The Goods (U.S. Edition) – Slim Pickings
Welcome back to The Goods! This week we’re discussing inventory challenges posed by GLP-1 drugs, why strained economic times are increasing manicure budgets, and prebiotic sodas “popping” up everywhere.
Alexa…play “Crash Into Me“ by Dave Matthews Band. A “city killer” asteroid that once had a better than 3% chance of striking Earth in 2032 is no longer a concern. According to NASA, the asteroid now has a .0017% chance of striking the planet we call home. There is still a 1.7% possibility the space rock could hit the moon, though experts expect these odds to decrease over time as well.
What’s In: This Week’s Trends
- Committing to the Pit: Aluminum-free deodorant is moving from a farmers market offering to a mainstream retail staple, driven by growing consumer interest in natural ingredients. Natural brands like Curie, Wild, and Each & Every have expanded in the past five years, investing heavily in product research to improve product efficacy (and reduce the stink). Meanwhile, legacy companies such as Procter & Gamble and Church & Dwight are also entering the market with aluminum-free versions of their iconic brands like Old Spice and Arm & Hammer.
- Tailored for Trouble: PVH, parent company of Calvin Klein and Tommy Hilfiger, was added to China’s Ministry of Commerce list of “unreliable entities” for allegedly undermining market rules and violating Chinese laws. PVH is the first fashion brand to be blacklisted, following its decision last year to ban cotton from China’s Xinjiang region in accordance with U.S. guidelines. This designation, typically reserved for defense and biotech companies, could effectively end PVH’s operations in China. The decision follows the Trump administration’s move to impose a 10% tariff on Chinese imports, though China has been conducting its investigation into the company since September.
- Slim Pickings: As a now estimated 6% of the U.S. population is using GLP-1 weight loss drugs, smaller clothing sizes are flying off the shelves at record pace. Apparel brands are shifting from the traditional 1-2-2-1 ordering model – meaning an inventory of one part S, two parts M, two parts L and one part XL – to a 2-2-1-1 model to accommodate a rising demand for smaller sizes. Consumers on the weight loss drugs are more likely to purchase apparel and form-fitting clothes in their first year, with a Circana study showing a 23% uptick in jeans sales among active GLP-1 users compared to non-users. This inventory dilemma comes as a majority of consumers prefer to shop in physical stores, but only 9% are satisfied with the product variety and availability.
Cash or Card: Consumer Behavior
What’s going on with the consumer these days? This week we talk about the steep dip in consumer sentiment since January, confusion about natural and organic products, and the “nail effect.”
- Tariff Trepidation: Tariffs, climate-related events, and rising inflation continue to rattle American consumers. A recent CNN poll discovered that 62% of U.S. adults believe Trump is falling short on addressing inflation, and a University of Michigan survey found U.S. consumer sentiment has declined 10% since January. Additionally, retail purchases fell 0.9% in January as deadly wildfires in California and severe winter storms across the Northeast impacted sales. Ongoing tariff drama is impacting Americans’ perception of prices, with inflation expectations for the year ahead spiking to 4.3%, up a full percentage point from January.
- Organic Identity Crisis: According to a new report from the Acosta group, most shoppers value natural and organic labels for their groceries and household goods, yet many remain about unclear about the meaning of the labels. The report shows that 40% of shoppers view the terms as interchangeable and about 20% avoid these products due to confusion. Additionally, over 70% of consumers who favor conventional products cite cost concerns as the main barrier to choosing natural or organic alternatives.
- A Manicure-All: Bold nail art has become more socially acceptable, with consumers investing more in salon visits and DIY products. The increased interest is what beauty experts are calling the “nail effect” and reflects consumers’ desire for an affordable luxury during times of economic strain. Inspired by social media influencers and celebrities like Wicked star Cynthia Erivo, demand is rising for personalized nail art at the salon, as well as press-on nails and stick-on gels.
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:
- Pop Culture: Given the bubbling popularity of prebiotic sodas, Coca-Cola announced the launch of its new brand Simply Pop, made with real fruit, no added sugars and vitamins for immune system support. The move signals an industry shift as legacy brands adapt to health-conscious consumer trends. Although Coke has significant marketing and distribution power, smaller brands such as Poppi and Olipop have already gained traction as early entrants in the popping prebiotic soda space.
- No More Screw-Ups: While renowned for its affordable prices and Swedish meatballs, IKEA is also notorious for its tedious furniture assembly. Although shoppers have always had the option to separately book Taskrabbit – a platform linking app users with local home repair professionals – the retailer now offers this service as an optional add-on during standard checkout. IKEA reported this option already increased Taskrabbit bookings by 50%, decreased returns by 40%, and nearly quintupled the purchase value of orders with furniture assembly.
Capital Markets Corner
What consumer news is moving the market this week? Our investor relations experts break down this week’s trends and headlines.
- Nu Kid on the Block: Energy-drink maker Celsius has agreed to purchase rival Alani Nu for $1.8 billion in both cash and stock, including a potential $25 million earn-out based on 2025 performance. While Celsius holds 23.1% of the sugar-free energy market, its growth has slowed, whereas Alani Nu saw its sales more than double in 2024. The transaction is expected to create a leading better-for-you functional lifestyle platform that will drive roughly $2 billion in revenue, as customers increasingly seek out beverage options that cater to health and wellness.
- Capsule Collection: Following its failed merger with Tapestry Inc. last year, luxury firm Capri Holdings is taking another stab at M&A as it explores the sale of its Versace label. According to people close to the matter, Capri has given Prada priority access to Versace’s financial data and four weeks to conduct its assessment. While the purchase of Versace would allow Prada to target a different consumer group, the transaction would mark a substantial strategy shift, as Prada’s last completed acquisition dates back to the 1990s. Moreover, Prada would be tasked with a turnaround of the Versace brand, which reported a 15% year-over-year revenue decline and a $21 million operating loss in 2024.
- In Quick Succession: In a seemingly sudden shake-up that surprised the street, Unilever announced that CEO Hein Schumacher will step down on March 1st. The announcement comes less than two years after Schumacher stepped into the CEO role at Unilever – which owns household names like Hellman’s and Dove – with the backing of activist investor Nelson Peltz. Since taking the helm, Schumacher spearheaded the company’s turnaround plan, including the spin-off of its ice cream business. Schumacher will be succeeded by finance chief Fernando Fernandez, a company veteran who is said to be well known and liked by investors, who will be tasked with speeding up the company’s turnaround efforts.
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