Managing tariff impact gets tougher as the holidays approach

Core Insights - Retailers and brands are planning to increase prices to mitigate the impact of tariffs, but this strategy is complicated by economic challenges and the approaching holiday season [1] - Executives from major off-price companies are closely monitoring mainstream retailers' pricing strategies to maintain their value advantage while raising prices [2] - Consumer confidence is declining due to tariff-related price increases and a weakening labor market, leading to slower growth in personal consumption expenditures [2][3] Consumer Spending Trends - US consumer spending growth is expected to remain weak through 2025, with a potential uneven recovery starting in late 2026 across different income groups and spending categories [3] - Wealthier households are increasing their spending on luxury goods, while lower-income households are focusing on essential items, highlighting a growing divide in consumer behavior [3] Price Increases in Luxury Goods - Prices for luxury goods are rising significantly, with high-end luxury handbags increasing by 9%, mid-tier luxury handbags by 14%, women's sneakers by 12%, women's boots by 9%, and women's denim jackets by 34% over the past year [4]