The first quarter of 2025 brought renewed economic uncertainty for retailers, prompting many to rethink their business strategies.
In response to mounting financial pressures and the impact of new tariffs, several major US retailers have introduced revised plans to help cushion the blow of inflation.
Retail Gazette USA explores the key tactics businesses are adopting to stay resilient in a shifting economic landscape.
Automating supply chain distribution
Deploying technology to optimize the supply chain is one strategy retailers are using to reduce overall costs and enhance customer experience.
Walmart made a $520 million investment in partnership with Symbiotic to automate their supply chain distribution center.
By leveraging AI and robotics, the company plans to deliver products to customers with faster delivery and pickup.
Greg Cathey, senior vice president of transformation and innnovation at Walmart, said: “We’re excited about what this means for our customers.
“We anticipate the synergy between Symbotic’s expertise and our nearly decade-long relationship in innovating the supply chain technologies to elevate customer service and rapidly advance our in-store Accelerated Pickup and Delivery capabilities.”
Other retailers, including Associated Food Stores, are continuing to streamline their operations by deploying automation into their supply chain process.
Expanding private label offerings
Another recent trend is increasing private label offerings, as they are becoming more popular among young shoppers.
Homeware essentials retailer Lowe’s recently introduced its home label aimed at boosting sales over the spring amid consumer uncertainty affecting sales.
Bill Boltz, executive vice president of merchandising at Lowe’s, said: “Because our private brands typically have higher margins than their nationally branded counterparts, these products will help increase our private brand sales and support our margin goals.”
Additionally, Macy’s and Kohl’s also debuted in-house designed collections to improve customer sales.
This allows retailers to maintain their current customers and provide cost-effective product alternatives.
Downsizing employees
Starbucks is part of a number of retailers carrying out mass layoffs amid a changing economic landscape, including Wayfair and Walmart.
The coffeehouse chain announced its plans to lay off 1,100 workers as part of its restructuring efforts.
This follows mixed results for the company, which also made C-suite changes aimed at revitalizing the brand.
Brian Niccol, Starbucks’s CEO, said: “We are simplifying our structure, removing layers and duplication, and creating smaller, more nimble teams.
“We intend to operate more efficiently, increase accountability, reduce complexity, and drive better integration. All with the goal of being more focused and able to drive greater impact on our priorities.”
Shrinking their brick-and-mortar fleet
Retailers are reevaluating their active fleet and downsizing underperforming locations, with store closures in the US expected to soar in 2025.
Dollar General plans to close down 96 stores in spite of strong earnings in Q4 2024 and predicted a cautious outlook during an earnings call.
Todd Vasos, CEO of Dollar General, said in an earnings call: “While this is less than 1% of our overall store base, those stores, many of which are in urban locations, have become increasingly challenging to successfully operate.”
Kelly Dilts, EVP, and chief financial officer, added: “We are currently anticipating continued economic pressure on our core customer, though at a relatively consistent rate to what they were experiencing as we close 2024.”
Other retailers such as Foot Locker, Kohl’s, Macy’s, and more are streamlining their fleet in 2025.
Expansion of off-price retailers
Due to the increased inflationary pressures, consumers are leaning towards budget-friendly off-price clothing.
This has led to an improvement in sales for off-price apparel retailers such as TJX, the parent company of TJ Maxx, Marshalls, HomeGoods and other brands.
Moving forward, TJX is planning to expand its retail footprint as the demand for affordable apparel increases among US-based consumers.
Ernie Herrman, TJX’s CEO, and president, said on an earnings call: “And because of the environment we’re in, where there’s a loss of consumer confidence, stores closing, etc., I’m thinking there’s more availability out there over the next six months, even more than there has been, which is going to create more buying opportunities for our teams.”
Other budget retail chains such as Dollar General have ambitious expansion plans, with the discount chain expecting to open around 575 stores in 2025 based on increasing demand for budget products.
Increasing product assortment
As a strategy to enhance customer experience, companies are also expanding their product assortment to boost sales.
Target recently introduced 2,000 new beauty and baby products as part of its plans to diversify its product assortment across different fields.
Amanda Nusz, SVP of essentials and beauty at Target, said: “That’s why our team is incredibly excited to add more than 2,000 new items to our assortment, including science-focused skin care, hair care, nail care, cosmetics, and fragrance.”
Other retailers, including Lowe’s, Kohl’s, and Macy’s, have also diversified their portfolio of brand offerings.
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