The first half of the year has been a significant learning curve for many brands as they navigated through economic uncertainties. With the backdrop of ever-evolving tariffs, rapid accelerations in artificial intelligence, and shifting consumer spending, many brands have found themselves having to pivot quickly to keep pace with the changing landscape. Not to mention the technical changes brought about by Apple’s iOS 18, which has further complicated marketing strategies for numerous brands.
Insights from Listrak‘s recent reports, including “H2 2025 Beauty Retail Outlook” and “H2 2025 Fashion Retail Outlook,” have provided a window into what brands experienced in the initial six months of the year. These reports highlight both successes and challenges that brands faced and offer forecasts to guide them through the remainder of the year.
The fashion sector is projected to experience growth of 3 to 5 percent, notably driven by non-luxury brands. On the beauty front, e-commerce is also paving the way for growth, with an anticipated one-third of beauty sales occurring online. The ongoing digital shift underscores the importance of establishing robust e-commerce strategies for brands looking to capitalize on these emerging consumer habits.
Further analysis by Listrak underscored the impressive surge of SMS communication for brand engagement. With the advent of RCS (Rich Communication Services), revenue from SMS communications saw an increase of 30 percent. In contrast, email engagement has been on the decline, attributed to consumer fatigue and changes in Apple Mail. Brands reported a decrease of 29 percent in both click-through rates and revenue from email campaigns. However, a silver lining emerged, with a 7 percent increase in conversion rates year-over-year, reflecting that consumers with intent remain actively engaged despite the overall decline in email performance.
The initial half of the year also showcased key challenges for brands, primarily driven by consumer behavior shifts. Reports indicated that 42 percent of brands noted consumers were reducing spending and becoming more reliant on sales. Additional hurdles included supply chain disruptions (26 percent), volatility in tariffs (22 percent), and complications stemming from Apple Mail changes (11 percent). Understanding these trends has become crucial for brands seeking to navigate the current retail environment successfully.
Major takeaways from the first half emphasize a consumer base that is increasingly conscious of spending and committed to maximizing their dollar’s worth. Brands are focusing on evolving customer experiences and loyalty programs, upping the ante on personalization and engagement. Additionally, digital-first brands are enhancing their physical retail experiences, indicating a strategic pivot to diversify offerings and appeal to a broader customer base.
Looking forward, brands informed Listrak that their strategies for the second half include a mix of measures. Plans to increase prices are being considered by 25 percent of brands, while 23 percent intend to mount discounts. Aiming to diversify supply chains will be a priority for 20 percent of brands, with another 20 percent looking to enhance their capabilities in artificial intelligence. Lastly, initiatives to adopt pre-loved and used items are being pursued by 5 percent, reflecting a broader trend towards sustainability and conscious consumerism.
The reports projected that the second half of 2025 would be defined by three key trends: 1) Price pressure and a shift towards value-driven behavior, 2) Inventory volatility alongside operational agility, and 3) A rise in AI-powered shopping assistants. These trends point towards a marketplace where consumers are increasingly calculating their purchases, looking for the best deals while brands must demonstrate value consistently.
Price sensitivity is becoming apparent across the industry, with “dupes” gaining popularity and private labels from retailers like Target and Costco becoming more prominent. Additionally, pre-loved brands such as Nuuly and Rent the Runway are seeing enhanced traction as consumers opt for more affordable alternatives. A significant 37 percent of shoppers indicated they would cut down on any non-essential spending leading into the summer and holidays, emphasizing the crucial need for brands to provide tangible value for fashion and beauty products.
As retailers broaden their supply chains beyond China, predicting inventory levels becomes increasingly difficult. Due to President Trump’s tariffs, imports from China dropped dramatically—65 percent year-over-year—with order cancellations increasing by 60 percent compared to 2020. This ongoing volatility demands swift adaptations and greater operational flexibility. Intriguingly, Listrak noted that low inventory alerts via SMS had driven a staggering 42 percent revenue increase year-over-year, reinforcing the idea that scarcity can be a powerful sales tool.
In a landscape where AI is more integral than ever, findings reveal that 53 percent of consumers anticipate using AI to facilitate their purchasing decisions. The reports suggest a transformative shift from traditional search engines to reliance on ChatGPT in the upcoming holiday season. Retailers are recognizing the necessity to invest in AI tools on their e-commerce platforms to enhance product discovery and personalize consumer interactions more effectively.
While ChatGPT had initially stated no plans to monetize product recommendations, they have since shifted their stance, indicating a potential new income stream through AI integration. A remarkable 155 percent year-over-year increase in traffic to e-commerce websites from AI tools illustrates the palpable impact of technology on consumer behavior. Over half of fashion executives surveyed concurred that generative AI will play a pivotal role in product discovery this year, and 43 percent of retailers have already adopted chatbots to streamline customer service, demonstrating the urgent need for innovation in retail strategies.
“The first half of 2025 reminded us that retail success is not simply about predicting the future; it’s about being prepared for it,” remarked Jamie Elden, chief revenue officer of Listrak. “Change is constant, and with the right insights and tactics, retailers can turn these changes into competitive advantages. With Listrak’s predictive intelligence, we have highlighted key trends and provided actionable tactics to help retailers sustain momentum throughout the year.”