Global uncertainty gives rise to new strategies in consumer and retail

Amid escalating geopolitical tensions and fresh tariffs, consumer goods and retail leaders are examining their portfolios, marketing channels and supply chains

For the retail and consumer goods industries, the global market continues to shift by the month – or week, or day. Waves of economic uncertainty and geopolitical tension, as well as the Trump administration’s gamut of proposed, enacted and rolled-back tariffs, threaten to upend supply chains, increase costs and compromise businesses’ ability to deliver quality products in a timely fashion.

In response, retail and consumer goods companies are re-evaluating their strategies with regard to product portfolios, marketing efforts, supply chain and operations. As they consider ways to move forward, retail leaders must balance their actions against ever-present novel risks. “The global markets feel a bit like a snow globe,” says Alexia Williams, Managing Director and Head of Corporate Coverage, UK & Ireland, at Standard Chartered. “One that keeps getting shaken every day.”

A new era in consumer and retail

Retailers realise their operations are always subject to disruption, but lately the industry’s only constant has been change. In the wake of the Covid-19 pandemic, for instance, retailers hurried to reorient their marketing and buying experience towards a surge in consumer luxury spend – as the leading luxury goods companies grew bigger and more profitable than ever. But the post-Covid luxury boom has been subject to a slight contraction over the past two years, balanced with stronger growth in the resale market, offering retailers an opportunity to team up with third parties or build out an in-house pre-owned offering, says Williams.

Inflation has dulled the results of such investments: the US Consumer Price Index saw increases of over 9 per cent in the middle of 2022. Inflation began to stabilise during the second half of 2023 and reached levels of around 3 per cent or lower by mid-2024, but relief was short-lived. President Trump’s return to office in 2025 brought new uncertainties in the form of rapidly changing tariff policies, threatening to send costs soaring. Accordingly, the consumer market turned tepid. “Spending is very much on a short leash,” says Williams.

Three core themes have bubbled to the surface in 2025. A subsection of consumer called the “prosumer” has emerged, more price-sensitive and strategic in their buying behaviour, seeking out affordable options. With the cost of living on the rise, citizens are also cutting back on non-essential purchases, including big-ticket items such as furniture and home appliances, but also smaller items like clothing and accessories. More than half of US adults – 54 per cent – expect to spend less on travel, dining out or entertainment in 2025 than they did in 2024, Bankrate found. “The squeeze is obviously worse on lower incomes,” says Williams. Finally, there has been a continued rise in multifunctional, sustainable products, with Gen Z and millennials showing particular interest.

As these trends take shape, retailers are navigating an erosion of consumer confidence tied to the uncertain nature of tariffs – and the pricing fluctuations they could bring if companies pass on the cost. With news headlines changing by the day, Williams says, customers have at times engaged in short-term panic buying. “Then they sit on their hands, reining in.”

Corporate strategy reshaped

As the snowstorm continues to swirl, many retailers are taking steps to evolve their financial and operational decision-making. There’s renewed momentum toward the “China plus one” strategy, which started over a decade ago as a way for retailers to diversify away from over-reliance on mighty manufacturers. “That diversification began maybe 20 years ago or so,” says Marshall Fisher, Professor of Operations, Information and Decisions at the University of Pennsylvania’s Wharton School. But until lately there’s been little incentive for companies to aggressively pursue other suppliers; the share of total US imports that came from China increased from 2 per cent in the late 1980s to 22 per cent in 2016, according to the Federal Reserve Bank of St Louis. But now retailers are thinking more along the lines of “China plus four”, Fisher says.

They’re also exploring how to manipulate country of origin requirements, choosing to strategically ship supplies from lower-cost countries to a country less exposed to tariff risks for final assembly. And some companies strategically stocked up on inventory in the periods between when tariff plans were announced and took effect, Fisher says.

Perhaps optimistically, some retail experts have predicted that tariffs will eventually settle at around 10 per cent. “That’s a number you can live with, because the supplier will eat part of it and the retailer will eat part of it,” Fisher says. “They’ll pass a little bit on to the consumer, and nobody will notice.”

In today’s environment, sitting on your hands carries its own risk. Williams recommends that companies analyse their current risk exposure and make plans for long-term resilience without sacrificing short-term growth. Prospects for growth include tapping into the circular economy – whether through resale, rental or recyclable products – and investing in digital commerce and direct to consumer platforms, where companies can leverage consumer data and personalisation to improve conversions and loyalty. Finally, for many retailers, market expansion presents a major untapped opportunity.

After all, there’s a population of 4.3bn across 32 dynamic markets in which the middle class is expected to double over the next decade, according to Oxford Economics. “Strong flexibility is key – obviously around cost controls, inflation, wage increases, real estate and currency fluctuations,” says Williams. “But especially in emerging markets, which can be far more volatile to operate, clients need to have the right risk management and hedge strategies in place.”

This content was paid for and produced by Standard Chartered in partnership with the Commercial Department of the Financial Times and the article was originally published here.