Consumer expectations and technological developments will drastically affect industries including retail, manufacturing, and distribution as we get close to 2025. The following trends outlined will have a significant impact on how companies might evolve.
Sales for the U.S. manufacturing industry are expected to increase at 2.9% compounded annual rate from 2024 to 2028.
US Manufacturing Sector Industry Growth
Source: Vertical IQ, Interindustry Economic Research Fund, Inc.
The 106-page 2025 Business Outlook Report breaks down the biggest shifts happening right now.
“The retail, manufacturing, and distribution sectors encounter distinctive obstacles, including complex supply chains, a potential return to volatile cost of goods (e.g. tariffs), fluctuating consumer demands, and potential delay in the cost of capital improving. LBMC’s customized audit services offer these businesses critical support through challenging environments, bolstering confidence in accurate financial reporting and providing insights to operational efficiency opportunities.”
ANDREW J. USERY, SHAREHOLDER AND MANUFACTURING INDUSTRY LEADER, AUDIT, LBMC, PC
Environmentally friendly operations are giving retail, manufacturing, and distribution businesses top attention. Greener packaging, circular economy concepts, and renewable energy sources are helping companies significantly reduce environmental effects. Along with improving brand reputation, this shift toward sustainable manufacturing offers a path for long-term operational resilience and resource economy.
“Focusing on sustainable practices and extending the product lifecycle can reduce environmental impact and enhance long-term value. Implementing green design and manufacturing practices is essential in today’s market.”
WILL SON, SENIOR MANAGER, CONSULTING AND BUSINESS INTELLIGENCE, LBMC, PC
Companies are adopting renewable energy solutions such as solar panels, wind energy, and energy-efficient machinery to reduce costs and cut carbon emissions. McKinsey reports renewable energy can lower emissions by up to 30%.
Reusing and recycling items in the circular economy helps to further maximize resource utilization and lower waste generation. According to BDO, sustainability techniques can help to cut material costs by up to 20%.
Recyclable or biodegradable materials in eco-friendly packaging help businesses reduce their impact on the environment and appeal to conscientious consumers. Including QR codes on packaging helps to disclose thorough efforts including carbon reduction initiatives or material sourcing. Companies that embrace green packaging will have a competitive edge as consumers and business partners demand it.
Companies that aggressively embrace green packaging will have a competitive edge as sustainability demands rise. Gartner reports that 52% of businesses give sustainable vendors—including those offering green packaging—top priority. Businesses can appeal to a growing segment of conscientious consumers while lowering their environmental impact by demonstrating their dedication to ecologically friendly methods via packaging and marketing campaigns.
“LBMC Procurement Solutions partners with clients to design intelligent sourcing and procurement solutions that address today’s objectives and enable flexibility to accommodate scale.”
TAMMY WOLCOTT, CEO, LBMC PROCUREMENT SOLUTIONS
Companies throughout the industry are using digital technologies to revolutionize operations management and become more efficient and flexible. Companies can achieve unparalleled precision, avoid costly mistakes, and make data-driven decisions using digital twins, AI, machine learning, and IoT integration to expand in a competitive market. IoT and AI help firms streamline operations and stay agile in a competitive market.
IoT sensors track product conditions, optimize inventories, and improve delivery timeframes, improving supply chain transparency and adaptability to disturbances. According to BDO, IoT integration can significantly improve efficiency and decision-making. AI and machine learning facilitate process automation, maintenance prediction, and resource allocation using IoT. Gartner projects that 60% of B2B companies will adopt AI tools by 2025 to improve productivity and reduce risk. IoT and AI help firms streamline operations and stay agile in a competitive market.
“LBMC Procurement Solutions can bring value and drive efficiencies through the overall bidding and buying process through aggregated contracting, along with control in sourcing.”
TAMMY WOLCOTT, CEO, LBMC PROCUREMENT SOLUTIONS
Digital twins—virtual models that mirror real-world activities — track operations, test new ideas, and project maintenance requirements. Apart from predictive maintenance driven by AI, digital twins optimize performance and reduce downtime.
These tools will be increasingly used in 2025 to enhance the production and resource control of manufacturing and distribution systems. McKinsey claims that using digital twins might raise operational efficiency by 10–15%.
“Including artificial intelligence (AI) and the Internet of Things (IoT) will help to maximize the lifetime of products. Real-time analytics and automation in these technologies help to increase efficiency and decision-making.”
WILL SON, SENIOR MANAGER, CONSULTING AND BUSINESS INTELLIGENCE, LBMC, PC
As technologies become more accessible, businesses embracing smart operations and digital transformation will be better positioned to handle sector challenges.
Companies with digital twins, artificial intelligence, machine learning, and IoT, will be ahead in supply chain management and manufacturing since they will be able to maximize resource use, simplify processes, and accelerate reactions.
Percent of US Manufacturing Sector firms investing in technology
Source: Vertical IQ
Companies are strengthening supply chains to reduce risk. Remote production, supplier diversification, and inventory analytics can help organizations develop adaptable supply chains that withstand market swings and global challenges.
Businesses use these methods to safeguard operations, cut transportation costs, and quickly respond to demand changes to strengthen supply.
“Data analytics can help businesses optimize their operations by identifying areas where they can improve processes, and optimize resources…resulting in reduced costs, increased productivity, and improved customer satisfaction.”
JON HILTON, SHAREHOLDER AND PRACTICE LEADER, CONSULTING AND BUSINESS INTELLIGENCE, LBMC, PC
Micro-factories meet local demands and reduce transportation costs and risks. These smaller, flexible facilities enable manufacturers to quickly reconfigure production based on market demands or supply chain disruptions, making them key to a strong, decentralized supply strategy.
Gartner reports that 91% of supply chain leaders with smart manufacturing solutions focus on digitizing their manufacturing operations. However, they struggle with challenges such as technology security, commercial availability, and data integrity, as well as aligning supply chain and factory on smart manufacturing benefits and plans.
Advanced analytics tools help businesses reduce markdowns and waste by forecasting demand, optimizing inventory, and managing seasonality. Companies can better handle market changes and keep supply and demand balanced by using real-time consumer data. McKinsey says companies that adopt advanced analytics and maintain diverse supply chains are 60% more likely to avoid interruptions. Gartner claims that advanced analytics can reduce inventory expenses by up to 30%.
Strong, distributed supply chains help businesses respond quickly to unexpected occurrences and maintain operations during increased demand. Investing in localized manufacturing, broad supplier networks, and data-driven inventory control helps companies create flexible and strong supply chains.
“Strategic procurement is an effective way to decrease operating expenses and today, new procurement solution models are available that pay for themselves and provide quick, measurable wins. These models can offer options ranging from fractional resources that are applied based on an organization’s budget and resources, to serving as an organization’s long-term procurement partner by helping with sourcing, request-for-proposal documents, contract management, auditing services, negotiating with suppliers and more.”
TAMMY WOLCOTT, CEO, LBMC PROCUREMENT SOLUTIONS
Businesses must embrace new ideas and prepare their employees for the future as technology shifts the workplace. This means bringing together a skilled and adaptable workforce ready to embrace new technologies.
At a time when technology has made much office work easier and more efficient, HR departments at most companies still rely on the same old manual processing and management that they did decades ago.
“Fortunately, this is starting to change with the release of new software platforms specifically designed for streamlining the management of employees. The most comprehensive of these software suites are known as human capital management programs, which provide tech solutions for nearly all HR needs concentrated in one place.”
ERIC FOODIM, CEO, LBMC EMPLOYMENT PARTNERS
Businesses also need to keep up with regulatory requirements, such as labor laws and minimum wage increases, in addition to workforce development. Competitive pay, flexible hours, and benefits can help companies meet these requirements while bringing in top talent.
Businesses handling regulated goods like drugs, alcohol, and tobacco must keep compliant and streamline their supply chain to prevent interruptions.
“Understanding and utilizing tax credits can have a substantial impact on profitability in the retail, manufacturing, and distribution industries. LBMC’s expertise in state and local tax (SALT) services can assist these businesses in optimizing their tax positions and increasing cash flow.”
LEIGH ANN VERNICH, SENIOR MANAGER, TAX, LBMC, PC
Online retailers are growing, putting more pressure on brick-and-mortar stores to stay competitive. Using options like buy-online, pick-up-in-store (BOPIS) and AR-enhanced shopping experiences help traditional retailers stand out.
Using AI for personalized marketing enhances customer engagement in both online and offline spaces. With automation changing industries, businesses need to train their staff on using AI and robotics.
By 2030, automation could push 375 million workers to change jobs, says McKinsey. Businesses must grow their workforce to stay competitive in an automated world.
Keeping skilled employees is essential in a competitive job market. Companies with positive cultures, flexible work options, and clear career paths do a better job of attracting and retaining top talent. McKinsey notes that businesses with good employee engagement can cut turnover by up to 24%.
Adopting retention strategies that emphasize flexibility, continuous learning, and professional development is essential for businesses to attract and retain a skilled workforce for the future.
US Manufacturing Sector Employment
Source: Vertical IQ, Bureau of Labor Statistics
Businesses are using online training and collaborative tools to support their workforce and improve communication and skills in blended workforce settings.
These tools enable employees to quickly adjust to new technologies and build important skills for handling advanced systems. Remote training programs can boost productivity by up to 20%, according to McKinsey, making them essential for a solid workforce strategy.
“Investments in technology and people are intertwined—and companies that realize they can’t have one without the other are able to attract and retain higher-performing employees. Over the past few years, many companies have accelerated moving to new platforms as many weren’t prepared to shift to a remote work environment. Moving to these cloud-based solutions helps eliminate the cost of equipment, network administration, and security concerns that are real costs to a company that houses and maintains their technology infrastructure onsite.”
BRYAN WILTON, CEO AND PRESIDENT, LBMC TECHNOLOGY SOLUTIONS
Omnichannel retail has changed consumer expectations. Businesses need to combine online and in-store experiences and enhance their delivery options. Retailers should use technological advances like AI, AR, and local delivery hubs for better personalization, convenience, and speed.
On all platforms, retailers employ AI solutions for customized product recommendations, flexible pricing, and special offers. Linking online and physical retailers, AR technologies let consumers see items in their homes before making purchases.
Retailers combining online and in-store experiences will keep 89% of their consumers by 2025, according to McKinsey, while those with insufficient omnichannel strategy will only retain 33%. Linking online and physical channels for a consistent experience everywhere is essential as BDO reports that artificial intelligence personalization can boost sales by as much as 15%.
“Today’s customers are smart, tech savvy and results oriented. To reach them you must ensure you are meeting them where they are, with the rich client experience they are now expecting. The best media/brand campaigns today are human-centered, connecting your brand values with your target audience in an authentic, relatable way. Digital relationships are vital to reach the audiences with genuine messaging, rising above the noise.”
LISA NAMM, DIRECTOR OF BRAND, LBMC, PC
It’s important to blend online and offline channels to satisfy today’s consumers. Combining online shopping with physical stores gives customers a seamless shopping experience. Technology like augmented reality (AR), smartphone apps, and click-and-collect options make shopping simpler for customers.
AR helps customers try products online, making it easier to choose and interact. Unified retail strategies help businesses cater to omnichannel shoppers, enhancing customer loyalty and driving sales.
Retailers are putting money into micro-fulfillment centers and last-mile delivery to meet the demand for fast and flexible service. These methods reduce transportation costs, lower emissions, and boost customer satisfaction.
Hyperlocal delivery hubs let businesses get orders out fast and support sustainability efforts. Gartner estimates that by 2025, half of supply chain companies will invest in last-mile delivery to enhance the consumer experience. Efficient logistics help businesses deliver quickly and make things easier for customers.
With advanced technology, smooth retail interactions, and better logistics, retail businesses can create shopping experiences that meet today’s demand for speed, personalization, and convenience. Using an omnichannel approach will increase customer loyalty and help with long-term growth. Using modern technology, boosting supply chain strength, and committing to sustainability can lead to long-term success and adaptability in a competitive market.
RMD businesses require strategic partners that understand the complexities of the modern market if they are to grow among these shifting trends. LBMC offers complete advisory, technology, and financial services to help RMD companies handle digital change, increase supply chain resilience, and prioritize sustainability. As data analytics, process automation, and workforce development experts, LBMC leads businesses toward operational optimization, risk reduction, and scalable solutions creation.
“Securing supply chains and customer data is essential for maintaining trust in today’s interconnected, digital-first economy.”
DREW HENDRICKSON, SHAREHOLDER AND PRACTICE LEADER, CYBERSECURITY, LBMC, PC
