Succeeding in uncertainty

Consumer Behaviour

📈 Consumers waver when it comes to AI usage to shop but the bigger picture is bleak

KPMG recently conducted their summer 2025 consumer pulse survey of over 1500 US consumers; revealing a significant shift in consumer behaviour, driven by inflation, shrinking incomes, and growing tariff concerns. The report highlights a "make it count" mindset, where consumers are more cautious, cost-conscious, and selective than ever before. Nearly 4 in 10 U.S. consumers report a decline in household income, almost double last year's figure, and over 70% anticipate a recession within the next 12 months. This environment demands brands to focus on trust, transparency, and tangible impact to win over today's consumer, emphasising empathy, innovation, and a clear reason to matter.

Tariffs have emerged as a major concern, with 79% of consumers expecting higher prices in the coming months. Over half attribute rising costs to tariffs, particularly in groceries, electronics, and apparel. This growing awareness is reshaping spending habits, with 50% cutting back on purchases and 49% actively seeking deals and discounts. Additionally, 39% of households report income erosion, leading to reduced savings contributions and spending cuts across nearly every category except essentials like groceries and automotive expenses. Consumers are adopting tactical approaches, such as chasing discounts, increasing thrift store purchases, and opting for fast food over casual dining.

Despite economic pressures, summer travel remains a priority, with 58% planning to travel, albeit with a 7% reduction in spending per trip. Wellness continues to be non-negotiable, with a focus on physical fitness and mental health, particularly among Millennials and Gen Z. Digital behaviour is also evolving, with 27% shopping direct-to-consumer for personal care, apparel, and food/beverages, prioritising secure payment, easy returns, and fast/free shipping. Consumers are increasingly skeptical of online ads, with 56% claiming they are not influenced by them, and privacy concerns around generative AI are prominent, with 43% uncomfortable with companies using AI to analyse personal data. Brands that leverage AI with transparency and purpose will be rewarded by consumers.

• Our guidance to retailers: Retailers need to adapt quickly to these changing consumer behaviours. To stay competitive, they should focus on delivering value through trust and transparency. This means being clear about pricing, offering genuine discounts, and ensuring that every dollar spent by the consumer feels worthwhile. Innovation is key—brands should explore new ways to engage consumers, such as enhancing their digital shopping experiences and leveraging AI responsibly to personalise offerings without compromising privacy. Additionally, empathy is crucial; understanding the financial pressures consumers face and responding with relevant, cost-effective solutions will help build loyalty. Retailers should also prioritise essentials, own brand and wellness products, as these areas are seeing sustained consumer interest. By recalibrating their strategies to meet these evolving needs, retailers can maintain relevance and drive growth in a challenging economic landscape.

 🔍Supply Chain

US tariffs causing an unanticipated consequence

It’s clear that Trumps (public) intention with tariffs was to drive more manufacturing back to the US. I won’t be discussing the logic behind this, because it is inherently lacking and it’s clear for all to see. But, his view to drive a ‘Made in America’ movement is having unexpected outcomes. Over the past few weeks we have seen a 90 day pause put in place for all but China, where trump has created a trade war, one that the US cannot win. By creating an effective 145% tariff on inbound Chinese goods, it incentivises production in America, but the realism around this is scarce, as production costs combined with lack of skill labour mean that it is nigh on impossible. Although chips and smartphones are exempt, we are seeing reaction from major firms already.

Apple is investing significantly in their supplier base, shifting production for US inbound goods to India and Vietnam, with component production being ramped up in Thailand. However transforming an end to end supply chain is challenging to say the least, and the reality is that these countries will not be able to compete with China’s efficiency or quality that is being produced. It will achieve part of Trump’s goal which is to decrease dependency on China, and empower other regional players to decrease risk.

The other effect is the opposite though, due to export controls we are seeing a rise in Chinese produced technology that will rival that of Western companies.

What does this mean for APAC?

For APAC businesses and consumers, this will be a good thing as we see increased competition and innovation across the board. It is possible that more economic collaboration will occur across the Asia Pacific region, and innovation becomes more regional and nuanced.

🔭 Gemba - At the place

 How 7-Eleven is transforming product introductions and consumer engagement

7-Eleven is revolutionizing the convenience store experience by introducing customers to new and innovative products through its retail media network, Gulp Media. Unlike many convenience stores that focus on upselling familiar items, 7-Eleven leverages personalised ads across various channels to drive product trial and engagement. Neha Nayyar, senior director of retail media and shopper marketing at 7-Eleven, emphasised the importance of the convenience channel for new product introductions, highlighting the retailer's role in promoting immediate consumption and driving unit sales.

Launched in 2022, Gulp Media has expanded across 7-Eleven's 13,000 stores, utilizing media at the pump, digital signage, in-store radio, and more to deliver personalized messaging throughout the customer journey. This approach allows vendors to introduce new products effectively, as customers are more inclined to try single units of drinks or snacks rather than purchasing larger packs at grocery stores. By focusing on incremental return on ad spend (iROAS), 7-Eleven and its vendors can measure the true impact of their campaigns, distinguishing between customers who would have purchased anyway and those influenced by the ads. Mario Mijares, vice president of marketing, loyalty, and monetisation at 7-Eleven, stressed the importance of partnership, visibility, and understanding consumer interests to achieve mutually beneficial outcomes.

What it means for you

Other retailers can adopt a similar approach by leveraging personalised retail media networks to introduce new products and drive customer engagement. By focusing on incremental metrics like iROAS, retailers can gain deeper insights into the effectiveness of their campaigns and optimize their strategies accordingly. Building strong partnerships with vendors, understanding consumer behaviour, and maintaining visibility across various touchpoints are crucial for success. Retailers should also consider the convenience channel as a primary avenue for product trials, offering single units to encourage experimentation and drive sales. This innovative approach can help retailers stay competitive and meet the evolving needs of their customers.

🧰 Framework of the Week

🎯 Retail Journey to Future-forward, autonomous and resilient (FAR)

The path to enabling omnichannel business has required continual evolution, from adding new applications and systems to embracing digital transformation, AI, and mobile technologies. Today, the retail industry is advancing towards a future-forward, autonomous, and resilient (FAR) model, leveraging Generative AI (GenAI) and intelligent edge computing to further reinvent retail. This journey is ongoing, focusing on customer-centric approaches, efficient product flows, and engaging employee experiences.

GenAI and intelligent edge computing are at the forefront of this transformation, enabling personalised content creation, new product designs, and enhanced customer service through sophisticated chatbots and virtual assistants. Investments in high-performance computing systems and distributed edge platforms are crucial to support GenAI algorithms, improving compute response and efficiency in stores. Additionally, AI-driven predictive analytics, autonomous systems, and real-time tracking are revolutionising the supply chain, while RFID mandates enhance traceability and inventory control. Automation of routine tasks allows the frontline workforce to prioritize customer service.

How Retailers Can Leverage This Approach:

Retailers can navigate the journey to FAR by embracing technological innovation, decentralisation, and automation. Investing in AI, machine learning, and GenAI can enhance personalised customer experiences and optimize supply chain management. Implementing intelligent edge computing reduces latency and supports real-time decision-making, while traceability applications build consumer trust through transparency.

Empowering the workforce with AI-driven insights and mobile technologies enhances operational efficiency and customer service. Deploying autonomous systems streamlines operations, allowing employees to focus on higher-value tasks. Building resilience through diversified supply chains, robust digital infrastructure, and strong customer and partner relationships ensures business continuity and adaptability.

By adopting these principles, retailers can meet evolving consumer expectations, secure a competitive edge, and achieve sustained growth, operational efficiency, and enhanced customer loyalty.

 📡 Link Roundup + My Take

• eBay Enhances Seller Tools with AI — eBay Enhances Seller Tools with AI: eBay’s CFO, Brian Priest, highlighted the company’s use of AI to simplify the listing process for sellers. Generative AI tools auto-fill item descriptions and attributes using photos, improving efficiency for over 10 million sellers.

• Morrisons pilot new robotics in store — UK supermarket chain Morrisons is piloting “Tally” robots from Simbe Robotics in select stores. These AI-powered robots autonomously navigate aisles, checking product availability and shelf compliance, aiming to optimize inventory management and free up staff for customer service r.

• Sam’s Club Eliminates Checkout Lanes — Sam’s Club plans to remove traditional checkout lanes across all 600 U.S. stores. Utilizing AI and its “Scan & Go” mobile app, customers can scan items as they shop and exit through AI-verified gates, streamlining the shopping experience

• Japan Showcases Futuristic 7-Eleven Stores — At the 2025 Osaka Expo, 7-Eleven stores are featuring remote-controlled robots called “newmes” that assist shoppers. These avatars, operated by staff from remote locations, aim to address labor shortages and enhance customer service

• GenAI adoption in APAC retail  — IDC predicts that by 2027, half of APAC retailers will be leveraging generative AI for product content creation, enhancing customer engagement and driving operational efficiency.

• NRF APAC  — The top retailers in APAC are coming together for Retails Big Show Asia Pacific June 3rd to 5th in Singapore. It will showcase some of the latest innovation across the region, and shouldn’t be missed!

• Shoppers furious over BigW loyalty shift  — From next month, Everyday Extra members will no longer be able to claim 10 per cent off their Big W purchases once per month.

My commentary: Robotics and AI are at the centre of the news yet again which is great to see. Retailers are spending on average $400k a year on AI initiatives, but there is still a requirement to move out from the POC/incubation stage into full scale rollouts.

📡 Top Jobs across APAC

• Head of eCommerce (Qantas)

• Head of Retail APAC (APM Monaco) 

• Director, Marketplace Supply Chain Pacific (Nike)

• Head of Retail APAC (Emma, The Sleep Company)

• Head of Commercial (Ranged)

• Worldwide Retail & Consumer Goods Business Development - Korea (AWS)

• Head of Retail, Hong Kong (Bang and Olufsen)

• Innovation Managers (Asahi Beverages)

• Head of Product Development and Product (Country Road Group)

• Head of Merchandising, Malaysia and Singapore (Sephora)