Square Explores How to Navigate Inflation With AI and Tech

In the face of rising inflation and a dynamic AI landscape, business leaders are reshaping their strategies to stay competitive.

The 'Future of Commerce 2025' report by Square offers a clear view of the coping mechanisms employed by business owners across multiple sectors.

Ranging from retail to restaurants and beauty, the document draws from data in Australia, the US and Canada, and involves thorough surveys of thousands of UK stakeholders.

Samina Hussain-Letch, Executive Director of 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.”

Restaurants Responding to Economic Pressures

In dealing with elevated inflation rates, labour shortages and soaring operational costs, UK restaurants are increasingly turning to automation, artificial intelligence and loyalty programmes.

These tools not only help in maintaining customer loyalty, but also play a key part in managing costs effectively and boosting operational efficiency.

As per Square's report, the shift in consumer spending in the restaurant sector is easily evident, with 63% reporting a reduction in their restaurant expenditure over the previous year spanning dine-in, delivery and takeaway.

In response, 71% of restaurant leaders say they plan to increase their prices within the next year to counterbalance economic pressures.

The Transformative Impact of AI

Technology will alter the restaurant industry through digital ordering systems, AI-driven services and comprehensive automation.

These innovations extend beyond cost reductions to revolutionise customer interactions, facilitate personalised marketing and enhance overall operational efficiency through data analytics and loyalty schemes.

Square’s report underscores a significant shift, with 85% of restaurant managers planning to enhance their operations with tech investments in the current year.

Gordon’s Wine Bar in London benefits from Square’s tech solutions, simplifying sales monitoring and enhancing customer service delivery, according to Administration Manager Amanda Whiteside: “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.”

Implications for the Beauty and Retail Sectors

The beauty industry uses tech to refine the client-service interface and streamline operations, with 84% of UK beauty businesses planning to deploy AI and automation for inventory and marketing management within the next year.

A critical area of customer interactions lies in personalised recommendations from beauty professionals, with 55% of global consumers indicating they tend to embrace such advice.

This openness to tailored experiences marks a key opportunity for beauty shops to diversify their product offerings.

The retail sector shows a similar trend, with 78% of retail leaders embracing in-store experiences such as classes or demos to fend off competition and facilitate growth.

One-third (33%) believe that offering more such events is key to remaining competitive.

Looking forward, Square illustrates a vibrant landscape for the UK's restaurant sector heading into 2025.

Businesses across sectors are leaning on technology to foster customer loyalty, stay relevant amid rapid economic shifts and satisfy the evolving preferences of a dynamic consumer base.​​​​​​​