Retail in 2025: Navigating Tariffs and Declining Consumer Confidence

By: Kenton McKeehan and Mike Jordan

The global retail landscape in 2025 faces an unprecedented convergence of challenges, as economic uncertainty and shifting policy landscapes reshape both consumer behavior and business strategy. Two forces in particular — rising tariffs and falling consumer confidence — are set to play outsized roles over the next 12 months, impacting everything from pricing and supply chains to brand strategy and long-term growth planning.

Jeffrey Rosenberg

Read Insights on the Margin

By: Mike Jordan, Big V Property Group Director of Research

Monthly Specials

Tariffs Cloud Consumer Picture For 2025

Current plan calls for 10% tariff on most nations, with potentially higher rates in 90 days
Chinese goods will now be tariffed at 145%
China has retaliated with 125% tariffs on American goods Read More >>
Consumer Sentiment index falls to 50.8, the 2nd lowest reading on record
Inflation expectations have spiked to 6.7% the highest reading since 1981 Read More >>
Electronics, toys, apparel, and certain food products are all expected to see price hikes under current proposals Read More >>
What 25 retail leaders are saying about tariffs Read More >>

The Checkout Lane

Source: Retail Dive, Chain Store Age, Progressive Grocer

Academy Sports has expanded to Pennsylvania and Maryland with the opening of two new stores, bringing the company’s footprint to 21 states and their store count to 300. Academy plans to open 20-25 new stores this year including locations in Charlotte and Kansas City.

Advance Auto Parts announced it will be growing its store fleet once again after embarking on an optimization plan that saw hundreds of locations close. The company has plans to open 30 new locations this year and plans a total of 100 new stores by 2027. The new stores span a variety of regions, but all are east of the Mississippi River.

Bath & Body Works is rolling out a new store design that will be part of all their new store openings in 2025 and beyond. The format debuted at 15 stores earlier this year and features a more open layout and dedicated stations to try a wider variety of products in store.

Japanese retailer Daiso continues to grow with 6 new stores opened by the end of the first quarter, including its first location in Colorado. Daiso now has 180 stores in the US, part of a worldwide fleet of 6,000 stores.

Dollar Tree announced it will be selling the Family Dollar brand to a pair of private equity firms led by Brigade Capital Management and Macellum Capital Management. The sale price was $1 billion, a far cry from the $8.5 billion Dollar Tree paid to acquire the stores in 2014. Family Dollar will continue to be headquartered in Chesapeake, Virginia.

Despite continued losses and sales contraction, DSW announced plans to be a net opener of stores for the first time since 2019. Though the company did not disclose how many new stores it would open, filings show that the shoe retailer ended 2024 with 5 fewer stores than it had in the 12 months prior, totaling 494.

Dutch Bros continues its rapid growth with plans for 1,000 new stores by 2029. Coincidentally, the chain will have exactly 2,029 stores if it reaches that goal in four years. Looking further ahead, Dutch Bros now sees the potential for 7,000 stores across the country. Previously, the company told investors it would be a 4,000 store chain.

Five Below will continue its growth with 150 new stores in 2025. While this is significant, it is down from a record 228 new stores last year. The chain is at just slightly over half of its 3,500 store goal. The company said it would also return its focus to lower price points of $1 to $5, while “highly editing” the assortment of items over $5. The announcements come as the company’s new CEO Winny Park completed her first quarter on the job. Ms. Park was previously the CEO of Forever 21.

Forever 21 has filed for bankruptcy and plans to liquidate all 354 stores by May 1st. The fast fashion retailer was bought out of bankruptcy in 2020 by Sparc Group, a consortium of investors including mall owners Simon and Brookfield, that also purchased JCPenney, Brooks Brothers, and other brands during the height of the pandemic. However, Forever 21 was not included when those brands were merged under a new holding company called Catalyst Brands. Forever 21 executives blamed increased competition from foreign retailers Temu and Shein.

Gamestop announced that it will continue trimming its store fleet by closing 600 US stores this year. While gaming software is increasingly sold virtually, Gamestop will continue to operate 1,700 stores in the US. The brand is also looking to close or sell its international operations.

The fallout from the failed merger of Kroger and Albertsons just got a little more complicated as Kroger filed a countersuit seeking damages from Albertsons. The suit claims that Albertsons pursued its own secret strategy for regulatory approval and divestiture that clashed with Kroger’s plans. Kroger is seeking damages and to be relieved of its obligation to pay Albertsons a $600 million termination fee. Meanwhile, C&S Wholesale filed its own suit against Kroger for $125 million in damages for failing to divest 600 stores to the company as part of the merger.

Ollie’s Bargain Outlet is hoping to meet its expansion plans thanks to the recent wave of store closures. The company recently acquired 40 former Big Lots stores. CEO Eric van der Valk noted that the acquired stores were all paying below market rent in desirable trade areas. Ollie’s plans to open a total of 75 new stores this year, with all 800 former Joann store leases due for bids by April 22; Ollie’s is sure to be a player at the auction.

UK retailer Primark has expanded its US store fleet to the South with the openings in Texas, South Carolina, and Georgia. Primark’s stores are just under 100,000 square feet and are known for budget priced apparel and licensed products from sports and pop culture. They have 30 stores in the US and plan to double that by the end of 2026.

Signet Jewelers, parent company to such brands as Zales, Kay, and Jared announced plans to relocate 10% of its stores away from enclosed malls to open-air locations over the next three years. The company has 2,600 stores across all of its banners.

Ulta has paused on rolling out more stores in their partnership with Target. The cosmetics retailer currently has over 600 shopes inside Target stores, or about one-third of all of Target’s footprint. Long term, Ulta is committed to being in 800 stores but said they need to take time to fine tune the offering with Target’s merchandising team based on their three year history together.

Walmart has announced plans to open 45 fuel stations this year, giving the company a total of 450 nationwide. With the new locations, Walmart will be one of the 20 largest convenience store operators in the country. The company has steadily expanded the format since 2016 when it ended a longtime partnership with Murphy USA to open gas stations near Walmart parking lots.

Wayfair has announced plans to open its second physical store location at The District at Howell in Atlanta. The new store will be 150,000 square feet and will feature a café in addition to a wide selection of furniture and home décor. Wayfair’s first store in Wilmette, Illinois has led to a 15% sales increase in the state compared to the country as a whole.

The Big View

While omnichannel retailing has meant an increase in store technology, one iconic French retailer had the opposite idea in mind when planning their entry into the American market. Printemps New York, located at the base of the historic One Wall Street building thinks that it can differentiate itself with more face to face customer service and a website that encourages shoppers to visit the store in person. Read more in this article from The Wall Street Journal >>

New retail development has been scarce since the Great Financial Crisis, but one Arizona-based developer sees big opportunities in building shopping centers amid the lowest vacancy levels in history. SimonCRE has over 1.5 million square feet of new space planned over the next year in markets all over the country. By focusing on municipal incentives to offset rising construction costs, Joshua Simon is betting that the time for new construction is now. Read more from Kate King at the Wall Street Journal >>

Video of the Month: With the threat of higher inflation as a result of tariff policy, many consumers are “doom spending” – buying things now in anticipation of higher prices and supply shocks down the road – however, in the face of rising consumer debt and recession alarms, will this lead to an even bigger downturn in the months ahead? Find out in this video from CNBC >>

By the Numbers

From the Research Desk

With consumer anxiety about the economy more pessimistic than ever, one thing most people can agree on is that shopping patterns are about to undergo a seismic shift for the second time in the last decade. While winners and losers will emerge among national chains based on how well each brand adapts to the coming changes, one retail category may already be poised to take market share, and in fact, has been quietly growing in prominence over the last few years: vintage and resale goods.

Vintage retail spans a wide variety of categories from a charitable thrift shop to a curated high street boutique. There are over 25,000 resale stores in the United States, and while online sellers like ThredUp and Depop continue to be popular, most thrift gremlins prefer to find the best deals and unique items at brick & mortar stores.

Secondhand apparel sales grew 14% in 2024 to $49 billion, outpacing the broader apparel market by a factor of five! This trend has been building throughout the decade since the pandemic, with secondhand sales growing at a $6 billion CAGR. Meanwhile a recent Capital One survey found that over 33% of clothing purchased in the US was secondhand and nearly 60% of consumers buy at least some of their clothing secondhand. That number grows to nearly 3/4^th among younger generations, while half of Gen Z consumers shop vintage first before looking for items at a traditional retailer. Current projections show secondhand apparel will reach $75 billion by 2029. Vintage shopping is also a sustainable and affordable alternative to fast fashion which has been under increasing scrutiny for its negative environmental impact.

While shopping may take place in brick & mortar stores, many young people are learning how to spot the best finds through online media channels. Kathleen Martin, a thrift store enthusiast from Columbus, Ohio, runs the popular YouTube channel Katheleen Illustrated and posts about her weekly thrift hauls, fashion inspirations, and creative ways to upcycle or add individual flare to thrifted threads. One recent video saw her locked in an Ohio thrift store overnight, while others focus on crafting and encouraging viewers to find their personal aesthetic. Her creative and approachable style fits in line with a younger generation who are increasingly rejecting the unrealistic perfection and unattainable lifestyle of mainstream influencers.

Thrift stores may have been around for decades, but in what may be an era of increasing supply chain disruption and a backlash against a tech driven, impersonal society, thrift shopping may have finally found its moment in the sun.

Mike Jordan

RETAIL MEME OF THE MONTH

SONG OF THE MONTH

Listen to the Song of the Month

Taking a trip to Ikea is a rite of passage for many young couples. Can two people handle 200,000 square feet of sensory overload and meatballs without resorting to hating each other? Indie rock giants Pavement tackled the topic on their 1997 album Brighten the Corners with this jangly power pop gem.