Retail & Consumer Brand Implications from the State of the Union
Recent economic signals point to a slightly more constructive environment for retailers.
In his latest State of the Union address on 2.24.26, Donald Trump emphasized easing inflation, wage growth, and a strengthening economy. Let’s see how that intersects with recent & forecasted retail trends to create actionable insights for Retailers & Brands.
For instance, industry coverage from Retail Dive’s 6 trends to watch in 2026highlights a retail sector that is cautiously investing in AI, serving value-oriented customers, offered different pricing in-store & online, further improved delivery speeds and experienced cost of goods uncertainty due to tariffs.
While discretionary spending pressure is easing, retailers & brands need disciplined execution to achieve efficient growth.
The Consumer Has More Breathing Room
Several economic indicators suggest that consumer pressure is easing modestly.
First, inflation has moderated. CPI declined from 4.1% in 2023 to 2.9% in 2025, based on historical data from the U.S. Inflation Calculator (1)
Second, according to AmericanProgress.org (2), the impact of tariffs are approximately 0.7% and are already reflected in the 2.9% overall inflation rate. As an observer, the rate of tariff’s impact on prices are real, but not nearly as large an influence as would be indicated by the panic that many retailers & brands experienced in 2025. Clearly, different sectors experienced different pressures, so I don’t want to minimize all leadership concerns in this area.
Third, wages are growing faster than inflation. According to the U.S. Bureau of Labor Statistics (3), wage growth in 2025 is 3.4%, exceeding CPI.
What Does this Mean in Real Spending?
Assuming….
· Income: $60,000 * 3.4% wage growth = $62,040
· Expenses: $50,000 * 2.9% inflation = $51,450
Consumers had discretionary income of…
· Previously: $10,000
· Now: $10,590
· Net Increase: $590
The increase is not dramatic at the individual household level. However, across millions of consumers, incremental discretionary spending could become meaningful. Consumer Demand is likely to shift to the next more important or desired category of goods versus a dramatic shift in spending across all categories. This highlights how important it is to have a compelling value proposition to inspire customers to choose your brand.
1. Marketing: Maximize All Marketing Levers
Retailers should evaluate all their marketing activities to ensure that all components are contributing to performance and working together seamlessly.
You’ll want to:
Reevaluate the marketing mix allocation based on incrementality
Ensuring brand value proposition aligns with key target markets
Be primed to adapt to a continuously shifting media landscape
Design strategies across the full journey: awareness, consideration, purchase, loyalty & advocacy
Execute integrated marketing versus isolated channel execution
Businesses often need to think more holistically about their marketing strategies, moving from simply testing & optimizing channels to ensuring their marketing system is working together as unit.
2. Conversion Optimization: Capture the Demand You Already Paid For
Retailers should ensure that the traffic they are driving converts at the highest possible rate. As acquisition costs remain elevated, conversion becomes one of the most powerful levers for profitable growth.
You’ll want to:
1. Leverage Agentic AI to assist customers during decision-making and checkout
2. Implement intelligent recommendations to increase AOV and basket size
3. Strengthen product detail pages with clear value propositions, imagery, and social proof
4. Optimize internal search to improve product discovery and reduce abandonment
5. Evaluate whether a website replatform could unlock meaningful performance gains
Retailers often focus heavily on traffic growth while underinvesting in user experience improvements and features that convert that traffic. Conversion optimization requires continuous testing, disciplined prioritization, and a clear understanding of where friction is limiting performance.
3. MarTech Stack Modernization: Build a Connected, Decision-Ready Infrastructure
Retailers should evaluate whether their technology stack supports fast, informed decision-making across all customer touchpoints. Disconnected systems create inefficiencies in marketing, merchandising, and operations.
You’ll want to:
1. Ensure clean data governance and consistent KPI definitions
2. Identify opportunities AI-powered tech solutions
3. Unify customer profiles across channels
4. Enable real-time segmentation and personalization
5. Remove redundant tools that add cost without clear ROI
Retailers and brands should strive to have a nimble stack this is a purpose-built system. This will allow you to portray a single, unified brand to your customer. You’ll also gain more accurate data for enhanced decision-making.
4. Omnichannel: Reduce Friction Across the Entire Customer Experience
Retailers should design their operations around how customers actually shop, not how internal teams are structured. Consumers expect consistency across digital and physical environments.
You’ll want to:
1. Provide accurate, real-time inventory visibility
2. Simplify shipping and returns policies
3. Align promotions and pricing across channels
4. Integrate customer service across in-store and online interactions
5. Ensure store teams and digital teams operate from shared customer insights
In truth, omnichannel strategies go beyond marketing. These strategies are an operational commitment to reducing friction at every stage of the customer journey. Retailers that align fulfillment, service, and digital experiences create stronger loyalty and long-term value.
The Bottom Line
The consumer purchasing environment is stabilizing. Inflation has moderated, wage growth is running slightly ahead of CPI, and the impact of tariffs appears manageable within current pricing levels. This provides a bit of breathing room that can calm the panic experienced by consumers, retailers & brands by the tariffs instituted in 2025.
Retailers that use this period to improve marketing efficiency, strengthen conversion infrastructure, modernize data connectivity, and refine omnichannel execution will position themselves for profitable growth. These improvements will compound over time and create a durable competitive advantage.
Conversely, retailers that rely on macroeconomic improvement to offset structural inefficiencies will not see the same results.
Prioritizing Critical Marketing Growth Initiatives
If your marketing organization is trying to determine what strategies and tactics to implement that will give you the biggest performance increase, Froghop Digital can help.
We’ll look at your marketing, conversion, martech stack and omnichannel sophistication to recommend the most impactful actions for your business.
If you’re ready to gain clarity on the multitude of options for efficient growth, let’s connect.
Sources:
US Inflation Calculator: https://www.usinflationcalculator.com/inflation/historical-inflation-rates/
American Progress: https://www.americanprogress.org/article/the-trump-administrations-tariffs-are-a-hidden-holiday-tax/
US Bureau of Labor Statistics: https://www.bls.gov/news.release/eci.nr0.htm