PERSPECTIVES

Have you caught World Cup fever? It's certainly on the rise near us, and reminded us of this explanation of the midfielder's position on a soccer team: 

"The midfielder is the position where you are always trying to regain position."

Sounds a lot like owning a retail business, doesn't it? Especially in today's business environment. Consider this*:

• The National Federation of Independent Business reported in May its lowest measure of economic expectations since Mr. Trump was elected to his second term.

• The Bank of America Institute reported that small-business profitability in April grew at its slowest pace in two years.

• Businesses with fewer than 10 workers have broadly been shedding employees for much of the past five years, according to data from QuickBooks, the accounting software company.

• Even as large corporations are posting solid earnings and the stock market is booming, small-business sentiment has plummeted in recent months. Some owners – maybe you? – report they have had to use their personal savings to pay workers because the company’s cash flow was so tight.

Pretty grim, isn't it?

Given all the angst that can come from paying attention to business news, we were intrigued by this explanation of the "buoyant spending" occurring currently:

• "Don't bet against the American consumer." 

That’s an upbeat thought, isn’t it? Especially for perpetually optimistic retailers. The writer goes on to explain 

• "It's a maxim investors ignore at their peril. There have of course been times that household spending slumped, but almost always later than when one would have guessed from reading the headlines."

The journalist then went on to cite economic experts, Commerce Department statistics, and other sources to explain this consumer resiliance. Plus, of course, some caveats about when it all will come due….

The Retail Brew newsletter posted their "roundup of the highest profile holiday forecasts." Their summation? "Experts predict cautious consumers will slow their roll in 2025." *

• They cited forecasts from Adobe Analytics, the Mastercard Economics Institute (MEI), Bain & Company, PricewaterhouseCoopers, and Deloitte. They explain how each of these sources gathers their data, what each source concludes - their Data Points – and their Insights. 

Retail Brew's conclusion: "A rough consensus is forming among experts that the 2025 holiday season could be a letdown compared to last year."

As you are the in-house expert on your business, that's undoubtedly not news to you. But it may confirm and quantify that dark cloud hovering on the horizon.

For retailers, pricing is never an easy task. Finding the sweet spot between growing sales and maintaining margins – while astutely managing turns and cash flow – is not a no brainer. 

Then there is today's environment. Consider these recent headlines:

• Tariffs have changed summer and holiday shopping in the US.
  Almost 40% of surveyed consumers spent less on Amazon Prime Day than in years past. 
  — Retail Brew, July 24, 2025. 

• After Pledging to Keep Prices Low, Amazon Hiked Them on Hundreds of Essentials. 
  Analysis found increases on 1,200 low-cost goods, while competitors such as Walmart made them cheaper
  —Wall Street Journal, July 20, 2025. 

So, shoppers are trying to spend less. But prices are creeping up, no matter what. 

The big problem, of course, is how the shoppers are dealing with all this. More uncertainty is NOT what they want or need. 

"Existential Question Facing Retailers: How Much Inventory Is Too Much?"

Walmart's announcement that its prices are increasing due to the tariffs is welcomed by some retailers as an "everybody is doing it" cover story for raising their own prices. They can recommend that their staff just dismissively say, "Oh, it's because of the tariffs, you know," whenever customers challenge them about the price of an item.

That approach, commiserating with the customer, is likely to become widespread. After all, we all are feeling the impacts of higher prices, from the gas station to the grocery store. 

But here's another idea for you to consider, an alternative to the victim mentality of the-tariffs-made-us-do-it. It all comes back to controlling the controllables in your business.

On April 5, the National Retail Federation, “the world’s largest retail trade association,” felt compelled to explain “Five Things To Know About Tariffs.” 

Among the first things they explain is who actually pays the tariff.

What is a tariff? 

• “Tariffs are a tax on goods imported into the United States and are paid for by the U.S. importer.”

• “When tariffs are enacted, retailers are forced to choose between raising their prices or relying on already slim profit margins to absorb the increased cost of inventory.”

• “Many small retailers are indirect importers and rely on other companies to import the products that they sell. These indirect importers [that is, small retailers] have even less ability to shift their supply chains to mitigate tariff costs.”

This sums up pretty well the challenges retailers are living with. But...

Honestly, we don't want to sound like alarmists. However…we are sounding an alarm!

As we all know, prices are rising, consumer confidence is falling, layoffs are rampant, and inflation, particularly with the impending tariffs, is likely to persist.  All of which could combine to drive the economy into a recession. Grim.

Savvy retail owners are starting now to draft new "game plans" for this new economic environment. We want you to be one of the savvy ones. 

For one example of how that can be done, consider the “torrent of adjustments” made by Starbucks' most recent new CEO Brian Niccol. (The company has had four CEO changes in the past five years.) 

Essentially, he has enacted the moves of a classic turnaround plan, one that matches cost-cutting tactics with strategic goals, both quantitative and qualitative. (All without a chainsaw.)