As tariffs push prices up, consumers are reevaluating their brand loyalties—and many are walking away for good. What once felt like long-term relationships are now being tested by sticker shock, with even high-income shoppers turning to discount retailers and finding satisfaction in switching.
North America was a bright spot for L’Oréal’s otherwise mixed Q2. Like-for-like sales in the region rose 8.3% YoY, more than twice the consensus estimate of 4%. L’Oréal’s bullishness about the health of the beauty sector is decidedly at odds with some of its peers. That doesn’t mean its optimism is entirely misplaced: L’Oréal is better positioned than its peers to capitalize on the beauty ecommerce boom, while its local manufacturing model significantly reduces its exposure to tariffs.
The news: Consumer packaged goods (CPG) marketers plan to hop on the AI train and scale up their retail, social, and connected TV (CTV) ad spending, but challenges around audience and data fragmentation remain. Nearly two-thirds (62%) of CPG marketers expect to increase their retail media spending in the second half of 2025, per MediaOcean’s 2025 H2 Market Report, compared with 59% for social platforms and 55% for CTV. Our take: Using creative AI tools like one recently added to YouTube Shorts to resize and retarget content for different social platforms can maximize campaign reach. CPGs are huge advertisers, and when they pivot, they can influence the entire market. Broader marketers should follow their lead not only in spending but by immediately testing AI tools in high-impact internal areas like CTV creative or retail copy optimization.
Procter & Gamble is hedging its bets as it grapples with higher costs related to tariffs and “stressed” consumers. The CPG company expects organic growth between 0% and 4% this year—a notably wider range than it usually forecasts, underscoring the uncertainty it (along with the rest of the CPG and retail industries) faces. Uncertainty is the byword for this year. While consumer sentiment is recovering, financial pressures, particularly on low-income households, remain—and are likely to intensify as tariffs boost inflation and the “Big Beautiful Bill” curbs buying power. Regardless of which way sentiment is headed, there is no question that tariffs are reshaping consumers’ purchasing decisions.
The situation: Despite logging a sixth consecutive quarter of negative comps in FY Q3, CEO Brian Niccol—who famously steered Chipotle out of its food‑safety crisis—said Starbucks’ turnaround is running ahead of schedule. Our take: While it’s encouraging to see Starbucks take some small steps in a positive direction, the road is still steep. Consumers remain price‑sensitive, agile rivals in the US and China are taking multiple paths to steal share (both value‑led and trend‑driven), and commodity costs are rising. To break out of its sales slump, Starbucks must execute on four fronts: Make service faster and better. The chain needs to speed up service without sacrificing the high-touch hospitality that Niccol is seeking. Find ways to differentiate. It’s easy to roll out new offerings, but it's hard to develop unique beverages that consumers will clamor for rather than recoil at (who can forget Starbucks’ Oleato line of olive oil-infused drinks?). Lean on technology. Refreshing Starbucks’ Rewards program and revamping its app are proven tools to drive occasional customers back into its stores. Stabilize China. Price cuts may lift traffic, but Starbucks needs to balance volume gains against margin erosion and fend off lower‑priced competitors such as Luckin. Nailing these pillars—speed, product innovation, tech‑powered engagement, and a calibrated China play—will determine whether early green shoots turn into sustained growth.
The trend: While rising cost-consciousness is causing consumers to think twice before indulging in a burrito, they’re still saying yes to a splurge-worthy drink. Beverages have emerged as one of the hottest growth categories in US foodservice, offering quick-service restaurants (QSRs) a high-margin way to boost traffic and ticket sizes amid inflation fatigue. Sales at beverage- and snack-focused chains surged 9.6% in 2024—the largest annual growth of any restaurant category, according to Technomic data cited by The Wall Street Journal. For comparison, burger chains—despite generating more total sales—grew just 1.4% over the same period. Our take: The beverage boom is fueled by novelty, shifting habits, and the hunt for higher margins. Consumers are stressed. Amid economic uncertainty, nearly half (44%) of consumers turn to comfort or junk food to cope—and specialty drinks offer a relatively affordable way to indulge without breaking the bank. They crave novelty. Limited-time drinks with bold flavors, bright colors, and TikTok appeal are strong traffic drivers, especially among Gen Z, who are eager to try what’s new while it lasts. Younger consumers are drinking less alcohol. As Gen Z and millennials cut back on alcohol, drinks like iced coffees, chillers, and fruity refreshers are filling the social gap with fun, flavorful alternatives. Chains are chasing margins. Beverages typically carry higher profit margins than food and are often (but not always) operationally easier to tweak. Adding a new syrup or topping is simpler than introducing a new entrée, making drinks an efficient way to drive both sales and excitement.
As more consumers start GLP-1 treatments, some CPG brands must work harder to stay in shopping carts. As many GLP-1 users eat less and change their diets, it opens new challenges and opportunities for retailers and marketers.
Chipotle lowered its FY sales forecast after same-store sales fell more than expected in Q2, marking the second-straight quarter of declining traffic as wary consumers think twice about dining out. Chipotle’s Q2 struggles clearly show that consumers are becoming much pickier about where they choose to spend their money. The vast array of meal deals available in the QSR marketplace means Chipotle can no longer compete on value alone—making menu innovation and limited-time offerings even more necessary to drive traffic.
The news: Coca-Cola and PepsiCo are expanding their portfolios by leaning into better-for-you trends and ingredient transparency. Our take: Even with Coca-Cola and PepsiCo’s massive brand equity, they face the same fundamental challenge as all CPG brands: competing against private labels offering innovative flavors at lower prices, and better-for-you upstarts chip away at brand loyalty. While ingredients like cane sugar and prebiotics may not sway every shopper, they appeal to increasingly fragmented consumer preferences. Expect more targeted innovations as soda makers try to balance nostalgia with modern demands for wellness, transparency, and functional benefits.
Starbucks is taking a different approach to its much-hyped Pumpkin Spice Latte this year. Rather than pulling the launch forward, as it has done for the past several years, the drink will make its debut on August 26—four days later than in 2024, and the PSL’s latest launch date since 2022. Delaying the launch slightly could build excitement over Starbucks’ fall menu, and encourage customers to visit more often once the PSL hits stores. The move might also lift sales for Starbucks’ grocery assortment—especially given the current popularity of at-home coffee brewing—which could in turn help offset the company’s in-store softness. Still, the enduring popularity of the PSL alone won’t be enough to lift Starbucks out of its slump.
The strategy: Despite ongoing economic headwinds, Domino’s delivered solid Q2 growth across all income levels by doubling down on value and innovation—key pillars of its Hungry for More growth strategy. CEO Russell Weiner noted during the company’s earnings call that Domino’s has consistently gained about 1 percentage point of market share annually over the past decade—and sees ample opportunity to build on that momentum and further outpace rivals. Our take: Domino’s is proving that even in a challenging, price-sensitive environment, smart innovation and a sharp value proposition can drive growth across income cohorts. By blending crave-worthy new items like stuffed crust pizza with a more personalized loyalty experience and increased delivery flexibility, the brand is positioning itself to win market share from slower-moving rivals.
Shiseido is planning a “wide-ranging and significant reduction” to its Americas workforce, according to an internal memo first reported by Instagram account Estée Laundry. That marks the latest in a string of beauty layoffs, with both Estée Lauder and Coty announcing headcount reductions earlier this year. While some of Shiseido’s problems stem from its misjudged acquisition strategy, its downsizing also speaks to the difficult beauty environment. We expect cosmetics and beauty sales to rise 2.4% this year, less than half of 2024’s growth rate—and a far cry from the 11.2% increase in 2023.
The trend: Budget pressures, increased GLP-1 drug adoption, evolving government policies, and a growing preference for healthy eating are reshaping consumer grocery habits—forcing CPG giants like PepsiCo to rethink their businesses in order to remain competitive. Our take: The food industry is in a state of flux, with companies frantically adjusting their portfolios to accommodate shifts in eating and drinking behaviors. Speed is of the essence—brands must adapt to consumer demand for high-protein products and simplified labels.
The news: Circle K owner Alimentation Couche-Tard has dropped its bid to buy Japan’s Seven & i Holdings, casting doubt on whether the 7-Eleven operator’s planned US IPO will proceed, Bloomberg reported. Our take: As 7-Eleven continues efforts to strengthen its core business, the failed takeover bid offers lessons for retailers and brands. Decisions involving globally recognized brands should be strategic, not reactive. Retailers must maintain flexibility to revisit IPO or spin-off plans as business circumstances change.
The news: Walmart introduced a private label for tweens, Weekend Academy, just in time for the back-to-school shopping season. Our take: As Target proved, retailers that use their private labels to deliver on-trend products at affordable prices can win big with shoppers. While Walmart hasn’t always been known as a destination for stylish products, its growing investments in its store brands could help it capitalize on Target’s fading “Tarzhay” magic and become a go-to for value- and design-conscious shoppers.
66% of U.S. adults have reduced nonessential shopping to manage expenses, according to March 2025 data from CivicScience.
The situation: Strong performances in ecommerce and pharmacy helped Albertsons beat top- and bottom-line expectations despite continued pressure across the grocery industry. Albertsons is also winning over more shoppers by making its loyalty program more rewarding and easier to use. Membership rose 14% in the quarter thanks to more deals, simpler ways to earn points, and bigger cash-back perks. Our take: Consumers remain laser-focused on value, especially at the grocery store. While food inflation has eased since the sharp spikes of 2021 to 2023, the impact of those increases—plus the threat of new tariff-driven price hikes—has shoppers watching their grocery bills closely. Albertsons’ 14% growth in loyalty membership last quarter signals just how eager consumers are for savings. With more people eating at home to stretch their dollars, Albertsons’ value-focused approach helped it outperform expectations and could drive strength in coming quarters.
Men’s care brand Every Man Jack employs a strategic calendar-based marketing approach that shifts focus throughout the year, responding to consumer behavior and competitive pressures.
Retailers and CPG brands may face challenges as President Donald Trump’s so-called “big, beautiful bill” takes effect, ushering in sweeping changes to the Supplemental Nutrition Assistance Program (SNAP).
The trend: Healthcare professionals are worried that social media influence promotes unhealthy fad diets, per a new Sermo survey. Our take: Healthcare professionals risk losing credibility with patients, who are turning to more relatable (albeit maybe more unreliable) social media influencers. Doctors and nurses will need to enroll in CME nutrition courses and lean into their medical expertise when patients are in the office to offer guidance on nutrition, without seeming heavyhanded.