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and cart size. Even retailers with essential goods are seeing customers trade down and opting for value brands or forgoing additional items they might once have added without hesitation. Senior consumers—many of whom rely on fixed incomes supplemented by retirement investments—are particularly sensitive to market declines. If they feel their retirement funds are less secure, they may reduce nonessential purchases, skip gi buying, and avoid large-ticket items. Given this demographic's historically strong retail participation, this can ripple across all sectors. Layering Tariffs onto Economic Anxiety At the same time, increased tariffs are pushing up the prices of imported goods, from apparel and footwear to home furnishings and electronics. Retailers now face a difficult choice: pass the cost to customers, thereby risking lost sales, or absorb the cost and sacrifice margin. Either way, the financial pressure is intensifying— and just as consumers are becoming more price-conscious. Areas of Particular Concern • Discretionary Spending Categories Luxury goods, home decor, specialty fashion, and lifestyle categories tend to suffer first when financial anxiety sets in. If the market continues its downward trajectory, we may see sharper declines in these areas than in basic needs or consumables. • High-Income Shopper Behavior Even affluent consumers are beginning to "pull back"—a trend sometimes overlooked in early downturns. When high-net- worth individuals reduce spending, it affects premium brands and high-margin segments, reducing profits faster than volume alone might indicate. • Mid-Year Slowdown Risk If Q1 earnings disappoint and economic forecasts remain gloomy, we could see a sharp consumer pullback beginning in Q2 or Q3, creating an even more competitive pricing environment and further pressure on inventory management. • Consumer Sentiment e University of Michigan's Consumer Sentiment Index dropped sharply to 57.9 in March 2025, down from 64.7 in February, marking the lowest level since November 2022. is decline is attributed to heightened worries about inflation and the potential economic impact of new tariffs. Consumers across various demographics expressed increased pessimism about personal finances, employment prospects, and business conditions. • Retail Sales In February 2025, U.S. retail and food services sales experienced a modest uptick, rising 0.2% from the previous month to $722.7 billion. is represents a 3.1% increase compared to February 2024. Notably, online store receipts surged by 2.4%, and sales at health and personal care stores increased by 1.7%. However, auto dealership sales declined by 0.4%, and furniture store sales remained stagnant. ese mixed signals suggest that while certain retail sectors are experiencing growth, underlying consumer apprehension—driven by inflationary pressures and trade policy uncertainties— may temper overall economic momentum in the coming months. What Retailers Can Do Now is the time to adjust plans—not panic. Here are four key strategies for navigating the months ahead: 1. Re-forecast conservatively: Revisit sales projections and expense plans with realistic assumptions. Use conservative models that reflect tightened consumer spending and adjust your buying accordingly. 2. Offer perceived value, not just discounts: Avoid the temptation to over-discount. Instead, emphasize value in messaging—durability, performance, usefulness, and total cost of ownership. 3. Focus on core inventory and essentials: Streamline your assortment to prioritize what your customers truly need. Minimize exposure to trend- driven or speculative items. 4. Communicate with your customer base: Use email, social, and in- store messaging to stay connected. Acknowledge the economic pressures and show empathy. Loyalty grows in times of understanding. Outlook: A Year to Watch Closely While it's too early to declare 2025 a down year across the board, the signs are sobering. Tariffs are compounding inflationary pressures, and a weakened stock market is reducing the sense of financial security that fuels retail spending. If retirement accounts continue to shrink and market volatility persists, retailers should prepare for a cautious and value-driven consumer mindset. Smart operators will keep a close eye on consumer sentiment and adapt accordingly. ere are always opportunities in challenge—especially for those retailers willing to act decisively, communicate clearly, and operate with agility. n Alan Miklofsky is a semi-retired Professional Shoe Dog with a distinguished career in the footwear industry. Over the decades, he successfully ran an award-winning shoe business while dedicating 29 years to the National Shoe Retailers Association (NSRA) Board of Directors, including serving as Chairperson from 2009 to 2011. Today, Alan channels his expertise into creating content on issues vital to independent shoe retailers and offering consulting services with a focus on financial oversight. Learn more about Alan Miklofsky online at: https://sites.google.com/view/alanmiklofskypersonalwebsite/alan-miklofsky https://www.linkedin.com/in/alanmiklofsky/ sportstylemag.com • sportstyle March/April 2025 • 7

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