The Goods (U.S. Edition) – Cure and Simple
Welcome back to The Goods! This week, we’re discussing meat stick mania, the “no buy 2025” pledge and Costco’s continued DEI dispute.
WEBINAR ALERT: TARIFFS
How could President Trump’s proposed tariffs impact your business? Join us for a webinar on February 12th where FTI Consulting experts in customs, tax, supply chain and government affairs will provide valuable insights and actionable strategies. This first session in our two-part series will help your business navigate the complexities of the current tariff environment – and thrive in the face of uncertainty. Register for the free event here.
What’s In: This Week’s Trends
- Topping Expectations: While 2024 was a tough year for many dining chains, fast casual restaurants continued to gain speed as they capitalized on long-term consumer trends. Despite consumer price sensitivities, fast casual restaurants outperformed other dining segments in 2024, with chains like Chipotle, Wingstop and Cava posting strong same-store sales growth. These chains have seen success by balancing efficiency, quality, and customization, while also leveraging tools such as digital ordering to provide a high value experience for customers.
- Who’s Footing the Bill? Tariffs are expected to drive up footwear costs for consumers, as over 99% of shoes sold in the U.S. are sourced overseas. The impact may vary by brand: larger companies have more power to diversify production from China or pass costs onto consumers, while private labels face tighter margins. Still, 60% of retail executives expect their operating costs to increase by 5%. The unpredictability of potential tariffs is especially hard on footwear makers, as they often determine their product assortment and pricing six to nine months in advance.
- On the DEI-fense: Continuing a public dispute over DEI, 19 Republican attorneys general have called on Costco to abandon its diversity, equity and inclusion policies, citing concerns about discrimination and legal risks. The move comes as 98% of Costco’s shareholders last week voted to reject a proposal requesting the retailer report on the risks connected to DEI initiatives. The 19 officials are now demanding the retailer notifies states within the next month as to whether they will terminate DEI programs or explain reasoning for maintaining these policies.
Cash or Card: Consumer Behavior
What’s going on with the consumer these days? This week we talk about America’s love for meat sticks, “no buy 2025” and the dip in U.S. consumer confidence.
- Cure and Simple: Meat sticks are now a $3 billion industry, reaching 41 million households annually and growing faster than any other category in snacks. The rise of health-conscious jerky options – featuring everything from grass-fed meat to lower sodium levels and clean ingredients – addresses a consumer shift toward premium, protein-packed snacks. Some loyalists are sticking to the bones of nostalgic favorites like Slim Jims, while others are opting for the gourmet versions of varying flavors reshaping the market.
- Legends of the Haul: This year, it’s not about showing off what you bought – it’s about showing off what you didn’t. In the face of rising prices and growing credit card balances, people on social media are swapping product hauls for the “no buy 2025” challenge, purchasing as little as possible to fight overconsumption and pay down debt. Google searches for “no spend challenges” are at an all-time high, and searches for “no buy challenge” are up 40% year-over-year. Consumers also are adhering to “project pan,” a similar trend that pushes them to finish all their skin care, makeup or body-care products before buying replacements.
- Let’s Get Ready to Crumble: For the second month in a row, U.S. consumer confidence dipped. The Conference Board reported that its consumer confidence index fell from 109.5 in December to 104.1 this month, 1.7 points worse than the January projection. The index measures both Americans’ assessment of current economic conditions and their outlook for the next six months. The research group also reported that the number of consumers planning to purchase “big-ticket” items in the next six months has slightly decreased since its December report.
Making Moves: Industry Transformations & Innovation
ICYMI, even industry icons need to reinvigorate their brand presence through unique and creative ways. Here are some new brand moves that you should know about:
- Bargain Branding: Following in the footsteps of Kroger and Amazon, Dollar General announced plans to expand its portfolio of private label grocery products. The discount retailer plans to add nearly 100 new items, more than half of which will be under its Clover Valley grocery brand. As more than half of the retailer’s baskets contain at least one private label item, these new offerings will include on-trend items and staples such as cinnamon rolls, honey mustard, and white grape peach juice.
- Brick Thinking: Competition is building in the toy sector as Mattel announced plans to launch Mattel Brick Shop, a Lego-like brick-based building toy coming to market in May. Mattel is aiming to inspire experimentation among users by offering creative, “easy-to-follow builds” that offer customization upon completion of the initial structure. While Mattel currently has a Mega Bloks line, Mattel Brick Shop hopes to establish a uniquely elevated and accessible identity in the building block space.
- That’s Jean-ius: Levi Strauss & Co. bet big on the comeback of the baggy jean with the help of deep analytics. Back in 2020, the denim company partnered with Google Cloud to gather data from 110 countries and 50,000 distribution points. Using machine learning to review the data and better understand shifting consumer preferences, the brand was able to identify the incoming trend of baggier, looser fit jeans gaining popularity across demographics. The approach helped Levi’s stay ahead of denim trends and boost looser fit sales by 15%.
Capital Markets Corner
What consumer news is moving the market this week? Our investor relations experts break down this week’s trends and headlines.
- Industry Tea 🍵: Based on a survey of retail executives, Deloitte identified three key trends emerging in the retail sector in 2025. As high-prices remain top-of-mind for consumers, the theme of customization – through differentiated loyalty programs, shopping experiences, and promotions – is becoming crucial to attracting and maintaining price-conscious shoppers. Retailers also expect to invest heavily in shoppable media, in-house delivery services, and enhanced physical stores to advance their omnichannel capabilities. Lastly, retail execs plan to invest in workforce retention, supply chain technology, and moderate M&A to optimize the industry-wide shift towards data-driven, hyper-personalized shopping experiences.
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