Why 'uncertain' consumers are retailers' biggest challenge
National Retail Federation executive director of research Mark Mathews joins Morning Brief to explain how consumer uncertainty is shaping spending patterns and what strategies could help retailers stay competitive.
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
Well, retailers across the U.S. are taking different approaches to tariffs, with some raising prices for consumers and others choosing to eat the costs. Joining us now, we've got Mark Matthews, who's the National Retail Federation Executive Director of Research. Good to have you back on the program with us. How are you viewing the retail landscape right now and and the pulse that you're hearing from some of the executives in the face of some of the uncertainty that they're citing when they report earnings?
Yeah, it's a great question. It's a really challenging environment right now, uh, just trying to understand what the consumer is doing and how the consumer is behaving. In January and February, we saw, uh, strong disposable income, we saw strong, uh, you know, consumer finances, but sentimentally, consumers have been weak. Uh, you know, as we all know, sentiment is is very low. Uh, and we definitely saw some fallback, fall off in spending in in January and February. Uh, however, we saw the opposite in in March and April, uh, as we saw consumers pull purchases forward because they were worried about tariffs. And and right now, I guess the big question for everybody is, you know, what's going to happen next? Uh, you know, some of those pulled forward purchases represent lost future sales, uh, and we still have a very uncertain consumer. Uh, so the the the challenge becomes understanding where they're headed. And right now, as we see, consumers are are are uncertain, they're concerned, and it looks like, you know, we we see a lot of trading down. You know, consumers are looking for value for the for their dollar.
Yeah, they certainly are, Mark. It makes me wonder, too, which retailers are best positioned to win in that particular environment. What do you think is the winning strategy for retailers to navigate tariff policy?
Yeah, I think we saw something pretty similar in in 2022 when we had high inflation. When the consumer is out there looking for the best price, uh, you want to be a retailer that is offering the best price. Uh, you want your consumer to believe that, uh, they're getting value for their dollars. So I think that's a challenge for everybody, and uncertain consumer means that they're going to be much more careful with, uh, with their money.
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