers (goal-oriented tasks that are incrementally completed towards an objective) will continue to drive consumer engagement as they evolve with AI and greater personalisation.

“Challenge offers stand out by combining highly personalised experiences with a mass marketing message. Challenges leverage the psychological ‘goal gradient effect’ and delayed gratification to drive consumer behaviour change and deliver value.

“These game-like experiences can alter shopping behaviours, such as increasing purchase frequency, encouraging product trials and growing basket sizes. We see challenges driving new behaviours at locations like Carrefour across Europe and Tesco in the UK.

“Undoubtedly we expect to see more retailers in Australia and Asia-Pacific add gamification to their loyalty programs to benefit from this highly effective strategy.”

Predictive and generative AI adoption in retail

Eagle Eye’s Tim Mason says that with generative and predictive AI expected to majorly change retail across supply chains, marketing, the omnichannel experience and beyond, 2025 will likely see strong adoption from leading brands.

“According to one study, AI adoption in retail is expected to surpass 80% in the next three years. Additionally, predictive and prescriptive analysis investments are expected to double over the same period of time,” he says.

“Customer expectations are changing, they expect more personalisation in their shopping experiences. The trend is towards a seamless omnichannel experience, integrating both physical and digital elements. Meanwhile, demand forecasting, price optimisation and personalisation will also benefit from increasingly sophisticated AI models.

“Retailers already make data-driven decisions, but predictive AI’s emergence can take it to the next level. For marketing, generative AI will rapidly enhance content creation and assist with automated personalisation.

“Both generative and predictive AI are going to be gamechangers for retail and in 2025 we’ll continue to see this future taking shape.”