Trump Tariffs: The $78B Consumer Impact...what does it mean? 💸

Hey there! Fun fact: today is National Retail Obsession Day (okay, we might have made that one up)! 🛍️

But with zillennials redefining shopping habits, it sure feels like it could be. Whether they’re chasing deals or sticking with their favorite brands, this generation is keeping retailers on their toes.

This week, we’re diving into how zillennials balance price sensitivity with brand loyalty, plus insights on Black Friday fatigue, AI innovations in beauty, and much more.

ECOMMERCE SEASONAL TRENDS

E-commerce Sales Poised for Growth Ahead of Black Friday and Cyber Monday

E-commerce is set to shine this holiday season, with 76% of shoppers planning to complete at least half of their shopping online, according to Bain & Company. Early reports suggest online sales will continue to grow, fueled by major retailers launching early discounts and an accelerated shift to digital.

In Q3 2024, retail e-commerce sales reached $288.8 billion, a 7.5% YoY increase, outpacing total retail growth of 2%, according to Commerce Department data. Notably, Walmart's digital sales surged 22%, while Target’s rose 10.8% YoY.

Amazon’s second Prime Days in October marked its "biggest October shopping event ever," while Bank of America noted that October’s online retail spending grew twice as fast as in-person shopping. Meanwhile, Best Buy and Costco joined the trend of rolling out early online savings.

Looking ahead, Adobe projects online holiday spending will hit $240.8 billion, up 8.4% YoY. Cyber Week alone is expected to contribute $40.6 billion, with Cyber Monday maintaining its dominance, representing 13% of total holiday sales last year.

Despite early discounts, 55% of shoppers plan to begin holiday shopping in November, suggesting that Black Friday and Cyber Monday will still see a surge in both in-store and online activity.

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ECOMMERCE TRENDS

Trump Tariffs Could Cost U.S. Consumers $78 Billion Annually

Proposed tariffs by President-elect Donald Trump could significantly impact American consumers, with an annual loss of $46 billion to $78 billion in spending power, according to a National Retail Federation (NRF) report.

The tariffs, which include 10%-20% on all imports and 60%-100% on goods from China, would raise the prices of everyday items such as apparel, footwear, and appliances. For instance:

• A $40 toaster oven could rise by $12.

• A $50 pair of athletic shoes may cost $59-$64.

• A $2,000 mattress set could increase to $2,128-$2,190.

The NRF emphasizes that tariffs are a tax on U.S. importers, ultimately passed to consumers in the form of higher prices. This would disproportionately affect low-income families, who may struggle to afford the inflated costs.

Retailers like Walmart have already expressed concern, with CFO John David Rainey warning of potential price hikes if tariffs are enacted. "We never want to raise prices," Rainey stated, adding that it's too soon to specify which products will see increases.

The NRF report suggests the tariffs’ benefits for U.S. manufacturers won’t outweigh the negative impact on consumers, with price hikes likely to strain already tight household budgets during the holiday season.

ECOMMERCE AI

ChatGPT Flexes Its Beauty Expertise as Estée Lauder Consultant

Estée Lauder Companies (ELC) is breaking new ground by integrating ChatGPT Enterprise to enhance operations across its global beauty brands. Through a collaboration with OpenAI, ELC has developed 240 AI applications, transforming consumer data analysis, product development, and marketing strategies.

Key advancements include:

• Fragrance development: AI processes consumer survey data to identify scent preferences.

• Skincare innovation: Machine learning accelerates clinical trial analysis for product formulation.

• Employee empowerment: Teams use ChatGPT to boost creativity and efficiency, completing tasks in minutes instead of hours.

Beyond R&D, AI is revolutionizing customer interactions. Virtual try-ons (like L’Oréal’s Modiface and Sephora’s Virtual Artist) and personalized skincare routines (e.g., Olay’s Skin Advisor) exemplify the growing AI footprint in beauty. ELC’s new lab also develops tools for marketing content creation, vendor data analysis, and predicting consumer trends.

With a focus on practical solutions, ELC’s AI lab ensures tools are rigorously tested and tailored to brand-specific needs before full deployment. Early results show faster workflows, enhanced personalization, and greater operational efficiency.

As beauty embraces AI, ELC’s partnership with OpenAI positions the company as a trailblazer in blending technology with creativity. For consumers, this means faster innovations and products more aligned with their unique preferences.

ECOMMERCE BUYER TRENDS

Retailers Beware: Shoppers Feel Overwhelmed by Too Many Deals

As the holiday season ramps up, a new challenge has emerged for retailers: deal fatigue. While discounts have long been a holiday staple, recent data reveals that some consumers feel bombarded by promotions, which may be dampening their enthusiasm for big sales events.

A PYMNTS Intelligence report found that:

• 33% of shoppers feel overwhelmed by the sheer number of sales.

• 41% believe frequent promotions make deals feel less special.

• 25% said they are less likely to shop during deal events this year.

Inflation is also playing a role, with 59% of consumers planning to spend the same or less than last year. Many are adopting a "one-and-done" strategy, targeting a single major sales event to cover their needs.

This trend could spell trouble for retailers relying on a drawn-out shopping season. Target’s CEO, Brian Cornell, noted during the company’s Q3 earnings call that consumers are becoming resourceful, focusing on deals for essentials or early gift shopping, potentially pulling sales forward.

Even high-income earners aren’t immune to financial pressures. A significant portion lives paycheck-to-paycheck, with average credit card debt nearing $7,000. This financial strain may limit spending power in the weeks ahead.

The result? Retailers must navigate a delicate balance between attracting shoppers with discounts and avoiding oversaturation. Will holiday magic prevail, or will shoppers stick to a cautious approach? Only time will tell.

ECOMMERCE TECH

Zillennials Split Between Price Sensitivity and Brand Loyalty

Zillennials (born between 1991 and 1999) are reshaping retail with their dual priorities: price sensitivity and brand loyalty. This dynamic poses challenges for retailers seeking to appeal to this influential demographic.

According to a PYMNTS Intelligence report, 41% of zillennials prioritize price over brand, actively hunting for deals over sticking with familiar brands. Yet, 21% remain loyal to preferred brands, valuing factors like quality, sustainability, and ethical practices over cost. This contrasts with older generations, who often strike a balance between price and brand.

Key insights include:

• Price-sensitive zillennials: Attracted by discounts, promotions, and price-matching programs. Retailers must implement competitive pricing strategies to engage this group.

• Brand-loyal zillennials: Drawn to companies that align with their values, such as sustainability and social responsibility. Transparent business practices and ethical sourcing resonate strongly with this cohort.

To win over zillennials, retailers should:

1. Offer personalized discounts and loyalty programs for price-conscious shoppers.

2. Cultivate an authentic brand identity through consistent quality and alignment with social values.

3. Highlight sustainable and ethical practices, as these are critical for long-term loyalty.

By balancing affordability with authenticity, brands can navigate zillennials’ diverse expectations, ensuring they capture both deal-seekers and loyal customers.

Signing off,

The Merchant @CartHustle