Retail 2025: What’s in Store? The Evolution of Consumer Spending and the Future of Fashion Retail
The past five years have been nothing short of an economic rollercoaster. One minute, we’re cashing stimulus checks for luxury handbags, indulging in what many called "revenge shopping" post-pandemic. The next, inflation soared, interest rates followed, and our spending patterns changed dramatically. By 2023, it became clear that the days of rampant splurging were over. Today, as we look toward 2025 and what it may bring, retailers are navigating a new normal—one shaped by cautious optimism, value-driven consumers, and the race to create unforgettable shopping experiences.
Photo by Hua Thun Ho on Unsplash
The Spending Shift: 2020 to 2024
Let’s rewind for a moment. Post-pandemic, the retail world experienced an unparalleled surge in discretionary spending. With government stimulus checks rolling in and little else to do, consumers flocked to luxury goods, upgrading wardrobes and investing in aspirational purchases. Between 2021 and 2022, it seemed like everyone was shopping, particularly at the high end of the market. Let’s face it, we were bored in the house, we were in the house bored!
But as inflation reared its head in 2023, central banks around the world raised interest rates to cool the economy. Suddenly, it got moody out there. Consumers tightened their wallets, prioritizing financial security over immediate gratification. According to McKinsey, while optimism about the economy began to rise in late 2024, discretionary spending—especially in luxury—declined as consumers embraced what researchers described as “trading down.”.
This trading down meant opting for private-label brands, ‘elevated-luxury’ so to say, delaying purchases altogether, and searching for value across the board. Mastercard noted that while essentials and value-oriented retailers saw resilience, spending growth in the luxury market dropped significantly during this period.
But here’s where it gets interesting—while spending on big-ticket luxury items cooled, consumers didn’t stop indulging altogether. They just got more selective. Enter the Lipstick Effect—a classic economic theory that suggests when money is tight, people still seek out small luxuries to lift their spirits. Instead of dropping thousands on a designer bag, shoppers leaned into fragrance, beauty, and small accessories—items that felt like a treat without the guilt.
In fact, while luxury apparel struggled in 2023-2024, prestige beauty sales surged. According to The State of Fashion 2025, beauty outperformed fashion in growth, driven by consumers seeking affordable indulgences. The same applied to "quiet luxury"—rather than loud logos, shoppers gravitated toward elevated basics, minimalist jewelry, and premium yet subtle statement pieces that gave them a taste of luxury without the price shock.
This behavior reinforced a critical truth about consumer psychology in tough economic times: people still want to spend. They just redirect that spending in ways that feel both justifiable and rewarding.
The Rise of the Value-Seeking Consumer
Fast forward to 2025, and the retail landscape reflects this new mindset. Consumers are still spending, but they're doing so thoughtfully. Deloitte's latest industry report paints a clear picture: loyalty to brands is eroding, with 56% of consumers prioritizing price over loyalty. Retailers, in response, are doubling down on personalization, offering discounts, and expanding private-label offerings to capture these value-driven shoppers.
This shift in behavior also reflects growing consumer savvy. As one Business of Fashion report aptly stated, "The resilient consumer is a myth." Today’s shoppers research deeply, ensuring every dollar goes toward purchases they deem worthwhile. This is particularly true for higher-ticket items, where decisions are more deliberate than ever.
Furthermore, value-driven retail segments, such as resale and off-price, continue to thrive. In 2024, 64% of U.S. shoppers reported trading down, even in higher-income groups—a trend that shows no signs of slowing. These segments have become the backbone of retail resilience.
But here’s where it gets interesting—while consumers are prioritizing value, that doesn’t necessarily mean they’re just looking for the cheapest option. Instead, we’re seeing the rise of what experts call “considered consumption”—where every purchase is intentional, but shoppers still want quality, aesthetic, and experience at an accessible price point.
This is why off-price retailers and resale platforms are thriving—not because shoppers are settling, but because they’re maximizing their dollar. According to The State of Fashion 2025, resale is outpacing traditional retail growth, with shoppers seeking high-quality pieces at lower price points. Meanwhile, brands are elevating private-label products to create an “affordable luxury” feel—think Zara’s premium collections, Uniqlo’s minimalist staples, and even Target’s designer collaborations that offer status-symbol aesthetics without the financial strain. Retailers that understand this new consumer behavior aren’t just slashing prices—they’re redesigning their brand perception to cater to status-conscious but value-driven shoppers.
Enter Coach—the comeback kid of 2025. Once seen as a "mom brand" that had lost its luster, Coach has executed one of the most impressive brand revivals in recent fashion history, successfully repositioning itself as a Gen Z favorite. But their resurgence isn’t just about nostalgia—it’s a masterclass in capitalizing on shifting consumer priorities.
As younger shoppers prioritize affordable luxury and resale-driven aesthetics, Coach has leaned in with archival-inspired designs, clever social media campaigns, and an emphasis on quality at an accessible price point. The viral success of the Pillow Tabby bag—which flooded TikTok with unboxings and styling videos—proved that Gen Z still craves status-symbol pieces, just at a price that feels justifiable. Searches for the Tabby surged 368% in 2022, and by 2024, the brand saw major revenue growth driven almost entirely by its younger customer base.
Coach’s (Re)Loved program, which promotes circular fashion and vintage-inspired designs, has also positioned it perfectly within the resale-conscious mindset of modern shoppers. And with younger consumers demanding both value and meaning behind their purchases, Coach's balance of heritage craftsmanship and trend-forward accessibility is paying off in a big way.
In 2025, Coach is no longer playing catch-up—it’s leading the charge in the new era of aspirational, attainable fashion. And if there’s one person who can catapult a brand back into the fashion conversation, it’s Bella Hadid. When she was spotted carrying Coach’s Brooklyn bag, searches for suede spiked 263%, and suede bag searches overall increased 175%. It’s a prime example of how today’s value-seeking consumer still craves trend-driven pieces, but they want their purchases to feel effortless, functional, and priced right. With mid-range designer bags booming, Coach's Brooklyn bag has solidified itself as the perfect blend of practicality and polish, proving that a well-timed celebrity endorsement paired with an on-trend, well-priced product is still a winning formula in 2025.
The Role of Technology in Retail
Another major shift in 2025 is the role of technology in shaping how—and where—people shop. AI is no longer just a tool for personalized product recommendations; it’s transforming retail operations, demand forecasting, and even trend prediction. According to Deloitte, 71% of retail executives expect AI to be a game-changer, helping brands optimize inventory, fine-tune pricing strategies, and reduce waste. (Deloitte, 2025 US Retail Industry Outlook)
But this digital shift isn’t just about efficiency—it’s about creating seamless, immersive experiences that cater to today’s hyper-connected consumer. Social commerce has exploded, with platforms like TikTok Shop and Instagram Live Shopping driving real-time, influencer-led purchases. Meanwhile, luxury retailers like Prada and Gucci are implementing AI-powered smart mirrors and biometric payments, blending the best of digital convenience with physical retail.
Perhaps most fascinating is how AI is now predicting fashion trends before they even happen. Pattern recognition algorithms track social media, search trends, and consumer behavior to help brands forecast demand and minimize overproduction. The result? A more agile, data-driven approach to fashion, where brands like Zalando and H&M are using AI to design collections based on real-time consumer interest. Technology is no longer just supporting retail—it’s reshaping it entirely. And in 2025, the brands that embrace AI, omnichannel innovation, and predictive analytics will be the ones leading the charge.
The Return of In-Store Shopping
Despite the rise of e-commerce, in-store shopping is far from dead. In fact, 80% of all retail sales still happen in physical stores, according to Deloitte. But the role of the store has evolved. Consumers are no longer satisfied with a purely transactional experience—they crave connection, immersion, and a reason to step through the door. Retailers like Aritzia, Aime Leon Dore, and Jacquemus have cracked the code. Their stores are more than just places to shop; they’re lifestyle destinations.
Aritzia is a masterclass in high-touch retail. Walk into any of their locations, and you’ll instantly feel the difference—the vibe, the soundtrack, the warm lighting, the plush fitting rooms that feel like mini dressing suites. The brand has elevated mid-tier fashion shopping into a luxury-adjacent experience, borrowing cues from high-end boutiques while keeping prices attainable. Their Super World flagship stores are more than just retail spaces—they’re designed to be destinations. Curated playlists (so beloved, they have their own Spotify following), lounges for waiting friends and partners, and visually compelling merchandising that blends trending pieces with timeless staples all make stepping into an Aritzia store feel like an event. You’re not just shopping—you’re absorbing the aesthetic and lifestyle that the brand represents. And Aritzia knows exactly where to put these stores. They position stores in AAA locations—Fifth Avenue, SoHo, prime shopping districts in every major North American city. Their flagship spaces are designed to pull people in, encourage browsing, and build an emotional connection between the shopper and the brand.
Aimé Leon Dore (ALD) has redefined the in-store shopping experience by creating spaces that are more than just retail outlets—they are cultural hubs that reflect the brand's unique blend of New York street style and Mediterranean heritage. Founded by Teddy Santis in 2014, ALD's flagship store at 224 Mulberry Street in New York City exemplifies this philosophy. The store's design harmoniously combines classical elegance with contemporary sensibilities. Warm wood paneling, vintage-inspired white walls, and meticulously crafted fixtures create an atmosphere that is both refined and inviting. A distinctive feature of the flagship is Café Leon Dore, an in-house café inspired by Santis's Greek roots. Offering traditional Greek beverages and light fare, the café provides customers with a place to relax and immerse themselves in the brand's cultural narrative. This integration of retail and hospitality encourages visitors to linger, fostering a sense of community and connection. ALD's approach to retail extends beyond aesthetics. The brand is known for its limited releases and collaborations, which generate excitement and a sense of exclusivity among its customer base. By carefully curating its product offerings and maintaining an air of authenticity, ALD has cultivated a loyal following that sees the brand as a lifestyle rather than just a label. In essence, Aimé Leon Dore has bucked retail trends by transforming its stores into experiential destinations that offer more than just products—they offer a glimpse into a thoughtfully crafted world where fashion, culture, and community intersect.
Jacquemus has redefined the in-store shopping experience by transforming traditional retail spaces into immersive brand environments. The brand's first boutique, located at 58 Avenue Montaigne in Paris, exemplifies this approach. Opened during Paris Fashion Week, the store spans 200 square meters across two floors of a 20th-century Art Deco building. The interior design features a palette of beiges, creams, and whites, with organic curves and artistic details that evoke natural elements like sun, sand, and rocks, creating an atmosphere that is both serene and Instagrammable. To further enhance the customer experience, Jacquemus incorporated playful elements such as popcorn machines—one resembling a claw machine and another designed like an ATM—adding a whimsical touch that encourages social media sharing and engagement. The boutique was designed not just as a retail space but as a gift to the brand's community, inviting visitors to immerse themselves in the Jacquemus universe. This approach has attracted a diverse audience, including many from Gen Z, who often share their experiences online, thereby amplifying the brand's reach. The store welcomes everyone, even those who may not make a purchase, focusing on strengthening ties with the community and enhancing brand visibility. By creating such immersive and engaging retail environments, Jacquemus has successfully reimagined the role of physical stores, turning them into destinations that offer more than just products—they provide memorable experiences that resonate with customers and encourage brand loyalty.
Aimé Leon Dore New York City Flagship, Aritzia Fairview Mall Toronto, Jacquemus
Predictions for 2025: What’s Ahead?
As we move further into 2025, one thing is clear: retail is evolving, and only the most adaptable brands will thrive. Here are the key trends set to shape the industry:
Value Wins – Consumers will prioritize affordability more than ever, making private-label brands, off-price retailers, and resale platforms the big winners.
Experiences Matter – Flagship stores that feel like destinations—not just shopping spaces—will dominate. Brands investing in immersive, highly curated in-store experiences will pull ahead.
Technology Drives Loyalty – AI, social commerce, and omnichannel innovation will seamlessly connect brands with consumers, making shopping more personalized, predictive, and frictionless.
Resilience in Mass-Market Retail – While luxury faces volatility, mid-market and value-driven brands (like Aritzia and Coach) are proving more stable and better positioned to capture shifting spending behaviors.
Luxury Under Pressure – Price fatigue is real. High-end brands that over-rely on price hikes and promotions risk diluting brand equity, while affordable luxury continues to gain traction.
The Retail Landscape in 2025: Balancing Innovation & Emotion
Retail in 2025 is a story of evolution, reinvention, and resilience. Consumers are optimistic yet cautious, demanding both value and experience, both convenience and storytelling. Retailers are responding by rethinking their strategies—integrating AI-driven personalization, expanding omnichannel innovation, and designing stores that feel like curated lifestyle hubs. The brands that successfully balance efficiency with creativity, affordability with aspiration, and digital with human connection will be the ones shaping the next chapter of retail. The industry is transforming, and those who embrace the paradoxes of this new era will lead the charge.