Square Asks: Can We Use Tech to Tackle Economic Challenges?

As industries navigate the complexities of inflation and the rise of AI, leaders must alter their strategies to ensure they maintain their competitive advantage.

Square’s Future of Commerce report for 2025 provides a comprehensive overview of how several business owners and consumers are tackling the multifaceted challenges of the retail, restaurant and beauty industries.

It collected insights from Australia, the United States and Canada and surveyed thousands of UK business owners and consumers.

The report highlights how many businesses are taking on the challenges of shrinking consumer wallets, the need to raise prices across the board and sustained high inflation by utilising tailored technology. 

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.”

What economic challenges are restaurants facing?

As UK restaurants tackle high inflation, labour shortages and rising operational costs, many are turning to automation, AI and loyalty programmes to retain customers, manage costs and enhance efficiency. 

The impact of inflation was showcased in Square’s recent report, with 63% of consumers saying they have cut spending on restaurant purchases in the past 12 months (this included takeaway, in-person and delivery).

This trend is mirrored in restaurant leaders, with 71% saying they will increase their prices over the next 12 months.

The impact of technology on the restaurant industry

Technology has the potential to redefine the boundaries of innovation in the restaurant industry by enhancing customer experience, reducing costs and improving efficiency through digital ordering systems, AI and automation.

Not only are technology and automation helping address labour shortages and drive personalised marketing but data analytics and loyalty programmes drive revenue and customer retention.

A key insight that emerges from Square’s Future of Commerce report is the growing prevalence of technology in our industries, with 85% of restaurant leaders planning to improve their companies this year by investing in technology, such as automation tools and AI. 

Two-thirds of restaurant leaders are optimistic about the impact AI or automation will have on the future of their business in the 15 areas Square asks about. 

Four areas emerge as the top areas of improvement as a result of AI or automation:

• Staff marketing and promotion (77%)
• Inventory management (77%)
• Payments (76%)
• Meni optimisation (76%)

Consumers are also ready to embrace our current era of technology as 74% said they are eager for automation to help fill vital gaps in understaffed restaurants.

Gordon’s Wine Bar in London - Square’s seller - leveraged Square’s technology to save money and improve service.

Amanda Whiteside, Administration Manager at Gordon’s Wine Bar, explains: “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.”

The impact on beauty and retail

Square’s report highlights how the beauty industry is leveraging the potential of technology to improve the one-to-one service they provide and save time, with 84% of UK beauty businesses looking to use AI and automation to support inventory and marketing management in the next 12 months.

55% of global consumers said that they will adopt practices or buy products their beauty specialist has recommended. This highlights the desire consumers have for personalised experiences from beauty salons and the ability these businesses have to expand their product range. 

The impact industry leaders can have on consumers is mirrored in the retail industry, with 78% of UK retail leaders believing that in-store experiences like classes or product demos are key for business growth. 33% also believe offering more in-store events will allow them to keep up with the competition.

78% of UK consumers also believe in-store experiences and interaction as key to the future success of retail stores. 

Rich Bayer, UK Country Manager of Clearpay, explains: “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 £30bn (US$37bn) in 2024 to £47n (US$58bn) by 2029 retailers should be looking to maximise choice and flexibility at checkout."

The future

Looking ahead, Square spotlights how UK restaurant leaders are ready to widen their expertise through 2025, with 36% planning to expand their brick-and-mortar locations and 48% wanting to grow their menu. 

Many businesses are turning to technology to drive customer loyalty, stay competitive and adapt to evolving consumer expectations in our ever-changing economic landscape. 

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