The Goods (U.S. Edition) – Germs & Conditions
Welcome back to The Goods! This week we’re discussing record-high beef prices, Canadian vacationers choosing Cancun over Florida, and how one baby brand is winning over Gen Z parents.
The Vatican has chosen a new pope – he’s American, and he’s an internet meme sensation. The Onion declared him the “First Chicago-Style Pope,” complete with an image of the pontiff encased in a poppyseed bun, while the Chicago Sun Times cover read “DA POPE,” capturing the city’s excitement, unique accent, and reference to every Chicago dad’s favorite SNL sketch. As The Guardian wrote, “the meme-ification of the new pope has revived one of the last remaining good parts of internet culture: laughing together.”
What’s In: This Week’s Trends
- Steal my Bunshine: Grilling season – which runs from Memorial Day to Labor Day – is heating up alongside record-high beef prices, fueled by strong demand and the lowest cattle inventories since 1951. The average cost of ground beef has jumped 13% since last year and meat producers are feeling the squeeze. Tyson Foods posted a $258 million loss in its beef operations last quarter, stating that the beef segment is facing its “most challenging market conditions.” As the BBQs start heating up, will consumers pay meatier prices to keep the burgers flipping?
- Buy Like an Eagle: Amazon shoppers seem to be increasingly curious about where their products are made, with searches like “made in USA products only” up 220% year-over-year. While the spike in interest has prompted brands to update their listings with patriotic visuals and “Made in America” messaging, it hasn’t yet translated into a meaningful boost in sales. With Amazon shoppers primarily driven by price and convenience, even a Made in America” label may not be enough to justify higher costs.
- Season of the Bricks: Physical stores now account for over 76% of core retail sales. Consumers expect the best of both worlds, relying on online stores for more expansive options and physical locations for returns, according to commercial real estate firm Colliers. In 2024, stores were integral to about a third of online retail sales via fulfillment like pickup or ship-from-store, and that figure is set to rise to over 36% in the next five years. According to a Colliers analyst, recent store closures making headlines have been tied mainly to operational challenges or oversaturation, rather than displacement by e-commerce.
Cash or Card: Consumer Behavior
What’s going on with the consumer these days? This week we discuss consumers thinking twice about their subscriptions, Canadian tourists going elsewhere, and buying now to save later.
- Unsubscribe: From imperfect produce to shaving razors, companies are adopting subscription models in the quest for steady revenue. However, budget-conscious consumers are reconsidering which monthly services they truly need. Streaming services and Amazon Prime – which gained 82 million U.S. subscribers from 2019 to 2024 – have staying power since they are embedded in consumers’ daily lives. On the other hand, rental clothing service Stitch Fix and pet goods curator Bark haven’t posted a profit in five years, as the novelty of their products eventually wear off and high turnover keeps the cost of customer acquisition and retention up.
- Stars & Gripes: In the wake of President Trump’s trade policies and annexation threats, Canadians are replacing their Florida beach vacations with tropical getaways to Cancun and swapping New York City for Mexico City. In March, Mexico saw a 15.6% increase in Canadian visitors relative to the same month in 2024, and at the same time, Canadian air travel to the U.S. dropped 13.5%. Mexico also saw its first year-over-year decline in flights to the U.S. since May 2022.
- Early Bird Gets the Bargain: The threat of rising prices from impending tariffs is driving consumers to spend more now before costs go up. The latest CNBC/NRF Retail Monitor revealed that total retail sales, not including cars or gas, increased 0.72% over one month and 6.76% year-over-year in April. Although the jump may be slightly attributed to Easter falling in April rather than March this year, NRF President and CEO Matthew Shay suggested consumers are spending now to avoid higher prices or potential shortages from tariffs.
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:
- Cute One-Z: Carter’s, the 160-year-old kids’ clothing brand, is stepping up its style game to win over Gen Z parents who will make up about two-thirds of the company’s consumer base by the end of next year. These parents want fashion, value, and convenience – and they’re looking to influencers for purchasing advice rather than their own parents. In order to connect with the generation, Carter’s is embracing trendy offerings, showcasing collections at New York Fashion Week, and investing in its influencer and experiential marketing.
- Deals on Wheels: Uber has teamed up with Family Dollar to deliver affordable essentials via Uber Eats from 5,000 stores nationwide. The collaboration is Uber’s first national deal in the discount retail space and aims to attract younger, digitally savvy shoppers – a shift from Family Dollar’s usual base. The move reflects a broader trend of dollar stores embracing delivery partnerships to win back cost-conscious shoppers and stay competitive, following similar efforts by Dollar General and DoorDash in 2021.
Capital Markets Corner
ICYMI, even industry icons need to reinvigorate their brand presence through unique and creative ways. Our investor relations experts break down this week’s trends and headlines.
- Germs & Conditions: Church & Dwight – owner of the OxiClean and Arm & Hammer brands – has agreed to acquire Touchland hand sanitizer for up to $880 million. The deal includes $700 million in cash and restricted stock as well as a contingent payment of $180 million based on the company’s performance this year. Founded in 2014, Touchland’s elegantly-designed hand sanitizers are sold in Bloomingdales and Sephora and had roughly $130 million in sales for the 12 months ended March 31.
- It’s Bittersweet: If life is like a box of chocolates, life is about to get more expensive. In a bid to preserve margins amidst rising commodity costs, Nestlé USA announced plans to increase prices for some chocolate products. In a memo, the company said the increases are due to tight supply and not tariffs. Last year, Nestlé attempted to ease cost pressures by asking suppliers to reduce prices, provide rebates, and in some cases cancel contracts, but those requests were denied. The company posted “better-than-expected” sales growth in Q1, with organic growth up 2.8% year-over-year.
- Not Sew Good: Citing slow sales, steep discounting, and macroeconomic uncertainty, American Eagle withdrew its full-year guidance and said it was writing off $75 million in inventory. The apparel retailer expects revenue for the first quarter to fall 5% compared to the same period last year. American Eagle is also expecting to see an operating loss of $85 million, reflecting “higher than planned” discounting and a write-down of spring and summer merchandise. The company says they are entering the second quarter in a better position by aligning inventory to sales trends.
Tariffs, Ands or Buts
On Monday, the U.S. and China agreed to a 90 day reduction in tariffs, easing trade tensions with a temporary truce. China reduced its tariffs on American goods from 125% to 10%, while the U.S. dropped its rate from 145% to 30%. Retailers are hopeful the pause will help restock shelves in time to avoid a “Christmas disaster,” as the holidays accounted for over one-fifth of annual retail sales last year.
At FTI Consulting, we help clients think comprehensively about the problems they face, understand their exposure, assess and mitigate risks, and manage change needed. Learn more about our Tariff Mitigation Advisory solutions here. Have questions about tariffs? Reach out to our experts Cory Fritz, Jackson Dunn, Ana Heeren, John Whitcomb, and Nick Baker.
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