Online retail giants Temu and Shein are set to see their respective growth rates plummet in 2025, according to a report by market research firm Forrester.

The report, which looks at retail predictions for 2025, said despite high-profile adverts and “relentless” digital advertising, both Shein and Temu will see a “plummet” in the rate of growth.

The report said while the two are fast-growing seemingly everywhere, “complaints about quality of goods, unethical production processes, unfair advantages in shipping, and increased nationalism” make them targets of environmental groups and governments.

It also referred to Shein still not securing its highly talked about IPO and Temu having high customer acquisition costs as to why growth is expected to slow.

Temu parent company PDD also said in its recent results that its “high revenue growth is not sustainable”.

The year of Gen-AI

Forrester also looked at how technology will play a role in retail in 2025, explaining that more retailers will be challenged to drive revenue and profit.

“To cultivate long-term growth, every business must be both willing and organizationally ready to continually experiment and fail,” the report said.

Forrester predicted that 20% of retailers in the US, Europe, Middle East and Africa will launch customer-facing generative AI applications next year.

It said retailers must “meticulously monitor AI output” but that generative AI will get closer to shoppers in 2025.

Forrester advised that retailers starting out with generative AI should begin by implementing the technology to support better site search, navigation or help explain recommendations to shoppers.

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