Retail’s future: Strategic insights
Current consumer demand remains resilient
In the United States, consumer demand for retail goods was steady in 2024, driven by high-income households. Total retail demand was up 3.6% in 2024. According to the U.S. Federal Reserve, low-income household spending began to diverge from the average in mid-2021 and the gap continues to widen. This divergence means retailers are considering product diversification and prioritization at a time when consumer dollars are being stretched.
Source: The U.S. Federal Reserve.gov, October 2024, The National Retail Federation, 2025
The impact of changing U.S. policies on the retail industry
New tariffs on imports from Canada, Mexico, and China could significantly disrupt consumer buying habits. Grocery retail supply chains would likely be more affected by 25% Mexico tariffs impacting the large volume of fresh produce crossing the border, while general retail supply chains are anticipated to be more impacted by the 10% tariff increase on imports from China. The removal of the De Minimis exemption, which allowed goods under $800 of value to be imported without tariffs, is expected to have a larger impact on ecommerce. The effective dates of these tariffs vary; see our top story for more details.
Retailers might absorb increased costs by lowering margins, impacting profitability. To the extent the cost of higher tariffs may be passed along to consumers, freight demand could weaken. Given the current economic conditions, this is a distinct possibility.
Consumers facing increased prices could reduce spending or shift purchases toward less expensive options. This has significant implications for domestic transportation in the retail industry, as shipping volumes could decrease, inventory could shift, and suppliers could be re-assessed.
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