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The Wealth Effect Is Weakening When the stock market drops significantly, the average consumer may not immediately change their shopping habits—but over time, the impact compounds. is is especially true for middle- and upper-income households whose retirement savings, investment portfolios, or real estate holdings have been a source of confidence, and in some cases, cash flow. is phenomenon, oen referred to as the "wealth effect," drives discretionary spending in good times. People spend more freely when their retirement accounts are rising, home values are up, and their future feels secure. But when those portfolios shrink—as they have in recent months—discretionary spending begins to tighten. A family that might have upgraded appliances or taken a seasonal shopping trip may now delay purchases or downsize their spending. Why This Matters to All Retailers Whether you're running a department store, specialty boutique, big-box chain, or online retail operation, your sales depend not only on need- based purchases but also on consumer optimism. When that optimism erodes, so does foot traffic Smart operators will keep a close eye on consumer sentiment and adapt accordingly. R etailers in 2025 find themselves navigating a delicate and shiing economic landscape. While tariffs and supply chain challenges continue to pose hurdles, a more subtle but potentially more dangerous storm may be forming—one that threatens to suppress consumer spending more broadly. As stock market values slide and retirement incomes take a hit, retailers across categories—from apparel and electronics to home goods and specialty stores—should be paying close attention. 6 • March/April 2025 sportstyle • sportstylemag.com NEWS & ANALYSIS HOW CONCERNED SHOULD RETAILERS BE ABOUT 2025 SALES?

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