In early March 2020, as the COVID-19 virus spread to more countries, the retail industry began to contemplate the possible implications, but a stark reality swiftly sank in. By March 11, the World Health Organization had declared the outbreak a pandemic, and retailers deemed nonessential initiated temporary store closures almost immediately.
Hope for a return to normal wouldn't come until November, with news of a possible vaccine. Slowly but steadily, workplaces, schools and stores opened up again, and the National Retail Federation pinned its growth expectations to the vaccine rollout.
Five years on, though, normal isn’t really happening.
Some of that is because the pandemic — which has taken millions of lives globally and over a million in the U.S. alone — reshaped work, lifestyle and shopping patterns. Many people have yet to return to the office. Shoppers were eager to head back to stores, but brought new expectations. They also diverted much of their discretionary dollars to experiences like dining out, especially at first.
Retailers initially didn’t seem prepared for their customers to walk back through their doors, according to Nikki Baird, vice president of strategy and products at Aptos.
“I was definitely worried the last couple of years, particularly ’22 and ’23 — I thought retailers could really screw this up if they don't reinvest in stores. Fortunately, consumers are giving retailers more and more chances, and they're telling them what they want,” she said by video conference. “They want these experiences, they want that to be as much a part of their brand experience as anything they do online. And retailers are now catching their breath and getting back into the rhythm of delivering on those expectations.”
They must, because consumers have taken back much of the leverage they had before the pandemic, according to Joe Schmitt, managing director in BRG’s retail performance improvement practice.
“Even up to 10 years ago, technology gave the consumer all the power in terms of where they buy, how to buy, and at what price they buy. The pandemic really derailed that and took some of that power away from the consumer,” he said by video conference. “But now that power is there and stronger than ever. And with the current situation we have in the economy and in retail overall, the consumer is really flexing their might and using that power right now — and they truly are fed up with how much stuff costs and what their perceived value is that they're getting out of it.”
Normalcy has mostly escaped the post-pandemic economy as well. For a while, retailers were buttressed by spending that was enabled by the federal government’s pandemic relief checks, and that support strengthened consumers for longer than many analysts expected. As pandemic savings dwindled, though, inflation surged and stuck around. That made consumers extra careful about what they bought, though they did keep spending.
In 2025 so far, inflation has ebbed, and even egg prices — which have become an emblem of the high cost of groceries — may be stabilizing. But fresh worries about distortions in the economy, mostly from tariffs and threats of tariffs, are shredding any sense of stability, several observers said.
Consumer sentiment has plummeted this year, amid rising fears that Trump administration policies including tariffs would stoke prices, according to consumer surveys from the University of Michigan. The most recent survey found confidence down 11% in March and a 22% cumulative drop since December, reaching the lowest level in three years. Sentiment has dimmed regardless of age, education, income, wealth, location and political affiliation, leading one economist to call it “a horrific report.”
The anxiety is grounded in reality. Jerome Powell, chair of the Federal Reserve, said at a press conference Wednesday that tariffs tend to slow economic growth and stoke inflation, and that the Trump tariffs and other policies have created “really high uncertainty.”
At the pandemic’s fourth anniversary, “normal” may have seemed possible. But the barrage of headlines about mercurial actions from U.S. leaders — and the upending of domestic and international norms — is getting in the way, according to Greg Portell, a senior partner and global markets lead at Kearney.
“We have entered a period where destabilization should be expected,” he said by phone. “If you would have been having this conversation a year ago, I think you would have a lot more comfort around this concept of a ‘normal.’ And even then the pace at which we're experiencing these changes almost precludes a normal from existing. When things can change in a 20-minute period and you don't know what's going to happen, it's hard to call it normal.”
