The evolving face of retail
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Hey, everyone. I just want to wish you all a happy Black Friday and Small Business Saturday and Cyber Monday to all those who observe. Here in the U.S., Black Friday used to be this very special tradition, one where you would wake up the morning after Thanksgiving, heat up some pie and watch Americans try to kill each other for a flat screen TV.

But consumers have changed and so have their shopping habits, not to mention technology, the economy, the global supply chain, you know, all that. So that's what we're here to discuss today on this weekend episode of Reuters World News. How are consumers' habits changing? How is the industry responding? And what might the future of buying stuff look like? I'm Jonah Green in New York. When you hear LSEC data and analytics, what do you think of?

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I'm joined now by Ariana McLemore, who covers e-commerce, Siddharth Kavale, who covers big box retailers, and Helen Reid, who covers retail apparel all across Europe. Hello, everybody. Thanks for joining us today. Thanks for having us. Hey, it's nice to be here. Great to be here. My first big question, is Black Friday? It's a date. People go shopping on it. But is Black Friday still a thing? Is it important to retailers?

Sid, let's start with you because you're the big box guy. So Black Friday has traditionally been the start of the holiday season, and it currently still remains the biggest shopping day in terms of sales. But what's happened since the pandemic is that there's been this acceleration towards online shopping. So

Black Friday has traditionally been a day where people used to shop in stores. It has become less so since the pandemic just because most of the shopping nowadays is done online. And it's also become, it's kind of the traditional start to the holiday season has also been stretched. I mean, nowadays you see retailers offering deals for the holiday as early as October. So that's kind of brought forward.

what the start of the holiday season is. And so Black Friday has sort of lost importance, but still it's a tradition. And so people still like to go to the stores, see what's available and shop products there. One thing we've been hearing from shoppers is like, where are the deepest deals? And online shopping brings a lot more convenience, right? You can compare a lot of stores a lot faster compared to hopping around at different stores on foot or driving around town.

to figure out where the best deals are. One thing we're also seeing this year is not only that more people are shopping online, but more people are shopping directly from their phones. So think about how much you may shop on an Amazon that has basically an ocean of merchandise, really deep deals. Some people think it's easier to just have their Christmas list and hunt for those deals directly from their phones.

We're also seeing more people shop for stocking stuffers from places like Shein and Timu. So I think the biggest story this holiday season is where and when our shoppers who are price conscious and who may not have as much money in their pockets this year, where are they going to find the deepest discounts? And Helen, do you want to jump in here? In Europe...

Black Friday is kind of a tradition that's been imported from the US. So it's never as huge over here as it is in the States, but it has been growing year on year. And we're seeing some new retailers and brands start doing Black Friday deals earlier as well. But is there still a desire to splurge or is everybody just...

sad like me and spends all their money on groceries. Yeah, I think that's the key question is how much are people actually going to spend on Black Friday and throughout the holiday shopping season? One study ahead of Black Friday in France asked French consumers how much they plan to spend on Black Friday. And the result was actually less than last year. So the average was 388 euros a

which was 28 euros less than a year ago. So there's signs like that, that people are still projecting their spending down on last year. Actually, what we're seeing, Janna, is there's a bifurcation, the consumer, right? Like we're seeing the top earners continue to spend, you know, the upper income households continue to spend. But at the same time, the low income households, they're being very choiceful, is the words I've heard a lot retail executives use. And so,

What's really propping some of these retailers up is the strength of some of these upper income households. And so even retailers like Walmart, which you would associate with having a more low income customer base because of the prices that they offer, we're seeing a shift towards more upper income households. These are households that they claim earn more than $100,000 a year, shopping more at Walmart. So you mentioned Timu and Shein. And anytime I Google anything, they seem to be the first results to come up.

at least at the top of Google. What has been their impact on how people consume? Well, I think that visibility in search is really exactly what they've been investing in. Both Timu and Sheehan have invested a lot of their marketing spending on what's called paid search, which means basically bidding on certain keywords so that

your ad appears high up when somebody types in a keyword like shopping online or cheap clothes online. And that's massively increased their visibility and the click rate on their products. And it's also made that type of marketing kind of more costly for the whole industry because of the kind of competition for certain words. What's interesting is we're seeing both

both of those platforms bidding quite heavily on competitors keywords as well. So both Tibu and Shein will bid on words like Walmart clothes so that they're more likely to appear in a search even when someone is searching for Walmart clothes, their product might appear. And that's quite a usual tactic, quite a common tactic in retail. But marketing experts say that they are using it more than average

And to Helen's point, this bidding that they're doing, not only is it driving up the cost of advertising online for other retailers, but retailers have had to reconfigure or reorganize who and how they're marketing to shoppers. So we've also seen some apparel retailers start trying to reinvest in SMS marketing or email marketing to their existing customers.

Because one thing they've also seen is that it's really hard to compete with Shein and Timu, especially Timu, on price, right? Where if you are selling a shirt for $20 and Shein and Timu are marketing shirts for $10 and $5, nine times out of 10, a customer is going to pick the cheaper one if they don't have an understanding of the quality differences. There's a big debate around sustainability, especially when it comes to fast fashion, right?

And now it seems like with Timu and Shien, it's becoming even faster. So is there still this growing conscientiousness about waste and sustainability, especially when it comes to, you know, Gen Z? The interesting thing about Gen Z is they are very aware of, like, sustainability and they want to preserve.

purchase from more sustainable retailers. But the reality of it is when you think about college students, when you think about high schoolers and the merchandise that they can afford, Shein and Timu are right at the prices that they can buy from. And I think that's one of the things we've been looking at over the last few years is

is where is the disconnect between what Gen Z is saying about sustainability and where they're actually shopping? Yeah, I would just characterize that as Gen Zers can't put money where their mouth is. I would just add that since, you know, there was this big push towards sustainability during the pandemic, you know, because of the insane amounts of shopping people were doing and the waste it was producing. But that has slowly ebbed away and has also

also lost focus at companies themselves just because inflation has been so rampant over the past two years that people are just so focused on price that sustainability has fallen down the ladder in terms of just the priority. I think what's difficult about the sustainability question is that consumers might be less willing to pay a premium for sustainable or less environmentally impactful products, but you

equally, I think we have to be quite careful about it because I think it's easy for companies to point to consumers as, you know, saying consumers' preferences have changed, therefore we don't need to do as much to change. It's kind of a useful, handy excuse for them. As an elder millennial, I'm, of course, fascinated with Gen Z because

They are different than my generation, which as everybody knows is the best generation. But are these youngsters only, you know, buying things on TikTok?

I would say the biggest difference is that Gen Z has kind of led the way in getting in shopping directly from their phones. And you kind of alluded to that with TikTok, which has a feature called TikTok shop is their e-commerce arm. And it's essentially just that you're shopping on this platform.

basically a social media platform. A lot of the things that you can get on Shein and Timu, you can find right there on TikTok shop. But one thing I've also seen is this push against overconsumption and only buying what you need and not buying so much. And I think Gen Z is talking about that a little bit more, at least the older end of the Gen Z spectrum. Just like to add, I mean, this is my analysis of having spoken to a

a bunch of people just on the Gen Z consumer. So what we've really seen is, I guess, they spend a lot of money more on experiences, right? They're spending more money on dining out, travel, entertainment. They also spend more on their pets than other generations. Yeah.

Another thing I would add is that Gen Z really values the personality that is selling them merchandise. So you've seen a lot of celebrities pushing out beauty products, whether that's Selena Gomez or Kylie Jenner. And that's one thing that's been really interesting to me, the number of like faces that have been put on products, not necessarily like retailers pushing products out. And that trend also kind of transcends to celebrities.

TikTok shop where these companies are doing what we call live stream shopping, right? Like people can look at a video and a live streamed video and buy products directly from that video. It's so funny. It's sort of like a modern version of the home shopping network. It's just it's kind of come full circle. Yeah, definitely. The

The QVCs of the world are now like right in your phone. And now this is a full circle moment where that's kind of why another reason why more people are shopping directly from apps and directly from their smartphones. While we're being all futuristic,

Is AI part of this conversation? We've seen the AI tools in like customer service chatbots. Okay. We've seen the generative AI tools in some of the search features on retail websites. Even Amazon has Rufus.

which is supposed to be very personalized, very customized to the prime shopper that's using it. The thing also with generative AI is that it's so integrated in the background that you don't know you're using it. So I think a lot of shoppers don't know that they're using Gen AI. I mean, we've been looking at this angle for a long time, right? Like how does it help save costs for a retailer or help save costs for any company in general? And, you know, the jury's still out.

One thing is that retailers have been using AI for more than a decade now to do a lot of forecasting, demand projections, customer research.

So they've been using models where they feed in some data points and it generates an outcome for them. For example, if there are hurricanes in Florida, how many generators should I be ordering in? Or also like if I need to get products quickly, what's the best delivery route to take so that I can get the product on shelves quickly? I mean, so

So AI has been working in the background for quite a bit. Yeah. One interesting area where I've been seeing retailers and brands use AI is in campaigns. So Mango, for example, the Spanish fashion retailer, generated a whole campaign for its Mango teen collection using generative AI. And so I think that this might be something that will spread.

We'll see more brands using Gen AI to create fashion campaigns. And that potentially has implications for fashion photographers and for that whole profession as well. I think there will always be space for high fashion photographers because of their skill and the big names are obviously brands in their own right. But

potentially for more of the fast fashion brands, it might be an easy way to cut costs if they can create some of their campaigns using Gen AI or assisted by Gen AI. Going back to supply chain issues, over the pandemic, we learned a lot about the global supply chain and how that functions and how it breaks. Have retailers learned any lessons by what happened? And as

I think this is related. How are they preparing for the potential of new Trump tariffs? Okay, so what happened during the pandemic? We just realized that many of our manufacturing bases are way away from where you actually sell the product. You also realized how fragile the ecosystem was. And so since then, a lot of big U.S. chains have made efforts to move away from what we call far-shoring towards near-shoring. They

their supply operations. And so we've seen this move from major people, like, you know, say the Walmart and Targets of the World. Walmart, for instance, is the biggest importer of goods into the US. And we have seen them cut back significantly on some of its China sourcing and moving it to areas like India, Pakistan, Bangladesh, which is slightly closer, but also to Mexico, which is right across the border, just bring production closer to their stores. But also the Trump effect has

has been looming high. I mean, Trump's threatened tariffs and proposed tariffs have also spurred some of this activity. So the thing is, retailers are very worried about this and are trying to drastically move away from some of these countries where these tariffs will be really high. But if you look at the supply chain, it's really complex. It's really complicated, especially

Since globalization, it has become even more complex. And so it's hard to unshackle yourself from some of these places where you've invested billions of dollars. And so this has been, this is a big headache for some of these companies and they're trying to navigate that. So what we're seeing is, like I said, nearshoring and we're seeing, you know,

more locally derived products and sourcing. And so going forward, what are some of the big trends that we might not have gotten to today that you'll be watching closely? One thing I'm looking out for, and you kind of touched on this earlier in the conversation, is this dynamic between Trump's looming tariffs and

the de minimis threshold which is a trade exemption for merchandise that's shipped into the US that's under $800. So if you think about companies like Shein and Timu, it's very easy to ship their merchandise in for less than $800 because their merchandise is so cheap. So there's a lot of moving parts, there's a lot of variables, but that's going to be something I'm keeping my eye on in the next few weeks. One trend that I

I have been following is the growth in resale as a type of buying. So people buying secondhand items, particularly in the apparel space. There's been quite a few resale marketplaces and online platforms that have made it easier and also kind of gamified resale a little bit and made it easier for people to buy other people's unwanted clothes. Hmm.

So I've been kind of looking into the impact of that. And there's many forecasts out there, some of them quite optimistic, potentially. It certainly is something that the fast fashion retailers are cottoning on to because a lot of them have launched their own resale platforms. We're entering an era of Trump again, right? And a lot of his threats could go into action, including propaganda.

proposed tariffs on Mexico and Canada and China. So I would think this could potentially be the season where you might find the cheapest prices on products because over the next few, at least the next four years of this tariffs going to effect, it could significantly raise prices on stuff like electronics, appliances, clothing, everything that comes from outside the US. So my advice to consumers is logistically,

Lock down your holiday shopping list for the next three years if you can right now. To stay ahead in fast-moving markets, you need to transform quality data into tailored, practical, and valuable intelligence. Access your choice of pre-built and market-validated models fast. And choose AI-powered analytics tools to suit your specific business needs.

Experience distinct advantages with innovation, differentiated analytics, actionable insights. Discover new possibilities with LSEC data and analytics. Thanks to Ariana, Helen, and Siddharth for chatting with us. You can read more on their reporting on the global retail industry on Reuters.com.

Reuters World News is produced by Gail Issa, Sharon Reich-Garson, David Spencer, Christopher Wall, Jasper, and me, Jonah Green. Our senior producers are Tara Oaks and Carmel Crimmins. Our executive producer is Lila DeKretzer. Sound design and musical composition by Josh Sommer. We'll be back on Monday with our daily headline show. Make sure to click follow on your favorite podcast player or download the Reuters app.