Impact of Retail Economics

One image just disrupted a £22 billion fashion empire more effectively than a thousand sustainability reports. 🔥 This isn't an official SHEIN campaign gone wrong. It's artist Emanuele Morelli's AI creation—a haunting visualisation showing what fast fashion's "affordability" really costs us. The image speaks volumes: a SHEIN billboard where the model's flowing dress transforms into a cascade of textile waste. Art communicating what statistics alone cannot. 5 uncomfortable truths this image forces us to confront: 1. The scale of fashion waste is staggering → 92 million tonnes of textile waste produced annually  → The equivalent of one rubbish lorry of textiles dumped every second  → Most fast fashion items designed to be worn fewer than 10 times 2. The business model depends on our amnesia → Constantly changing trends keep us buying  → Ultra-low prices remove financial friction  → Digital marketing creates artificial scarcity and FOMO  → We're trained to forget yesterday's purchases 3. The true cost isn't on the price tag → Environmental damage from production chemicals  → Microplastics shedding into water systems  → Supply chain ethics compromised for speed and cost  → Communities near production sites bearing health consequences 4. Our definition of "affordable" is broken → When clothing is cheaper than a coffee, someone else is paying  → True cost spread across communities, environments, and future generations  → Psychological cost of constant consumption never factored in 5. Solutions exist but require systemic change → Circular fashion models gaining traction  → Rental and resale markets growing rapidly  → Consumer awareness rising but needs to translate to behaviour While SHEIN isn't the only culprit in the fast fashion ecosystem, Morelli's artwork throws a spotlight on an uncomfortable reality we've normalised. What we wear reflects our values more than our taste. What is your wardrobe saying about yours? Image: Emanuele Morelli ♻️ Found this helpful? Repost to share with your network.  ⚡ Want more content like this? Hit follow Maya Moufarek.

With most Q2 results in, we’re getting a picture of retail performance. 🔄 A bit like in Uno, the reverse card is being played. Some retailers that have been performing badly are starting to see declines bottom out or are moving into modest growth (think Best Buy, Target, Foot Locker, Peloton, Victoria’s Secret, Gap). 📉 In contrast, some of the traditional star performers are struggling to keep up the fast pace and are seeing a slowdown (think Lululemon, Ulta, Dollar General). 💰 Are economic dynamics playing a role here? Partly. But strategy and competitive forces remain critical. Ulta has more competition, so too does Lululemon which failed to inspire with its womenswear in Q2. Target has recently invested a lot in price and value. Foot Locker, Victoria’s Secret and Gap all have turnaround programs. 🤔 On this front, don’t always buy the narratives retailers spin. Dollar General blames its weaker numbers on pressures on its customers. There is truth in this, but it has been true for a long time. The issue now is that inflation is not flattering the growth as much and there is more price competition in grocery. Oh, and some stores are terrible and are preventing sales and repeat visits.  🖼️ The long-term picture remains vital because quarterly results fluctuate and create noise. An example is Nordstrom, which has 3.4% growth this quarter, versus Dillard’s which has a 4.9% decline. Look at the Q2 numbers compared to 2019, and Dillard’s has grown sales by 4.4% while Nordstrom’s sales have grown by just 0.2%. A long term view is sometimes a better signal of the health of the business model. 🏡 Home related categories remain very pressured. A lot of this is linked to the more sluggish housing market: moving is an important driver of demand. Some bigger ticket purchases are financed, so high interest rates play a role too. ↔️ The market remains polarized with a balance of winners and losers. Out of the selection in the graph below, 17 retailers are in growth and 18 are in decline. 🐌 Growth rates have, generally, deteriorated since Q1. From the retailers shown below, 21 have lower growth rates than in Q1, 14 have higher growth rates. The average, overall growth rate has dropped by a modest 0.5 percentage points since Q1. So no recession, but some modest slowdown. #retail #retailnews #earnings #consumer #economy #shopping

Americans are telling us that their financial lives feel harder than they have in decades, and the data back them up. Prices for everyday necessities remain high, wage growth is slowing as the job market softens, and confidence surveys are showing some of the weakest readings on record. In this newsletter, I explain why affordability has worsened, why it’s proving so persistent, and which policy choices have pushed inflation back up after earlier progress. I also examine how these pressures differ across the income distribution. This is an important read for anyone trying to understand the disconnect between strong headline economic data and the real financial stress many families are feeling. It also highlights why revisiting tariffs and immigration policy could help ease the #affordability burden and restore balance to the economy.

The Fed says rates are still in restrictive territory, and resumed progress on inflation supports that notion. But the battle isn’t won, and there are inflationary risks in the pipeline.  Price growth slowed last month, coming in lower than the spike we saw in January and also slightly lower than price growth in the last month of 2024. But inflation is still not close enough to the Fed’s target. Recall: The Fed targets a 2% price growth reading in the PCE index (their preferred inflation measure). Today’s consumer #inflation figure and tomorrow’s wholesale inflation data feed into this calculation. Households and businesses are bracing for the impact of inflationary policies — those being implemented and those being talked about. We’ve seen inflation expectations rise and consumer sentiment fall recently as the uncertainty of future policy decisions plays on households’ and businesses’ feelings of financial security. It is very difficult to make sound financial decisions when you can’t be sure what will happen in the coming weeks or months. And it’s through this mechanism that inflation expectations and consumer sentiment can shape the real economy. Households anticipating economic turmoil may find peace of mind by focusing on the things within their control: their #spending and #saving. Then, if their doubts come to fruition, they’ll be better insulated. And even if economic performance exceeds their expectations, they’ll have a better grasp on their financial position. 

E-commerce didn’t kill retail, all the predictions got it wrong. In 2025, 91% of businesses compete primarily on customer experience, not price or product. And nowhere is this more visible than in the world’s leading high streets, where physical stores are no longer points of sale, but platforms for brand experience Welcome to EXPERIENTAL retail The stores winning today aren’t transactional. They’re immersive, emotional, and designed to be lived, not just visited. Flagships and pop-ups are turning prime locations into experience hubs, spaces where consumers explore, test, share, and connect. And that’s something pure e-commerce still can’t replicate >>IT’S ALL ABOUT SENSES Digital is efficient → Physical is emotional. From skincare labs to AI-powered diagnostics and immersive scent journeys, experiential retail activates all senses, creating deeper, longer-lasting brand relationships +85% of repeat purchases are driven by emotional connection +66% of consumers are more likely to buy after engaging experiences >THE NEW ROLE OF HIGH STREETS The most valuable retail spaces today aren’t about inventory. They’re about impact. Top locations in cities like Paris, London, or New York have become stages where brands perform, blending storytelling, design, and technology to create omnichannel ecosystems The store drives content → Content drives traffic Traffic drives conversion → both online and offline >THE VIRAL EFFECT Experiential retail is built to be shared. Instagrammable environments, interactive installations, and creator-first design turn visitors into media channels. Physical retail is no longer the end of the journey. It’s the beginning of amplification +83% of consumers trust user-generated content over brand messaging +78% say social sharing influences purchase decisions >REAL-TIME INSIGHT Experiential spaces are also powerful innovation labs. Brands test products, gather feedback, and refine positioning in real time, something digital alone can’t fully replicate. +22% improvement in product success with live feedback +15–20% sales uplift in nearby channels post-activation >EXPERIENCE -> TRANSACTION Exclusivity, urgency, and storytelling drive action. Limited-time pop-ups, collaborations, and one-off experiences create FOMO that traditional retail simply can’t match +Activations can drive 25–35% higher conversion rates +88% consumers are more likely to purchase after a unique experience CONCLUSION Retail isn’t becoming obsolete. It’s becoming the most powerful media channel a brand owns. In a world saturated with digital noise, physical experiences cut through, turning passive consumers into active participants and loyal advocates. The future of retail isn’t about more stores. It’s about better experiences in the right places Featured brands Chanel Charlotte Tilbury Dasique Lancome Latafa Louis Vuitton Sephora YSL #experientialretail #brandactivation #retailInnovation #omnichannel #beautyIndustry #popupstore

How healthy is the U.S. consumer? So far through 2023, consumers’ spending has defied expectations and remained robust despite high rates of inflation. This then raises the question: how much will the consumer spend at retailers as we move into the critical Q4 period? The chart below attempts to provide some guidance by adjusting the monthly retail sales data for inflation using the CPI for commodities (a permanent FRED link to the data used in this chart can be found at https://lnkd.in/gDADwQSD). Data run through August of this year. Thoughts. •In this chart, I’ve plotted seasonally and inflation adjusted retail trade sales and included the 2014 – 2019 trendline (estimated using SOLVER in Excel using Ordinary Least Squares). •Looking at the pattern, we see the surge above the trendline starting June 2020 when consumers came out of COVID-19 lockdowns with stimulus money and fewer chances to spend on services, so America goes shopping. That behavior was supercharged starting March 2021 with stimulus round 3. Subsequently, retail sales have flatlined since about July 2021, which is a substantial change from the upward pre-COVID trendline.  •In terms of forecasting Q4 2023, my expectation would be for inflation adjusted sales to come in around the levels we saw last year given the flat trend (and possibly down a percent or two given the economic uncertainty, resumption of student loan payments, and higher interest rates). •There is no evidence yet of a collapse of retail sales like we saw in Q4 2008, where inflation adjusted retail sales dropped ~8% from Q4 2007 levels (see https://lnkd.in/gFWeC9fm). •These data likely explain, in part, why containerized imports remain above 2019 levels (https://lnkd.in/gcacg7Kf). Implication: there are no signs yet that consumer spending at retailers is set to fall sharply (certainly nothing like we saw in 2008). All data points towards this holiday season having sales volumes around where they were last year (and maybe down one or two percent). #supplychain #supplychainmanagement #shipsandshipping #ecommerce #freight #trucking

𝐓𝐡𝐞 𝐓𝐨𝐠𝐞𝐭𝐡𝐞𝐫𝐧𝐞𝐬𝐬 𝐃𝐞𝐟𝐢𝐜𝐢𝐭 𝐚𝐧𝐝 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐭𝐲 𝐈𝐦𝐩𝐚𝐜𝐭    Business thrives when communities thrive. I was deeply moved by Jumbo supermarkets' innovative "Kletskassa" (chat checkout) initiative in the Netherlands. Instead of rushing customers through checkout, these special lanes encourage conversation and connection for people who want a slower retail experience.   "Many people, the elderly in particular, can feel lonely. As a family business and supermarket chain we have a central role in society. Our shops are a meeting place and that means we can do something to combat loneliness. The Kletskassa is just one of the things we can do,’ Jumbo CCO Colette Cloosterman-Van Eerd said.   It's a brilliant example of how businesses can weave social impact into their core operations. The reality is stark. According to the Dentsu 2025 Trend Report, the world is facing a global "togetherness deficit." Recent global events have left many feeling disconnected – particularly our elderly population. But herein lies an opportunity for businesses to step up:   1. Reimagine existing touchpoints: Every customer interaction can be transformed into a moment of connection. What's your equivalent of a "chat checkout"?   2. Create dedicated community spaces: Jumbo's "chat corners" show how businesses can repurpose physical spaces to nurture belonging.   3. Train staff as community builders: Our team members can be more than service providers – they can be connection catalysts.   4. Identify local needs: Understanding your community's specific challenges helps create meaningful interventions.   The ROI? It goes beyond metrics. It's in the strengthened community fabric. It's in being part of the solution to societal challenges. I believe every business, regardless of size or sector, has the potential to create impact in a way that people feel seen, heard, and connected.      

Make Room For a Really Big Amazon Box The world’s most efficient search bar is about to grow a parking lot. For years, Amazon flirted with physical #retail; bookstores here, pop-ups there, a wardrobe app that quietly exited stage left. Interesting hypotheses with mixed results. Now comes something less coy. Amazon is waiting for final approval to build its first true big-box store, a supercenter-scale footprint in suburban Chicago. Think less Amazon Fresh and more Walmart-sized statement. This matters, not because Amazon is opening a store (that’s old news), but because of what kind of store this is. Big-box retail isn’t a format. It’s a physics problem. It runs on scale, velocity, replenishment math, parking lots, habit loops, and the unglamorous poetry of logistics. Walmart and Target didn’t win here by accident; they won by mastering gravity. Amazon, by contrast, has always tried to defy gravity, dematerializing shelves into servers, aisles into algorithms, and errands into subscriptions. This move suggests a synthesis. A large-format Amazon store, groceries plus general merchandise, would collapse the aisle and the algorithm into a single address. This isn’t “another store.” It’s an operating-model test: micro-fulfillment behind the wall, price and product selection out front, and pickup and returns stitched into daily traffic. When an #ecommerce pure play starts sketching supercenter footprints, this isn’t a trend story. It’s a #logistics and data story. Expect near-term tremors: pricing pressure where food and non-food overlap, tighter expectations on pickup and return SLAs, and a re-rating of what “convenience” means within a ten-minute drive. For #brands, the playbook shifts. Shelf space becomes a search space in real life; planograms must behave more like recommendation engines; and content accuracy, attribution, and availability must reconcile digital promise with store-level reality. Promotions should travel cleanly from screen to shelf. Packaging and assortment must flex across bulk, basket, and buy-online-pick-up-there. And the scoreboard changes. The winners won’t just chase sales per square foot. They’ll manage dwell time, data loops, and loyalty across a single, connected experience. The metric that matters most is the fidelity of the flywheel linking discovery, delivery, and delight. If this big box works, it isn’t nostalgia. It’s infrastructure. And a laboratory.

We’re only human Measures of economic policy uncertainty have eclipsed the pandemic. The largest increases are due to trade policy uncertainty and where the US will end up with regard to tariffs. Why do we care? A top 10 list 1. A “wait and see” mentality emerges. Large, hard to reverse spending decisions by firms and households are put on hold. That acts as a drag or tax on economic activity. 2. Business investment feels the bulk of the effects and contracts. 3. Credit conditions tighten, especially for those most exposed to tariffs, which further constrains investment. Even firms with plans to invest can be hobbled. 4. The banking system becomes less stable. Loan defaults pick up as the economy slows. Consumer delinquencies are already on the rise. 5. Unemployment rises as growth slips to levels that no longer enable the economy to absorb those entering the labor force. What is unknown is whether that weakness will cause a further slowdown in wage growth given the stagflationary effects tariffs. Workers tend to demand compensation for the escalation in the cost of living due to tariffs. 6. Consumer spending skips a beat. Job losses confirm fears and and trigger a larger blow to aggregate incomes and spending. 7. Financial market volatility soars and asset prices fall. People lose retirement savings and feel poorer, companies can't raise money by selling stock and loan losses accelerate. Confidence among consumers and busineses further falters. 8. Monetary policy becomes less effective as fear prevents firms and consumers from reacting to stimulus once it starts. 9. Contagion. Foreign firms and governments perceive the US as an unreliable and less predictable partner. Supply chains are reconfigured to reduce their dependence on US markets. 10. If left unchecked, sustained periods of uncertainty can trigger a breakdown of economic and political systems. Five things can help mitigate and derail bouts of uncertainty from becoming a vicious global cycle: 1. Strong institutions. They create confidence that rules won’t arbitrarily change, and work to counter the “wait and see” behaviors that curb growth. The judiciary plays a key role. 2. Clear communications by the Fed. That and a lack of political interference tempers uncertainty regarding the trajectory of inflation. 3. Automatic fiscal stabilizers, which provide immediate, predictable government response without political gridlock that can worsen a crisis. 4. Well capitalized banks, which prevent larger credit crunches from taking root. 5. International cooperation, which limits contagion. Bottom line Bouts of uncertainty trigger fight or flight reactions. That has resulted in a toxic mix of panic and paralysis. Expect whiplash, as the surge in activity ahead of tariffs borrows from growth later in the year. As for national security, that could be shored up with a targeted & strategic approach to industrial policy. Break bread not ties when possible. Be kind; pay it forward.

Wages and benefits are up, inflation and interest rates are down, and real incomes have been rising in the UK for almost 18 months now... But consumers aren't spending, and PwC UK's latest survey finds the *biggest quarterly decline* in consumer sentiment in over 2 years. Is the UK in a "#vibecession" like our US brethren seem to be? Some of my thoughts below, or read the full report: https://pwc.to/48mI0rA First of all, why does it matter? I've been running PwC UK's consumer sentiment survey since 2008, and the main index number has historically been a reliable predictor of actual household spending 6-12 months later (with an R-squared of +0.7 for you statisticians!). Sentiment has been recovering steadily since a low in Sep 2022... until now. In fact, as with previous changes of government, July's survey, taken directly after the General Election, saw #consumersentiment climb to its strongest level in 3 years. However, our latest September survey (https://pwc.to/48mI0rA) shows the biggest quarterly decline since the start of the Ukraine War, worse than after the Truss mini-budget of 2022. The new government's honeymoon is most definitely over in the eyes of consumers. The biggest decline in sentiment in the last quarter was amongst over 65s. For the first time in over 8 years, #pensioners are now the most pessimistic demographic group, reversing over a decade of improving sentiment amongst older people. The end of the universal Winter Fuel Allowance has had a *direct impact* on the sentiment of retirees. Meanwhile, the sentiment of under 35s actually rose - slightly - but no more than it normally does every September. Weak sentiment has been reflected in #consumerspending. According to the BRC, quarterly non-food retail sales have been in decline every month for over a year now. As MPC member Megan Greene pointed out in her Financial Times column earlier this week (https://lnkd.in/dUQA_3HF), UK consumption is just 1.5% above pre-pandemic levels vs 13% in the US. UK consumers are saving, but not spending. This fall in sentiment and continued aversion to spending is bad news for #retail and #hospitality as we enter their Golden Quarter. Christmas spending propensity amongst consumers has fallen since the summer, and is now no better than it was last year - 27% of us think we'll spend less this Christmas, compared with only 18% saying they'll spend more. Will the improving macro environment and more certainty after the Budget be enough to turn the tide? Whatever the Chancellor unveils next week, consumer sentiment looks to have peaked, and is now falling again. For retail and leisure operators, that means the critical run-up to #Christmas hangs in the balance. Where will the brighter spots of higher spending be? Read our prognosis in PwC UK's latest consumer sentiment report here: https://pwc.to/48mI0rA