This week, we offer an update on the current state of the UK market and dive into new research and data on consumers' outlook in the US. John Mercer, Head of Global Research and Managing Director of Data-Driven Research at Coresight Research, discusses our recent, survey-driven findings on consumer sentiment trends and shifts amid tariffs. He explores shoppers' spending expectations for upcoming holidays (such as Easter and Mother's Day) and the end-of-year holiday season, and what these say about short- and long-term consumer confidence. The conversation also covers Dollar Tree, Inc.'s decision to divest Family Dollar and the implications for both brands. Overall, the episode provides valuable insights into the economic landscape and consumer behavior as retailers navigate uncertainty.
Takeaways
Chapters
00:00 This Week in Research: New Reports and Data
02:42 UK Economic Overview and Consumer Sentiment
03:56 US Consumer Sentiment Trends and Spending Expectations
07:56 Dollar Tree's Strategic Move and Market Insights
Read our comprehensive reports on the topics covered in this episode:
Speaker 2 (00:01.398)
Welcome to Retaili$tic, the official podcast of CoreSight Research for April 1st, 2025. We begin the second quarter with an update from our Head of Global Research, John Mercer. He has a first-hand take on the current situation in the UK and an update on consumer sentiment from our ongoing tracking survey. But first, Georgina Smith, our Head of Editorial, is back to share the latest research, publishing this week on CoreSight.com.
Hi Georgina.
Hi Philip. Firstly, I want to highlight new research that we have just published in partnership with Rithum. Driving margin expansion is increasingly challenging in a highly competitive retail environment and amid uncertainty around tariffs. Achieving sustainable and profitable growth requires businesses to overcome multiple challenges across various business functions. We analyse proprietary survey findings to uncover the key challenges for brands and retailers and examine which technologies retail companies are prioritising to solve these challenges.
Explore the path to profitability across the retail value chain, from partnerships and product assortment to retail media to delivery and returns. Plus, understand how to reach return on investment goals by future proofing technology investments.
Turning to consumer-focused research, our new survey analysis dives into spending expectations among US consumers for calendar events in the second quarter, Easter, Memorial Day, Mother's Day, and Father's Day, as well as taking an early look at plans for the end-of-year holiday season. Plus, we look back at the first quarter to reveal actual behavior and spending for Valentine's Day and President's Day.
We also present our latest check on consumer awareness and responses to inflation, as well as how financial and economic sentiment are tracking. So there's a lot of survey data to get your teeth into this week.
Elsewhere in research, following the recent news that Dollar Tree is divesting the Family Dollar business, we offer expert commentary and data on the move, including discussion of key factors in Dollar Tree's integration struggles with Family Dollar.
Continuing our regular report series, our latest quarterly US Retail Inventory Insights Report will analyze inventory trends in US retail, and we will wrap up the fourth quarter 2024 earnings season with highlights on retailers' recent performance.
Finally, our upcoming monthly instalment of the US Store Tracker Extra Series will detail US retailers' store closure and opening announcements from March this year, as well as the square footage impacts of these developments.
I want to emphasize that this is by no means an exhaustive list of our new research and data this week. If you're looking to be kept in the loop more often and in more detail, please visit Coresight.com to sign up to our free daily email. Or better yet, contact us to become a premium subscriber and access all of our videos, infographics, deep dives and exclusive events. We'd love to hear from you.
Thanks Georgina. We're happy to have John Mercer, our head of global research, back with us this week. So John, how are things in London?
That's a really open question.
Okay, are there things going on in London we should know about?
So the bigger picture for the UK is that the economy is not growing very strongly. The Office for Budget Responsibility, which is an arm's length government institution, expects about 1% economic growth this year. Consumers are cautious. There are new taxes coming in in early April for employers, including retailers. We think it's going to be a tough year for retail because costs will be rising, demand will be muted in the UK. As I mentioned, economic growth is relatively soft. It's not a very strong outlook for the UK.
Okay, well thanks for that update. Let's talk a little bit about what we're seeing in the U.S. One of the things that makes Coresight unique is that we have a robust and frequent consumer survey that is essentially always in the field. So we keep track of what people are thinking and ask them about all kinds of things. John, what are we seeing in the consumer survey data over the last couple of weeks?
Yeah, so one of our unique data offerings is our weekly measure of forward-looking US consumer sentiment. Many observers of the industry will be watching a widely cited consumer sentiment index that's publicly available each month, but obviously we're tracking that each week, so we're getting a head start on that kind of metric. So we're tracking consumer expectations for household financial situation and the wider economy, and we ask them to look forward over the next 12 months.
So what have we seen recently? Well, since January, since mid-January, sentiment in both measures has declined quite sharply. It's been pretty on a kind of downward trend since mid-January. This week we saw a bit of leveling off. Sentiment in both our key measures was essentially flat this week versus last week. But our latest survey was undertaken on March 17th. Now that was a week when stock prices had stabilized and then recovered slightly after falling sharply in the prior week. And we think that prior week's fall contributed to that week's decline.
And we think reflecting this, the overall net personal financial sentiment improvement was driven by increases amongst higher income and middle income consumers this week. And economic expectations among higher income consumers improved slightly this week too. And we think that's likely a reflection of that kind of stabilisation we saw in that week.
So I get the story, what do the numbers actually look like?
So net sentiment in terms of the economy and personal finances is negative. It's negative across income groups. It's most negative amongst lower income consumers, but the decline since the start of the year has been seen relatively steadily across all income groups. So this is a trend we're seeing that's relatively widespread. Some of the week-to-week changes do vary, but it is across kind of all groups.
And one thing to note is that further tariffs are set to come into force this week. So we wouldn't be surprised to see sentiment decline further amidst coverage of those tariffs and their possible effects.
What else have we tracked around consumer caution and propensity to spend?
So we've also seen sentiment trends reflected in our regular quarterly check on expectations for shopping holidays and calendar events. So each quarter we're asking consumers about how they've shopped for those kind of calendar events in the past quarter and what they expect to do in the next quarter. And we're seeing consumers be relatively optimistic about spending intentions for holidays that are in the near term, but they're pessimistic about the end of year holiday season.
And we think this kind of chimes with that most consumers are doing okay now. if we kind of strip out specific factors such as government layoffs, but there's a high degree of uncertainty and caution, particularly around the impacts of policy effects such as tariffs and what effect they may have on prices for consumers. So for instance, if we look at intentions for Easter or Memorial Day, a slight net majority expect to spend more on those events than they did last year.
We see a similar trend for Mother's Day and Father's Day that are upcoming, and expectations to spend more there are actually driven by consumers' expectations to buy more. So about half of shoppers for Mother's Day and Father's Day expect to spend more because they're choosing to buy more, which suggests a degree of confidence in the near term.
But at the same time, we also ask consumers to look ahead to the holiday season. And first is when we last asked in January this year, consumers are now more likely to plan to spend less than spend more. We've seen a significant decline from January, sizable proportion, net, expected to spend more and overall more consumers now expect to spend less.
Consumers feel pessimistic about their personal finances looking out to the holiday season and consumers with higher household incomes are the most likely to expect that their financial status will improve or strengthen between now and the holiday season which kind of correlates with higher incomes generally seeing greater financial optimism in our surveys. So that really does reflect that near term consumers seem relatively willing to spend, but longer term there's a high degree of uncertainty and they're viewing the end of your season with caution.
Anything else to call out?
So yeah, away from consumer sentiment entirely, one big story this week was Dollar Tree announcing that it planned to sell the Family Dollar Chain. It's selling it for about $1 billion, and in fact, in quite a timely move, we'd only just undertaken our regular survey of dollar store shopping, and we published that for subscribers last week. That survey, which was undertaken on March 17th, found about three quarters, 72.5 % of all survey respondents had bought from a dollar store recently. That's in the past three months.
Dollar Tree was the most shopped, as it usually is in our surveys, about two-thirds had purchased from it. Family Dollar was the third most shopped, as it typically is in our surveys. And then Dollar General was kind of between those in number two. And when we dig into our survey data, we find that Family Dollar shoppers tend to be more urban, more skewed to southern states, and on average, poorer than those shoppers at Dollar Tree.
And our sector analyst view that we've published this week is that by divesting Family Dollar, Dollar Tree can focus on its core Dollar Tree stores. Those have proven to be more profitable and easier to scale. And for Family Dollar, the sale opens the door for potential revitalization under new ownership. yeah, that's what we've been covering this week.
Thank you John, always great to have you on Retailistic to share a glimpse into the regular insights we provide our premium subscribers.
Next week, our team is back from Shop Talk Spring in Vegas and they'll be here with us to recount all of their adventures and perhaps misadventures and bring us all up to speed on the latest innovations and tech trends we need to keep top of mind as we navigate through uncertainty.
Thank you for joining us this week on Retaili$tic! If this was your first time with us, we hope you will check out some of our previous episodes and make Retaili$tic part of your podcast routine. For a full catalog of more than 6,000 reports, hundreds of webinars and video presentations, as well as info about the CoreSight AI Council and our strategic advisory services, visit us online at coresight.com. Have a wonderful day!
and we'll see you next week.