Temu’s US business is slowly recovering, despite tariff pressures and the end of de minimis. The ending of de minimis for all sellers—not just those based in China—coupled with higher tariff costs for virtually all retailers has enabled Temu to maintain its value proposition and appeal to bargain-hunting shoppers. That also applies to Shein, which is seeing shopping frequency, app downloads, site visits, and search interest above 2024 levels. The company’s recoveries show how important price is to US consumers—and how receptive they are to the stream of flash sales, discounts, and gamified rewards that Shein and Temu offer.

Tariffs and inflation are reshaping retail, pushing shoppers toward value and convenience. Off-price chains gained ground, while housing-linked retailers sought new growth paths in a slowing market.

Asia-Pacific has the largest retail and ecommerce sales in the world. While China continues to dominate global ecommerce share, India and Southeast Asia are increasingly driving growth. As consumer sentiment improves in China, the retail sales gap with the first-place US will narrow in the coming years.

Temu parent PDD posted its slowest revenue growth in Q2 since the end of 2021, as it struggles to navigate a weak consumer environment in China and regulatory challenges in the US and other key markets. While PDD’s Q2 results beat expectations, they show how the company’s primary strategy of undercutting competitors with cheaper prices is becoming untenable in the current political and macroeconomic landscape.

AI-fueled gains kept Google, Meta, and Amazon atop Q2’s ad market, but slowing engagement, murky ROI, and macro risks leave the triopoly’s future growth story more complex than the headlines suggest.

Consumer spending will be restrained during the 2025 holiday season as shoppers remain cautious amid ongoing economic uncertainty. That means retail and ecommerce will see the slowest growth since we started tracking the metrics.

The news: President Donald Trump signed an executive order to close the so-called de minimis trade loophole, which allows foreign packages valued under $800 to enter the US tariff-free. Effective August 29, all shipments under that threshold—regardless of origin—will be subject to duties based on value and country of origin. The White House already ended the exemption for packages from China and Hong Kong on May 2. Our take: Eliminating the de minimis exemption levels the playing field between international ecommerce sellers and domestic retailers—but could also drive up prices for consumers.

The challenges: UPS’ turnaround remains in the early innings due to structural inefficiencies, operational missteps, and mounting macroeconomic headwinds. Our take: UPS faces a difficult road ahead. The company is actively trying to streamline operations—planning to shutter up to 10% of its buildings, downsize its fleet, and reduce its US workforce to better align with leaner volumes. It’s also trimming low-margin business, notably cutting back on Amazon deliveries, which made up as much as 11.8% of its total revenues last year, in an effort to prioritize more profitable shipments. Still, with demand under pressure and cost headwinds mounting, stabilizing performance will be an uphill climb.

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.

Ecommerce growth is slowing as the market matures, but gains will come from mobile commerce, Gen Z buyers, and high-performing categories.

Our midyear report revisits the top trends we named in early 2025 to see what’s shaping the market, evolving fast, or fading in the rearview mirror.

Last November, our analysts made some predictions about how the retail category would fare in 2025. Now that we’re halfway through the year, it’s time to check back in on what has (or hasn’t) happened. "We're seeing many of our predicted trends playing out, though not always in the ways we anticipated," said our analyst Suzy Davidkhanian on a recent episode of the "Behind the Numbers" podcast. "The retail landscape is evolving rapidly, with some developments accelerating faster than expected while others face unexpected headwinds."

Direct-to-consumer (D2C) ecommerce is evolving, driven by Gen Z’s shopping habits and the rise of powerful AI tools.

The situation: A perfect storm of consumer pullbacks, rising prices from new tariffs, and the suspension of the de minimis tax exemption will drag US ecommerce sales growth this year to its weakest pace since the Great Recession in 2009. We expect US online sales to grow just 5.0% this year in our moderate tariff scenario, which reflects the current policy landscape. That’s a 3-percentage-point drop from last year. Looking ahead: We expect ecommerce growth to experience a modest rebound to 5.3% growth in 2026. But more headwinds are on the horizon. The tax-and-spending package known as the “One Big Beautiful Bill” will close the de minimis loophole that lets most packages under $800 enter duty-free from countries outside China and Hong Kong. While that will eliminate the possibility of some workarounds, it could also reshape the economics of cross-border ecommerce—and place even more strain on platforms, suppliers, and price-sensitive consumers alike.

The news: Target is testing a factory-direct shipping model that would enable it to offer lower-cost products to customers, per Bloomberg. The model, which lets suppliers ship products directly to shoppers, closely resembles the strategy used by Temu and Shein to keep prices low. Our take: Unfortunately for Target, now is not the best time to increase its reliance on overseas suppliers. While the Temu-Shein model worked spectacularly well for several years, the conditions that fueled their growth—namely, the de minimis exemption and low tariffs—are no longer in place.

Online fashion sales growth in France is stabilizing as global competitors capture market share and social platforms become more influential.

The news: Temu’s foothold in the US is shrinking as the company pulls back sharply on advertising. Weekly sales slumped more than 25% YoY between May 11 and June 8, according to Bloomberg Second Measure. Our take: Given the importance of the US market to Temu and its merchants, it’s possible that its current pause on US ad spending and shift to Europe is a temporary effort to regroup as it searches for a business model more resistant to tariffs and the end of de minimis. At the same time, the longer the pause goes on, the more ground it will cede to Shein and other competitors—and the harder it will be to regain market share.

US retail and ecommerce sales growth will take a hit in 2025 as unpredictable changes in tariff policies ripple through the economy, shaking consumer confidence.

In the first half of 2025, tariffs rattled retailers, consumer trust wavered in the face of muted DEI efforts, and fast-fashion platforms like Shein and Temu braced for policy whiplash. Meanwhile, private label products surged in popularity, and the retail world took a closer look at generative AI—not just for buzz, but for tangible impact across the shopper journey. Here are the top stories from H1 2025 and why they matter for the rest of the year.

The US-China trade war drives Shein to diversify its sourcing: Shein and Reliance Retail plan to start international sales of India-made Shein-branded clothes within six to 12 months.