H1 2025 retail results: Volatility, tariffs, job market hit hard; make for uncertain H2

If the H1 2025 retail recap were to have a soundtrack, it just might be a loop of the canary in a coal mine.

RetailWire recently hosted a session dedicated to H1 retail results, and in addition to multiple variations of “Never been more unpredictable” being said numerous times, key points that stood out include: 

1. Consumers are price aware – and at, or beyond, their limits
2. Warehouse clubs and dollar stores reigned supreme as consumers seek ways to maximize tight budgets
3. Food retail behavior is changing: consumers aren’t adding new store brands to their carts
4. Mixed-use investments have positioned malls as community hubs
5. Many consumers are prioritizing health and wellness during store visits
6. Manufacturing and port activity hints at a slowdown during 2H 2025

In June, the market seemed to become more volatile with tariffs hitting multiple industries again, as well as numbers indicating a step down in consumer spending YoY.

The canary sings: H1 2025 retail results hint at implications for a difficult H2

The trend of high-income households being the prime driver for all spending carried throughout H1, while inflation masked weak sales volumes. All of this provides a worrisome disconnect at times between headlines and realities.

Even McDonald’s – long known as an inexpensive fast-food franchise – is feeling the pain wrought by the squeeze on the wallets of lower-income families. After multiple attempts to stabilize sales to the lower-class demographic, their CEO Chris Kempczinski announced that during H1 2025, “The U.S. remained challenging as visits across the industry by low-income consumers once again declined by double digits versus the prior year period.” Kempczinski speculated that the loss of lower-income customers is directly correlated to a “challenging and uncertain economy”.

More H1 2025 retail stats:

• More than half of U.S. consumers indicated “major” stress over the current cost of groceries, according to The Associated Press-NORC Center for Public Affairs Research. A mere 14% indicated that grocery prices were not currently a source of stress at all.
• Lower-income U.S. consumers are significantly curtailing spending on dining out, travel, and certain pantry staples. Execs from Coca-Cola, Procter & Gamble, and Chipotle indicated that these cutbacks came as a result of ongoing tariff pressure.
• U.S. tourism set to lose up to $29 billion as visitors plummet amid Trump policies: a study from the World Travel & Tourism Council (WTTC) that analyzed the economic impact of tourism in 184 countries revealed the U.S. was the only country forecast to see international visitor spending decline in 2025. This significant shortfall represents a 22.5% decline compared to the previous peak.
• Under Armour indicated that an ongoing sales decline would continue this quarter, alongside projected softer demand and a further $100 million in tariff-related costs.
• Retail job cuts are up a whopping 249% versus last year’s figures, per a Challenger, Gray & Christmas analysis. Through July, the retail sector shed 80,478 positions, versus 23,077 by the end of July in 2024.
• Goldman Sachs believes that shoppers are about to face dire circumstances due to tariffs, reporting that the share of tariffs paid by consumers is likely to rise from 22% through June to an eventual 67%, if history is a guide.
• The average American household “will pay $2,400 more annually on items including coffee, clothing and cars, as companies hike prices to offset the cost of tariffs. The same data indicates there will be significant markups on clothing in the months ahead; cars will cost $6,000 more; and the price of fresh produce is expected to climb 7%,” according to estimates.

All eyes on supply chain risk as tariffs, global instability force enterprises to take action

COVID had everyone talking about supply chains. Five years later, volatile business conditions with sweeping tariff changes are putting supply chain risk back in the spotlight.

What comes next?

All signs point to the second half of 2025 continuing to be a challenge for retailers and the economy in general. Typically the stronger half of the year, experts are worried that the economic realities of most Americans will become a downward cycle – the depths of which we’ve not seen for quite some time. Retailers should begin to plan now for the upcoming season to minimize risk.

H2 will likely reveal which retailers have a firm understanding of the economic state in the U.S. right now versus those who believe their own hype and growth projections. As the middle class continues to sink in the quicksand where the American dream once resided, the best strategies retailers can put forward will target either the wealthiest among us, or will pivot to becoming truly value-oriented for the majority of Americans who are trying hard to survive and make ends meet.

Retailers should remember that real sales growth — the kind that strips out inflation and those tariff-fueled buying spikes — has actually been weaker than the headline numbers suggest. Some analysts think that could mean slower business in the second half of 2025, especially as inflation, rising interest rates, and tariffs start hitting harder across the supply chain.