The situation: Despite logging a sixth consecutive quarter of negative comps in FY Q3, CEO Brian Niccol—who famously steered Chipotle out of its food‑safety crisis—said Starbucks’ turnaround is running ahead of schedule. Our take: While it’s encouraging to see Starbucks take some small steps in a positive direction, the road is still steep. Consumers remain price‑sensitive, agile rivals in the US and China are taking multiple paths to steal share (both value‑led and trend‑driven), and commodity costs are rising. To break out of its sales slump, Starbucks must execute on four fronts: Make service faster and better. The chain needs to speed up service without sacrificing the high-touch hospitality that Niccol is seeking. Find ways to differentiate. It’s easy to roll out new offerings, but it's hard to develop unique beverages that consumers will clamor for rather than recoil at (who can forget Starbucks’ Oleato line of olive oil-infused drinks?). Lean on technology. Refreshing Starbucks’ Rewards program and revamping its app are proven tools to drive occasional customers back into its stores. Stabilize China. Price cuts may lift traffic, but Starbucks needs to balance volume gains against margin erosion and fend off lower‑priced competitors such as Luckin. Nailing these pillars—speed, product innovation, tech‑powered engagement, and a calibrated China play—will determine whether early green shoots turn into sustained growth.

The situation: The US housing market is in rough shape, as homes aren’t selling, yet prices keep climbing. In June—typically the spring peak—existing-home sales fell 2.7% MoM, while the median price hit a record $435,300, per the National Association of Realtors (NAR). This spring marked the weakest selling season since 2012, with just 1.39 million contracts signed from April to June, per Redfin. That was down 9.7% from last year, which was also a weak sales season. Our take: With transactions stalled and prices still climbing, the housing market offers little short-term relief. For retailers tethered to homeownership and moving cycles, that’s a stubborn headwind—especially as tariff costs rise and consumers grow more selective about their discretionary spend. Retailers tied to housing can keep sales going by highlighting their affordable products as well as the long-term value of items like appliances and furniture.

Tariffs could reshape the fashion calendar as brands rethink their merchandising strategies to limit exposure. While Vince’s decision to lengthen its spring season was borne out of necessity, it could herald a larger shift in how fashion brands approach their calendars—particularly as tariffs force tougher decisions about what and how much inventory to bring in. Companies can either go faster—taking a page from the fast-fashion industry and launching new styles quickly and often—or slower, à la Vince, depending upon their customers’ preferences.

emu’s attempts to tariff-proof its business are running into opposition from regulators and sellers alike. The company has been accused of failing to protect EU users from illegal products. Efforts to woo US sellers to its marketplace are also running aground as companies and merchants refuse to sell products on Temu for less than what they retail for on Amazon. For all its troubles, we expect Temu’s US ecommerce sales to rise 13.5% this year, which would be the second-fastest rate of growth among the companies we track—but a far cry from the triple-digit increases it enjoyed over the past few years. With governments increasingly unfavorable to its business tactics—and Amazon increasingly inclined to flex its market power—Temu will need a new playbook to navigate the current era of uncertainty and tariffs.

President Donald Trump said the US will set a global “baseline” tariff in the 15%–20% range, up from the 10% rate he outlined in April. Our take: Steep tariffs are the new normal. Consumers currently face an average effective tariff of 18.2%—17.3% after adjusting for spending shifts—the highest since the 1930s, per Yale Budget Lab.

The volatile macroeconomic environment is causing most shoppers to be more cautious with their spending, but it’s also driving a subset to spend more in search of comfort. Roughly 2 in 5 shoppers (38%) say that the current stress of economic uncertainty is making them spend more, according to a June LendingTree survey. Consumers may be choosing to spend more of their money on essentials, but that doesn’t mean they can’t be swayed to spend a little extra on the occasional indulgence—particularly if there’s an element of novelty, or if the purchase offers a sense of emotional comfort. While the Labubu craze is likely to fizzle out as quickly as it started, shoppers will remain as eager as ever to splurge on small luxuries that bring them satisfaction.

Deckers and Puma are proceeding with caution as tariffs complicate US operations and consumer sentiment. Of the two companies, Deckers is better equipped to manage the uncertain environment. It has considerably more pricing power than Puma, giving it more room to offset tariff costs. It also has significantly more runway to grow outside the US: International revenues surged 50% in Q1, while Puma is facing weakness in Asia and Europe in addition to North America.

The trend: While rising cost-consciousness is causing consumers to think twice before indulging in a burrito, they’re still saying yes to a splurge-worthy drink. Beverages have emerged as one of the hottest growth categories in US foodservice, offering quick-service restaurants (QSRs) a high-margin way to boost traffic and ticket sizes amid inflation fatigue. Sales at beverage- and snack-focused chains surged 9.6% in 2024—the largest annual growth of any restaurant category, according to Technomic data cited by The Wall Street Journal. For comparison, burger chains—despite generating more total sales—grew just 1.4% over the same period. Our take: The beverage boom is fueled by novelty, shifting habits, and the hunt for higher margins. Consumers are stressed. Amid economic uncertainty, nearly half (44%) of consumers turn to comfort or junk food to cope—and specialty drinks offer a relatively affordable way to indulge without breaking the bank. They crave novelty. Limited-time drinks with bold flavors, bright colors, and TikTok appeal are strong traffic drivers, especially among Gen Z, who are eager to try what’s new while it lasts. Younger consumers are drinking less alcohol. As Gen Z and millennials cut back on alcohol, drinks like iced coffees, chillers, and fruity refreshers are filling the social gap with fun, flavorful alternatives. Chains are chasing margins. Beverages typically carry higher profit margins than food and are often (but not always) operationally easier to tweak. Adding a new syrup or topping is simpler than introducing a new entrée, making drinks an efficient way to drive both sales and excitement.

The contrast: At a time when many big box retailers are struggling, Tractor Supply Co. bucked the trend by delivering its strongest sales growth in two years—up 4.5% YoY to $4.44 billion—driven in part by solid momentum in big-ticket purchases. That performance stands in stark contrast to peers like Target and Home Depot, which have seen consumers pull back on discretionary and high-priced items. Our take: Tractor Supply’s formula is simple: high-quality experience + strong loyalty program + scale = growth. It delights shoppers, rewards them, and keeps expanding its footprint. That approach is helping it outrun the macro headwinds—and its largely US-sourced assortment leaves it better insulated from tariff and supply shocks than many other merchants.

Q2 earnings revealed turbulence across the travel sector as American Airlines and Southwest reported lower net income and reduced their outlooks. With US airlines and hotels likely to face more headwinds amid uncertainty over tariffs and trade policy, companies need to adjust their strategies.

The news: Facing mounting pressure from ChatGPT and other platforms, Google Shopping is stepping up its game to stay ahead in the product discovery race. Our take: The best way for Google to fend off the competition is by making Shopping indispensable. Features that mimic personal stylists, surface the right deals at the right time, and boost shoppers’ confidence through virtual try-ons can help ensure consumers keep turning to Google as their shopping companion.

LVMH’s sales fell more than expected in Q2 in yet another sign of trouble for the luxury industry. 2025 is shaping up to be another difficult year for the luxury industry—and not only because of tariffs. While the duties are certainly hitting consumer sentiment and buying power, limited innovation and a perceived lack of value are diminishing luxury’s appeal, even among shoppers who can afford it.

Walmart is going all in on AI as it prepares for a future in which more people rely on the technology to work and shop. The company is making strategic AI hires while streamlining its agents to make them easier for shoppers, employees, and partners to use. Agentic tools are both a threat and an opportunity for retailers. Companies need to prepare for a future where tools like ChatGPT and Perplexity make purchases on behalf of shoppers—which will require them either to make their websites more accessible to these assistants, or to build their own AI agents to make those transactions seamless. AI agents are also a useful investment in the current era of uncertainty, given their ability to unlock cost savings at a time when every dollar counts.

The results: Walmart’s decision to directly overlap its “Deals” event with Amazon's four-day Prime Day sale appears to have paid off. Spending on Walmart.com surged 24% YoY during its promotion that ended July 13, according to credit and debit card transaction data from Bloomberg Second Measure—six times Amazon Prime Day’s YoY growth rate. Data from Similarweb reinforces the momentum: Walmart’s web traffic rose 14% and app usage jumped 22%, compared with flat web traffic and a 3% app increase for Amazon. Zooming out: Exact sales figures remain elusive, but one thing is clear: July has become a high-stakes battleground for summer spending. While Amazon may have pioneered the mid-summer shopping holiday, Walmart and others are proving it’s no longer a one-player game. A growing number of consumers are using Prime Day as a cue to comparison shop—creating real opportunities for retailers that can deliver compelling value, urgency, and convenience.

Chipotle lowered its FY sales forecast after same-store sales fell more than expected in Q2, marking the second-straight quarter of declining traffic as wary consumers think twice about dining out. Chipotle’s Q2 struggles clearly show that consumers are becoming much pickier about where they choose to spend their money. The vast array of meal deals available in the QSR marketplace means Chipotle can no longer compete on value alone—making menu innovation and limited-time offerings even more necessary to drive traffic.

The challenge: Hasbro and Mattel may be signaling muted confidence with upgraded full-year outlooks—Hasbro raised its guidance and Mattel reinstated its forecast after a pause in May—but both faced the same headwind: Retailers delayed holiday inventory builds and postponed shelf resets into Q3, which weighed on Q2 results. Our take: Weak Q2 orders could set up a rebound in the back half, but Hasbro and Mattel can’t depend on their legacy brands alone to drive growth. To protect margins in a volatile market—tariffs alone could cost Hasbro up to $180 million this year (although it expects the hit to be closer to $60 million)—both companies need to trim SKUs and focus on proven winners, diversify their sourcing to cut tariff risk, and fine-tune their pricing and promotional levers. Their success will ultimately depend on their ability to adapt to shifting operational pressures.

The situation: With President Trump’s so-called “reciprocal” tariff deadline—pushed from July 9 to August 1—fast approaching, the White House has announced the outlines of trade agreements with Indonesia, the Philippines, and Japan. Our take: This new tariff regime is already dragging on growth—and the effects are likely to deepen. Before the Trump administration rolled out its trade agenda, we expected US retail sales this year to rise 2.9% YoY, a slight increase from the 2.8% growth last year. But given the current tariff regime, we now expect sales to increase just 1.5%, which would be a real sales decrease, since that’s below the rate of inflation. We’re not alone. Goldman Sachs sees a clear deceleration ahead, citing tariffs as a likely driver of both rising prices and weakened consumer spending. And while economists surveyed by The Wall Street Journal trimmed the odds of a recession to 33%—down from 45% in April—it remains well above the 22% forecast in January. In this new normal, retailers and manufacturers should prepare for sustained margin pressure, increasingly cautious consumers, and slower growth.

Retailers have been quietly sidelining plus-size clothing and reducing in-store quantities, even though most US women wear larger sizes. This shrinking presence isn't just a bad business decision; it's out of step with consumer preferences.

Tesla is officially in the restaurant business following the much-hyped opening of the Tesla Diner in Los Angeles. The futuristic concept could be the template for additional openings in the US as well as abroad, CEO Elon Musk said—helping the company boost brand awareness, engagement, and sales. The diner’s launch—and the accompanying wave of press and social media posts—could help reset consumers’ perceptions of the Tesla brand at a particularly tumultuous time for the company. But it could also, given the company’s increasingly polarized reputation, become a focal point for protests, which might deter would-be customers from stopping in.

The news: Coca-Cola and PepsiCo are expanding their portfolios by leaning into better-for-you trends and ingredient transparency. Our take: Even with Coca-Cola and PepsiCo’s massive brand equity, they face the same fundamental challenge as all CPG brands: competing against private labels offering innovative flavors at lower prices, and better-for-you upstarts chip away at brand loyalty. While ingredients like cane sugar and prebiotics may not sway every shopper, they appeal to increasingly fragmented consumer preferences. Expect more targeted innovations as soda makers try to balance nostalgia with modern demands for wellness, transparency, and functional benefits.