CEOs have been using that one for decades. But all that tempered optimism, more often than not, flowed from what has been repeatedly referred to as the “resilient consumer.”
The resilient consumer has become an article of faith in retail. Americans especially are going to spend, as if it’s almost their reason for being, completing the circle in a consumer-heavy culture.
But there are limits.
And Trump’s trade war, launched into an economy that was already showing signs of strain, might just have found a limit hard enough to break that faith in the consumer and necessitate a new buzzword.
“I’m not sure I would call the consumer fully resilient anymore,” said Katie Thomas, who leads the Kearney Consumer Institute and puts together its Consumer Stress Index.
Instead she suggested something new — “The coping consumer.” That’s something of a rhetorical step down from “resilient,” suggesting more a consumer who is standing their ground, but is struggling to do so. Consumers are being careful with their money, and aware that they might have to start cutting back.
One of the many stated goals of Trump’s trade war is to bring manufacturing back to the U.S. But most experts see supply chains that are hard to move and labor mismatches that would put companies that rely on imports out of business and ultimately raise prices for consumers.
Thomas has a nuanced view of the shopping psyche today. It’s not quite as dire as the mainstream readings of consumer confidence, including the University of Michigan’s Surveys of Consumers, which is down 30 percent since December, with last month’s decline described by the university as “pervasive and unanimous across age, income, education, geographic region, and political affiliation.”
A more-targeted dive into the consumer mindset reveals something a little different, according to Thomas.
“It’s no secret that most consumers are feeling a general level of stress and uncertainty around the economy — just more uncertainty than anything, just not knowing what’s going to happen, not knowing how it will impact them directly,” she said. “If you ask them more personalized questions about their own individual situation, they’re not actually feeling quite as stressed yet.”
At least so far, consumers aren’t directly seeing a threat to their job or or changes in stores.
Kearney’s research shows consumers feel about the same amount of agita that they did a year ago.
The pressure is just coming from different places.
“We’re seeing it kind of shift around from cost of living into trade and geopolitical concerns,” she said. “But we also continue to see that they’re not feeling it on a personal basis yet.”
The unemployment rate is still low at 4.2 percent and payrolls expanded by 228,000 in March, just before the trade war started in earnest. Over the past five years the Consumer Price Index has shown a 23.8 percent increase in prices across the economy. Average weekly wages, meanwhile, have still risen just a bit faster, gaining 25.6 percent to $1,231.
That has helped consumers hold their own.
All of which leaves the consumer — and the fashion world — in a kind of limbo, waiting for the next shoe to drop.
Trump’s trade policies have already forced changes that will be felt by consumers soon.
In the case of Shein and Temu shoppers, very soon.
Fast fashion’s e-commerce giants both said they would start to raise prices next week now that a duty-free loophole for goods valued at under $800 is closing. That will hit the younger shopper keen to snatch up some inexpensive fashion quickly.
Trump’s 145 percent tariffs on goods from China will take longer to work its way through the system, but will be felt much more widely since the country accounts for a third of all U.S. apparel imports.
That’s a point that Doug McMillon, chief executive officer of Walmart Inc., and Brian Cornell, CEO of Target Inc., no doubt made when they and other retail executives met with Trump in the Oval Office this week. Both Walmart and Target import goods from China, using the country’s manufacturing expertise and low costs to appeal to U.S. value shoppers.
There were signs on Tuesday that Trump was wavering and could cut those tariffs. But even at a third of their current levels, the levies would have a major impact.
No one really knows what will come out of the trade war — and that’s a problem.
“If you look at the human psychology component of it, it’s the unknown. It’s the fear, it’s the concern not knowing what’s going to come next,” said Marcie Merriman, cultural insights and customer strategy leader at Ernst & Young. “Over the last five years that’s got pretty well ingrained into our heads. What’s going to come next? When’s the next shoe going to fall? If we look at the overall psychology of people and the fear, the concern, the preparation for the unknown, that has become habit.”
Merriman said qualitative research shows that people are being more hesitant to make shopping decisions.
“That happened before the economy took a shift,” she said. “The habits have already been there and this is just impacting the way that they’re thinking about it.”
The challenge, well, one of the many challenges for retailers and brands, is to learn how to rely less on historical data — what sales were last week or last year — and focus in on consumers while planning for the future.
“Because things continue to change and we can’t get to that point of consistency, the importance of really talking with the customers, of really understanding where the mindsets are — much more broadly beyond just shopping in your store — is critical,” she said.
“So how are they changing other behaviors? How are they changing other things? Are they going out to eat less? Are they getting their nails done less?”
These are the “weak” signals from consumers who are not so much resilient anymore, but are now just coping.
If the fashion industry is going to work back up the ladder itself — from coping to resilient and maybe even to robust — it’s going to have to do it all.
It’s going to have to listen to both the weak and strong signals from consumers, figure out their supply chain, bolster their balance sheets and be ready to react and move quickly.
The “resilient consumer” might be on the way out, but a corporate structure built on “agility” is still in its prime.
The Bottom Line is a business analysis column written by Evan Clark, deputy managing editor, who has covered the fashion industry since 2000. It appears periodically.
