Retail Pulse Report: Coping With a New Level of Uncertainty
Not consumers – they’re still trying to figure out what they’re going to do. Retailers, however, seem to be adjusting to a new, higher level of uncertainty.
Source: Adobe Stock’s version of “new levels of uncertainty”
This week is all over the place. A little bit of the now, a little bit of a look back, a round up, and a look ahead. The one thing to look for in all of this is the juxtaposition of the near-term uncertainty against the long-term opportunity. Retail is changing at a pace that has no chance of slowing down, even if consumers take a breath, or retailers, or the economy, or all three. Still waiting to find which of these is around the corner.
In the meantime, let’s take a breath and jump in.
Retail Economic Indicators
As the last of the April sales reports roll in, it’s clear that April was a blockbuster sales month, year over year, partly because of the shift of Easter from March last year to April this year, and partly because everyone bought stuff ahead of the supply chain disruption that seemed inevitable at the time.
In the UK, the ONS reported that retail sales were up in April by 1.0% over March. I hate that they report it that way, you always have to dig around to find out the actual year over year, and it was an even better headline than the 1.0% led you to believe: up 5.3% year over year excluding petrol (gasoline). Household goods were the biggest winners, up 12.1% year over year, helped along by great weather.
However, inflation for shop prices came in for May in the UK, and while non-food prices saw deflation of 1.5%, food prices stayed consistently higher, hitting a 2.8% increase the first week of May after a 2.6% jump in April. This is the fourth month in a row of food price inflation, according to the BRC-NIQ Shop Price Index.
Meanwhile in the US, Father’s Day spending is expected to hit a new record. According to the NRF/Prosper Insights survey, spending will hit $24 billion, up from $22.4 billion in 2025. Anticipated participation stayed about the same, so the increase came from people getting ready to spend more: $199.38 per person on average, an increase of $10 over last year. Just to keep it in perspective, people planned to spend an average of $259.04 for Mother’s Day.
It had been a while since I’ve done a bigger round up of the state of the US consumer, so even though some May numbers are not out yet, I thought it was worth just checking in on what we have so far.
For jobs, the ADP national jobs report showed an increase of just 62,000 in private employment in April. The US Bureau of Labor and Statistics showed payroll up by 177,000 in April (some revised numbers), but basically unemployment was unchanged at 4.2%, and wages were unchanged from March to April, and with a 1.4% increase year over year, which will do nothing to make workers feel like they’re catching up against inflation. It’s a waiting game. The more current jobless claims report from the Department of Labor, which covers the week ending May 24, saw 240,000 initial jobless claims, an increase of 14,000 over the week before. The 4-week moving average of jobless claims hit 230,750.
The second reading of US GDP for Q1 2025 came in revised downward to -0.2%, versus up 2.4% in Q4 2024. The negative reading was driven by, you guessed it, an increase in imports, and a decrease in government spending.
Like the UK, the US saw a big leap in retail sales in April. The CNBC/NRF Retail Monitor reported a 6.76% increase in core retail sales, and the US Census Bureau saw retail trade sales up 4.7%, both number as year over year.
And the most recent report is consumer confidence from The Conference Board saw overall confidence start to bounce back. Reporting these numbers is getting complicated for everyone, with TCB noting that half the survey responses came in before the US administration suspended the Chinese tariffs until July. The overall number increased to 98.0 in May, but from 85.7 in April. And future expectations index increased 17.4 points to 72.8, but that’s still below the threshold of 80 that TCB says indicates a recession. They also noted that while overall confidence was up, consumers’ opinion on the current job availability weakened for the fifth straight month.
What to take away from all of this? To paraphrase The Lord of the Rings (the movie version), our journey sits on a knife’s edge. Overall, more good news came in during May for both retailers and consumers, or at least the bad news didn’t seem so bad. But the uncertainty created a freeze, and that freeze has yet to ripple through the economy. We can see some beginnings in the GDP figures and in the flickers in the job market. We’ll just have to keep watching. And listening.
Retail Tech & Research Data
More surveys on the tariff impact on the consumer mindset. First, Collage Group asked US shoppers about what they wanted to see from retailers regarding price hikes. The real headline to the article was buried, really: only 9% of consumers say brands don’t need to explain price increases. The other 91% want to see either “clear and thorough” explanations, or “brief or simple” explanations. The survey ran in March. From what I’ve seen, retailers are still considering their options, even as some costs are starting to hit their margins.
Another survey (from dunnhumby) asked Canadians how they feel about buying US grocery brands. And while Canadians may have a reputation for being nice, they can also apparently hold a grudge. The “Buy Canada” movement started in February, and still seems to be going strong. US retailers in Canada have seen an average 3% drop in sales. 71% of Canadian consumers say they will buy fewer US groceries in 2025. 84% cited US-imposed tariffs as the most important reason for reducing their purchases of American grocery products. One note for US retailers trying to figure out how to represent tariffs in their own prices, Loblaws has put a black “T” on the price signs of goods impacted by the tariffs.
AI & Retail
I haven’t had a chance to read the report yet, but there was one statistic that emerged from IBM’s recent research into agentic AI and executives’ plans and made the round: 85% of executives expect agentic systems to run major parts of their operations by 2027 – this would be 24x7, touchless, outcome-driven agents.
Sigh. I mean, AI has progressed breath-takingly fast. But this seems like either wishful thinking or flat-out unrealistic expectations. It’s really difficult to square this kind of prediction against all the AI engineers and scientists who call out how this is an order of magnitude more difficult to accomplish than a chatbot.
Apparently IBM makes a point that of course humans are still essential in this agentic future. I’m not sure that the execs they surveyed agree.
Retail Winners and Losers
OK, the big deal in this week’s newsletter is from Zoe Scaman, “The Fan-Industrial Complex.” She meant it all for the agency and media world, but everything she says applies to retail too. She was presenting at Comic Con UK, and talking about how content creation has shifted from IP that a company owns to frameworks that they publish in order to hand over to fans for co-creation.
Instead of “fans” like I am a fan of science fiction and fantasy, think instead of your most loyal and/or aspirational customers of your retail brand. If you really want to build loyalty, think of the content you have available to build loyalty. That content is more than just what goes out on social channels or the website. It’s more than product descriptions. It’s the products themselves, it’s what your store associates say about them, what the fitting room looks like in the store, pretty much any part of your brand story and the products that are the main characters of that story.
Now apply this concept: “Fans aren’t your audience anymore. They’re your collaborators. Your quality control. Your distribution. Your future.” When you think this way, you want emotional ownership among your customers, not just eyeballs. You want them co-building the brand, not just buying products. Enable remix culture, and share in the upside – a place for them to deepen their engagement with you and what your brand stands for. Measure vitality, not views. It’s not about likes, it’s about how they integrate your brand into their own life, and creating avenues to celebrate that.
Zoe also lays out a “layered participation model” and retailers and brands should consider this as well, finding ways to engage with and support observers/lurkers, amplifiers, contributors, and even architects – people who can build new narrative layers onto your brand story.
What Did We Learn This Week?
There is a huge amount of dissonance between the long-term strategy for how retail is evolving and the massive amount of uncertainty that retailers are trying to grapple with in the short term. This week’s newsletter starts with the latter, breezes by what might charitably be called unrealistic executive expectations for the impact that AI will have in the middle of this mess, and ends with the “if we weren’t in the middle of uncertainty, you’d be way more receptive to these ideas than you probably are”.
But we can’t give up on or ignore the future just because the now is a mess. And sometimes, when everyone is frozen in the short term, those with a clear vision for the future can make real progress while everyone else is standing around.
Program Note: I’m taking the week off! The next Pulse Report will be June 16.
Until then!
- Nikki