First Qtr. '25 Consumer Spending
U.S. Retail Trends

Looking at U.S. consumer spending three months in to determine how retail is doing isn't easy during the current state of our economy.  From the start of 2025 and throughout the duration of the year’s first quarter to-date, economic indicators continue to uncover a complicated retail sphere. The shopping sector has been drastically influenced by significant shifts in consumer buying behavior as a result of multiple factors including a mixture of economic pressures, consistent advancements in technology, and changing social values. These forces, joined with overall financial uncertainty in the economy makes understanding U.S. retail trends, driven by consumer buying behaviors, difficult to discern.  

 

Retail Outlook - Present Day Reality​

According to Conference Board latest update March 25, 2025, the Consumer Confidence Index of 92.9 points was down from the 104.1 stated for January. Further accentuating the significance of a falling consumer confidence was highlighted in comments made by Jared Bernstein, FMR. Chair, Council of Economic Advisers, in which he reiterated that consumer spending is 70% of the U.S. Economy. Therefore, consumer confidence as an essential driver of consumer spending having a direct impact on retail forecasts should be atop considerations and alongside other key factors, such as labor statistics Note:   per U.S. Bureau of Labor Statistics:  Payroll employment rose by 228,000 in March and the resulting unemployment rate changed little at 4.2%.

 

​​Economic Influences on Consumer Spending 

Increased concerns about the lag in consumer confidence as a primary indicator that consumers have cautioned spending habits was shared by the Voice of America. The business research group said on February 25th ‘25, that U.S consumer confidence in February entered its biggest monthly decline in more than four years. And according to Reuters, on March 25th '25, the current administration's fluctuating statements and uncertain intentions regarding increasing excise duties on imported goods continues to confuse and insert challenges for business owners' attempts to shape future business plans and economic strategies for growth.  

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Inflation and Spending Power

Though Trading Economics cited an easing of the U.S. annual inflation rate from Jan 3% to 2.8% in February 2025, the instability of economic factors influenced by the current administration's policy statements and unexpected actions, and the impact of it all on consumer sentiment makes estimating inflation trends for March too difficult to forecast, at the time of this article.  

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The Conference Board noted declining trends for March 2025, per consumer expectations measured against the outlook stated for February 2025:

• Regarding expecting business conditions to improve in March, 17.1 down from 20.8% in Feb.

• In March, 27.3% expected business conditions to worsen, up from 25.5% noted in Feb.

Consumers’ outlook for the labor market 

• 16.7% of consumers expected more jobs to be available, down from 18.8% in Feb.

• 28.5% anticipated fewer jobs, up from 26.6% in Feb 

Consumers income prospects

• 16.3% of consumers expected their incomes to increase, down from 18.8% in Feb.

• 15.5% expected their income to decrease, up from 12.8% in Feb.

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According to Reuters, U.S. consumer confidence plunged to the lowest level in more than four years in March, with households fearing a recession in the near future and higher inflation because of the threat of tariffs.  The Commerce Department's advanced estimates of U.S. Retail cited a revised percent change down .9 percent in January 2025 from December '24.  As of this article, Feb 2025 was not yet adjusted for price changes.  April 16th is the scheduled release date for the bureau's March 2025 Advance Monthly Retail report.   

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PYMTS cited:  "Visits to U.S. stores dropped by 4.3% in early March", the Financial Times (FT) reported Sunday (March 16th), citing data from RetailNext ... "The University of Michigan’s index of consumer sentiment recorded its third monthly decline in a row and the lowest reading since November 2022."

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Consumer Spending and Retail Trends Look Bleak, but Retailer Solutions Exist!

Despite teetering consumer confidence for whether to purchase with significant restrictions on the pocketbook now or later, or an inability for reliable sources to project economic outcomes that can be depended upon and the challenges that retailers face to know how best to proceed in this environment of constant shifts, retailers that deploy strategic marketing and advertising find solutions that work.

 

Micro Strategies

​Retailers with a micro focus on creating cost-effective solutions, leveraging competitive pricing, discounts, and promotions with messaging and brand positioning to boast value driven products and services both in stores and online, better manage the impact of growing consumer caution for what and when to purchase. 

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Ambient Shopping Experiences

Consider how consumers are prompted to unintentionally view products at the checkout counter and make impulsive or last-minute shopping decisions, retailers that create marketing and advertising strategies that further advance opportunities for ambient shopping, both in stores and online, increase consumer purchases. As often deployed in stores, retailers do this online by utilizing clear messaging, signage and simple organizational techniques for brand promotion to guide consumers to look or to notice a particular product while browsing, searching or working online—just as they would be prompted to turn down a particular isle while in a store shopping.

 

With the growth of online shopping, retailers that nudge purchase options as consumers are viewing websites or multitasking while scrolling across different social media platforms, capitalize on ambient shopping behaviors by presenting brand products and services intentionally in those spaces. According to Salsify, "Shopping isn’t just a deliberate act anymore. It’s a constant background activity."  Moreover, Salsify noted that 69% of shoppers' purchases occur while multitasking. Ambient shopping is popular amongst all age groups and demographics, with 76% of Millennials and 75% of men leading the trend, per Salsify.

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Invest in Lower Cost Private-label Products:  Pocket-Friendly Alternatives

Financial concerns have increased the popularity of lower cost brands. According to Salsify, 52% of shoppers are heading toward local stores to buy brand products and pocket-friendly substitutes. 

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Integrate Personalization and Strengthen Data Privacy Practices

Per Netcore Ecommerce Report:

Personalization and privacy are in growing demand for consumers. Retailers that create trusted spaces and provide personalized solutions aligned with helpful products, services and information have the most to gain as 77% of consumers expect personalized customer shopping experiences.  However, with 91% of shoppers willing to abandon their cart due to a poor shopping experience, retailers must ensure that consumers find a fast and efficient shopping journey, and that their data is protected.  The numbers reported represent opportunities for retailers citing the average cart abandonment rate 60% or higher without personalization versus an average of 46% abandonment after personalization.  Also, regarding transparency of information collected and use, the report found that 35% of shoppers are willing to share data when privacy concerns have been addressed properly.

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Ensure Seamless Integration Online and Offline - Advance Omnichannel Marketing Efforts

Retailers must deploy processes that are focused to maintain a cohesive consumer shopping experience by ensuring that all retail touchpoints are unified.  Wherever retailers have brand presence, consumers should feel the same enthusiasm, optimism and comfort when engaging with the brand, whether online or offline.  Effective brand communication and brand management are essential for creating interest and meaningful engagement for retailers.

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Improve Customer Base - Revamp Communication Strategy

Retailers retain current customers' interest and improve engagement by rethinking overall approach to communication.  Retailers that consider what's communicated, the manner it's communicated, the time and day it's communicated and how often, are in the best position to connect with prospects and existing customers.  It goes without stating, knowing the customer is half the challenge.  The other half is knowing what to do with that information for success.  Retailers that analyze customer interactions with their brand make informed decisions.  AskLita@ScoopandShare.com to assist your efforts to deliver better communication.

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The good news regarding retail trends in 2025 is that not only has online shopping remained a growth opportunity for retailers, but also brick-and-mortar stores remain the preferred experience.  Deloitte cites that "80% of all shopping still happens in store, and shopping-center vacancy is at its lowest point in two decades at 5.4%"

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Retail executives' tactics to offset the current economic climate, according to Deloitte include:

• Strengthened loyalty programs

• Utilization of AI to further convenience

• Expanded in-house delivery options

• Increased workforce through outsourced services and partnerships

• Advanced technology that improves supply chain and inventory management decisions​

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