A look back at 2025, from tariffs to Target to Labubus

0:09Hello and welcome to the Modern Retail Podcast, our show that covers the ways the retail industry is changing and modernizing. I'm senior reporter Gabby Barco. I'm here with Melissa Daniels and this week we are joined by Mitchell Parton. Hello everyone. Hi. Howdy howdy. Well today is our very special annual year in review episode where we look back on the biggest shifts in the retail world and the stories and trends that pretty much defined the landscape and stood out to us you know especially with our beats. But we are going to start by going all the way back to January to go over a few topics that were on our minds and then kind of walk through the year and see how everything's changed since.

0:56Yeah, you know, in preparation for this episode, I went back and I listened to what our predictions were for 2025. And, you know, boy, were we right and boy, were we wrong? There were some good forecasting and, you know, maybe some stretches. But one of the biggest topics we were looking at heading into this year is what would happen in the M &A world, the world of mergers and acquisitions with businesses. And we started the year thinking it would be pretty interesting, maybe even see more IPOs. We anticipated some consolidation. And, you know, I think we were 50 right on that. Yeah, I think so.

1:34I mean, IPOs, not so much. I feel like I can't think of a pretty notable one off the top of my head from this year. Of course, that has a lot to do with just the market still being bad for that. A lot of volatility and companies that filed have just held off. I mean, I think Skims is one that we mentioned a lot, right? They filed to go public and still have not. But then we also had a lot of big M &A deals, especially in food, beverage, personal care. So, yeah, I think we were 50-50, as you said, Melissa. Yeah, I mean, there were a lot of headlines about some big acquisitions this year. We saw Church & Dwight acquire Touchland, the hand sanitizer brand for$880 million.

2:21Coterie, the luxury diaper care brand, was acquired by Mammoth, you know, valued around$1 billion. And Mammoth's biggest acquisition to date as they sort of get off the ground as a disruptor in the CPG portfolio world. You know, I just think it's interesting to see some of these newer, younger, savvier companies make big leaps. You know, I think it always says something about what consumers are demanding and the kind of brands that they want to see on shelves and that they want to support. You know, there's some through lines there. I think there was also a lot of hunger for consolidation this year, like given how much AI has grown.

2:58and companies just want to have as much data as possible and maybe feel a little better about the regulatory environment this year. Yeah, for sure. I was hearing that a lot where it's like, usually this environment lends itself really well to acquisitions because the big strategics see it as a quote unquote opportunity to buy out brands. So if you're trying to round out or recalibrate your portfolio and you want like a hip young diaper brand, And this is a good time to acquire one. So I think, yeah, that turned out pretty much as we had predicted to be true. And I'm sure we'll see even more of it.

3:37All right. Well, next up, we have to talk about probably one of the biggest stories of the year, which is tariffs. So back in January, we did predict that the Trump administration was going to implement tariffs on imported goods. I mean, we knew it was going to be a big story, but I guess come April, I was still really surprised at just how much it snowballed and it took off and it just kind of like torpedoed the retail industry in a way. Yeah, I think, you know, when we were thinking about this issue this time last year, there was a lot of uncertainty. Brands were starting to get more visibility and wrap their arms around their supply chain.

4:22And, you know, OK, what's coming from where? Let's let's reposition if we have to pull out of China, what have you. But you're right that I don't think people anticipated it was going to be as sweeping to so many countries and that there would be so many, you know, complications and confusion, I think, around what it applies to when it applies to. I mean, the whole world got a schooling, I think, in international trade and supply chain management this year. I mean, it feels so long ago now, but remember in April when Trump rolled out his or kind of flipped over his flow chart or that board with all the numbers on it, but he kind of collectively freaked out.

5:01It feels I think we're pretty numb to crazy numbers at this point. But those numbers were kind of left field and out of nowhere and nothing like anyone predicted. Right. Yeah. And for policy wonks, those decisions were done under the International Emergency Economic Powers Act. You know, as of this recording, we're awaiting a U.S. Supreme Court decision about that. Yeah. And so I think we all covered this area from a lot of different angles. I want to hear some of your favorite anecdotes about stories you heard from brands because they all responded, of course, by doing everything they can by diversifying supply chain, pulling out of certain countries and whatnot, or even mass ordering upfront, you know, bulk ordering inventory.

5:49One of my favorite interviews was with a founder who I was on a call with that day, Liberation Day. And like 40 minutes in, by the end of our call, we realized that the rate for the country that she's importing from changed while we were talking, or at least was on pause. It was one of them. So, yeah, she just was like, I can't even have a call without the world ending outside. So, yeah. What about you guys? Did you have any interesting sort of like that adrenaline of that day to day volatility those first few weeks was pretty intense? Yeah. I mean, I just remember talking to any executive about this thing.

6:30They were just glued to the news and looking for changes day by day and minute by minute. You know, one thing that stands out to me was some of the, you know, just kind of like advocacy, I think we saw brands doing. You know, I think about Juliet Wines and some of the businesses that are small businesses that sort of got together to say, hey, this is really, really unsustainable for us. Even if we're making our products here in the U.S., we have so many parts of our packaging sourced in China or EU or what have you. And just the kind of components issues that people are running into. You know, we had the PF Candle company folks on here to talk about that very same issue too, where even the Made in America brands, you know, have so many things that they were affected by just because of the packaging or components they use.

7:19Another more fun one is that that very day, Nintendo announced the details of the Switch 2, which is like one of the biggest product releases this year. and I don't know why they scheduled it that day but they like announced the price and they announced everything and then like later in the day Trump did the tariffs and then everything just kind of started falling apart and nobody knew what the price was going to be and then Nintendo had pullback pre-orders in the US so it's just kind of terrible timing on their part What about a lot of like earnings calls which we all listened to started mentioning it more and more aggressively, right?

7:58Especially the big box retailers and the big, yeah, just the big retailers in general. Yeah, I mean, I think the costs, after the tariffs, you know, did hit and people were starting to get those bills as they were getting, you know, their glass bottles coming from China or what have you, that's when I think we really started to see brands shift their strategies and rearrange their business priorities. Because if$300 ,000 is going to pay a tariff on, you know, getting your packaging to your manufacturing hub to get your product bottled, that's not going into, you know, the expansion products that you had planned or the new launches that you had planned, you know.

8:39And I think it was really more in the summer and into fall and will continue into next year that the business decisions brands have to make are going to be, we're going to see the long tail of that, you know. We also saw, of course, a lot of price increases. You just mentioned it with Nintendo, but some of it, I don't know how you guys feel, but there were price increase announcements the day after. And when I've talked to some analysts, this is no shade to any single brand, but it's like, well, if you have to raise prices overnight due to something like tariffs, maybe you were already on shaky ground, right?

9:17Maybe your margins were already really tight. So a lot of those price increases, I do wonder if they're going to come down eventually if things get rolled back. But from experience, I'm not expecting it. I'm not holding my breath. Yeah, I don't think I'm that much of an optimist on the generosity of businesses. And then there was another interesting hiccup that popped up over the last few months. I wrote a story about, you know, a lot of customers, a lot of Americans these days, they order products like from eBay or from resale sites individually where they're drop shipped or imported. And some of them were hit with tariff bills that came from like UPS or FedEx or whoever routed the package to them or whoever their carrier was.

10:05And it was, I think, I mean, they were shocked to say the least because usually the business or the company ends up handling those. But the fact that some of them got like a literal invoice in the mail was just a messy byproduct of all of this. And I should check back in with one person I talked to who refused to pay the bill. So I want to see if she paid her bill yet. Because from what I could tell, I don't think there's like concrete consequences. You know, I don't know if it's being sent to collection. I mean, I don't think so. So I don't know where that bill goes. But she said she's going to hold off to see whether things change.

10:42like everybody else. But yeah, like who's hitting you up for the tariff bill repeatedly? That is a really interesting follow-up to do. Yeah. Well, why don't we kind of, you know, walk us through the fall and then now December. There's been a few changes, of course, which is that outside of the, there's a lot of pauses, right? Like a lot of, especially with China, there was that 90-day pause to figure out what they were going to do in the middle of the year. And then a lot of the rates changed country to country. But now we have this big Supreme Court decision that we're waiting on. And so there is a chance that some of these will be rolled back, as I said before.

11:24But yeah, it's been quite a roller coaster, to say the least. Yeah, I mean, bottom line, the best context you can have to run a business is certainty and reliability. And this year was not that for most people operating in this industry. I mean, do you think we might get a little bit more certainty or at least concrete plans for what these policies are going to look like in the new year, given that they are about to make this decision, maybe even by the time this episode airs? I think a lot of companies are hoping it goes that way. And then we have to see what happens with this refund policy, right?

12:06People are already talking about that. Right. Yeah. I mean, with the Supreme Court decision, we're expecting something by the end of 2025 or even early 2026. And, you know, the court could strike down all or part of the tariffs that were enacted earlier this year. It could clarify a process for importers to receive those refunds, which many are eagerly anticipating. But it kind of remains to be seen on how that process would even work. You know, is that something that happens through an administrative portion of the government? Is it something a court oversees? But we do know that there's dozens of importers and businesses who have filed their own actions about this, including well-known brands like Costco had a lot of headlines about this recently saying, hey, we demand a refund for some of those tariffs we already paid.

12:54So let's move on to a more fun one, and that's TikTok. So much fun. So much fun. So this time last year, I wasn't here, or I wasn't on this pod, but y 'all thought it was posed for a sale. In 2024, there was a law passed that would ban the app unless it no longer was owned by the Chinese parent company, ByteDance. Trump has said there's a deal with some American investors, but who knows really how this is all going to play out still. but TikTok is still like you know over the course of the year it's defined a lot of trends it's very widely used and and especially so for TikTok shop which did a half a half a billion in Black Friday Cyber Monday sales yeah I mean that's a great recap I feel like the general populace didn't seem to care that people wanted TikTok banned and that this was all going on behind the scenes I I mean, I think from a user perspective, there was very little of that.

14:02You know, I think there was some messaging from the app when the law was initially passed. But as far as operations this year, you know, it was business as usual. And if anything, it's just become even more mainstream. Well, and the Trump admin gave a lot of certainty to kind of backing it, backing the deal. So I think that gave people a lot of certainty there that wasn't there at the start of the year. Yes, because I remember there was that deadline, which was around inauguration day. And I guess I thought once the administration swapped that there would be an official announcement, but we are going on a year.

14:39And so I don't know where that leaves us. But I mean, I guess if we're going to talk about what this means for brands and retailers, that's probably a little bit more interesting to us than the political aspect. But is it just me or does it feel like brands are just like, yep, we're still doing TikTok shop. We are still investing in TikTok. Like there was almost like no acknowledgement, to be honest, the last few months of any sort of potential band kind of throwing a wrench in their strategy. I mean, just this month, we saw Skims launch a live shopping event on there. So it seems like they're still bullish on it.

15:16Did you guys hear sort of similar sentiments? Oh, totally. If anything, I'm hearing from brands that they still want to find a better way in. You know, I think there's some brands that have been sort of viral on TikTok before and thinking of cakes and beach waver, you know, brands that really got a lot of their boosts in spending and customer base from TikTok. But if anything, I'm hearing more from brands that aren't big on TikTok yet that want to be. One brand I talked to this year, Clean Cult, they're a cleaning company and they really want to make household essentials work on TikTok shops. So it's not just a place for beauty and fashion and accessories, but where you're also buying things for your home because they see that their audience is there and they'd like to find a way in.

16:03yeah earlier this year on a similar vein when i was i was at a grocery conference in vegas earlier this year and they were they had a very huge presence there tiktok shop at a grocery conference and they they were really trying to sell themselves as like you know this is this is a big place for cbgs this is this is where we we want your your ad money we want you know we want everything you know you've seen you've seen it start to like define a lot of like we had like dubai chocolate this year. I'm sure we're about to talk about LaBubu. All these big trends are still business as usual. And even big brands too.

16:40I think Old Navy's made a big push on there. A lot of more mainstream retailers have made a presence there. Can we pause to talk about LaBubu here, Mitchell? I feel like that's a great transition. Yeah, sidebar. Because yeah, sidebar, you can't talk about 2025 retail without hitting on the boo-boos, which is maybe more trend focused than we typically are in our reporting. But man, did they blow up. And yeah, I mean, this intersection of Popmart and TikTok shop really goes back to even earlier in the year. In April alone, Popmart generated 4.8 million in sales on TikTok shop. That's according to reporting from our colleague Allison Smith from earlier this year.

17:24But that was an 89 % month over month increase for PopMart at the same time that TikTok Shop was seeing decreasing sales. And then looking even further, as of May, PopMart sales on TikTok Shop surged 1000 % year over year, and their revenue overall climbed over 100%. So there was something in the water with PopMart and TikTok Shop. And then I think in the summer is when we saw that LeBouBou craze really kind of hit everywhere. You know, you started to see on eBay, buy, sell, trade, et cetera, et cetera. Yeah. And we really went from summer, most people probably not knowing what it was to, I was just thinking about this, how like it went like within six months to like being largely unknown to like having a Thanksgiving float on the Macy's parade and like being mentioned by Al Roker.

18:16Like that's, that's pretty nuts. Yeah. The Halloween costumes kids had, I had a lot of the boo-boos come to my house this year. That's cute. Yeah. Now I'm hearing they're already out. This is these cycles that are getting quicker and quicker. Our attention spans in pop culture are fleeting. Is it because the scarcity is no longer there? It's like you can kind of get them more easily. I don't know. What do you think, Mitchell?

18:44As a be expert like i i saw like you can just like roll up to any pop mart down just like you don't even have to in some cases probably uh you know you don't have to they used to be behind the counter and now i'm starting to see them up by the front so they're not as worried about losing it it kind of reminds me of dubai chocolate actually there's like a peak and then now it's like you can walk into any store any brand has a version of it um yeah and then you know moving into sort of the fall with TikTok shops specifically, we saw they had just another blockbuster Cyber 5, right? I think that's what we call it that sort of entire week.

19:26And a lot of brands participated. And we talked to a bunch of brands that said they saw really successful TikTok shop sales that week. And it seems like it's just going to keep building this entire Q5. Yeah, I mean, I think it's remarkable when you think about how young the platform is, but they crossed half a billion in U.S. sales over the four-day holiday period, you know, that Black Friday, Cyber Monday weekend. And, you know, even though that's still just a fraction of the overall spending we saw, it is kind of crazy when you think it's, that was only, it's like, what, like third holiday season?

20:02Well, maybe a little bit of a poll, but a question for the group. Did you shop on TikTok Shop this year? I have not. I have never purchased anything from TikTok, but I'm maybe an outlier. Me neither. Never. So I bought at least one LeBouBou. Maybe two there. No, one or two there. And LeBouBou clothes. Nice. It's full circle. I'm expecting a fashion show after this. Well, you know, those are some of the topics that we did talk a lot about this year. I can confirm that labubus were a frequent topic in our editorial meetings. But there were some things that I think kind of crept up on us a little bit, you know, while there was M &A and tariffs and some of these bigger tentpole issues we kept looking at.

20:54There were just like overall shifts in consumer behavior this year that I feel like really say something about where we're at, changes in how people shop, And the first one that comes to mind for me is just sort of the boom in private label that we saw. We talked about this earlier this year. We did a whole episode on private label and the changes over time there. But this year really felt like it got mainstream. Mitchell, you cover big boxes. Gabby, you're our in-house CPG expert. Curious what you guys see happening in the private label world and just what shifted there in 2025. Well, I know Melissa is a big, better goods shopper, right?

21:34it's true. It's a cart staple for me. Yeah, you got called out. And I'll tell you why. I did, but I'll tell you why. I think it's because they have different flavors and different types of products. They're not just duping brand names and things you've seen before. They're really doing their own thing in an interesting way. There's like a sea salt cracker I really love. I don't know what its brand name equivalent is, but I get it almost every time I'm at Walmart. Well, Melissa, that's actually a good note to start off on, which is Better Goods. It's this sort of blockbuster in-house brand that Walmart launched almost a year ago.

22:11And it's become really one of the fastest growing grocery private labels. I know, Mitchell, you have covered them a bunch, but maybe this is a good time to talk about just the pure investment that goes into branding these products and just how much marketing they're putting behind them, right, to make them these household brands, not just, quote unquote, store brands that you're picking up for value? Yeah, well, both Walmart and Target have very heavily leaned in to private label or like grocers too. Like, you know, everybody's all over this. Like Aldi invested into rebranding its entire fleet of private label products.

22:55Now they all have the Aldi logo on it. They really see a reason to have their brand all over these private label products and really become known by them, especially in a year where everyone wants to save money. Like, everybody – every grocer wants to appeal to that, right? Like, so where are they able to do that first? They can whip out the private label stuff. We saw in the Thanksgiving meals this year, they put a bunch of private label in them to make them less expensive. That's how they can do this. And kind of the combination of that and the overall just kind of growth of these products too, grocers are a lot more comfortable giving them more of the spotlight.

23:38Yeah. And going back to the crackers, we can even mention just the fact that Better Goods launched in April 2024 and now has a 46 % repeat rate and a 20.6 % household penetration rate means that customers aren't only buying them occasionally or discovering them, you know, or kind of buying them when their favorite brand is maybe not on sale. This is becoming part of their cart on a weekly basis. And maybe this is a good time to talk about private label kind of being, frankly, a threat to big cpg right well yeah these brands are a lot more kind of agile they can do new flavors a lot easier they they own the supply chain so you know why why not kind of experiment around and that's that's agility that the national brands don't always have yeah you know i did a story earlier this year looking specifically at diapers private label manufacturing and there's two big players in that space who are investing heavily in more U.S.

24:51manufacturing for private label diapers and that's because they know that there's retailers who want to offer more different price points, different quality, different sizing and that they can compete in a way that national brands would have a harder time keeping up with. They can maybe be a little faster on the trends and maybe be a little faster reading what customer data says. All right. Well, speaking of big box retailers, there's been a lot of shakeups this year in this space, including leadership changes. Of course, Target's decline has been a big story of this year. So yeah, just the shifting popularity and success of certain big box retailers has been really interesting to watch, right?

25:38Yeah, like the first the first company we can talk about here is Target. I think that's been that's been the more controversial figure, I think, this year. I was just thinking about how about a year ago, it wasn't the same story it is now. Like a year ago, it was just, oh, Target's kind of not doing so hard. Like people aren't are opening their wallets for a lot of things that they want rather than just groceries you know so maybe people flocked to walmart more now we look back and we had all the dei stuff uh earlier in the year was target pulled back on a lot of program or initiatives in the dei front um and leading all the way into layoffs and a ceo change later in the year and yeah their foot traffic's down 2.7 % year over year.

26:32They laid off 1 ,000 people and closed 800 open positions. So that's kind of the story with Target. It's just been kind of a downward spiral throughout the year. And they hope to turn it around with a new CEO next year. But the next CEO has been with them for 20 years and has probably been behind the scenes on a lot of the things that ended up being controversial. So we'll see what ultimately happens there as far as transformational change. On the other side of it, Walmart's just keeping doing what they're doing, which was being Amazon with a store network, essentially, and doing kind of their save money, live better routine that they've done for years and years and just like adding online shopping and ad business and like, you know, just broadening out their flywheel.

27:24And, you know, they've talked about how they've really upped their share with more wealthy shoppers, shoppers making more than 100K a year. And you see that now with like the Who Knew campaigns and like the Holiday Who Knew Ville campaigns. Like they really want to be like, oh, who knew Walmart had all this stuff that might be interesting to somebody in a wealthy suburb, perhaps. Yeah, I think when you think about the overall macro we were faced with this year, Walmart was able to benefit from a lot of that. and they really kind of stepped into target's lane on so many things like we we saw we saw them like uh step up on fashion i think they did like a fashion week uh pop-up they've broadened that assortment quite a bit and and they're heavily promoting things on their marketplace like even like club booboo going back to that but like all all these like um kind of more like expensive shoes like they've launched like resale businesses on there like they're offering a lot of things that people wouldn't expect Walmart to have thus broadening that demographic.

28:30Right. Not to mention Private Label, which was, I don't know how many people of you remember, but that was Target kind of pioneering that, right? The elevated big box brand and Walmart has caught up pretty well. And then they've done other things like something else. Target kind of helped pioneer 10 years ago was bringing in digitally native or direct consumer brands and Walmart has really doubled and tripled down on that in the last couple of years, like in the wellness and personal care space too. So yeah, as Mitchell said, I think just constantly broadening the offerings. And then of course they've got like the advertising business, the delivery business, it seems like it's growing.

29:17So yeah, I guess a winner when it comes to this year, regardless of tariffs, right? Because that was also a big threat to them. But it seems like they're weathering that storm. Even at the end of this year, they switched from the New York Stock Exchange to NASDAQ, which seems like kind of a minor financial thing. But it's like Walmart is starting to see itself as a tech company. And we've been talking about that all year and before that too. But they're really kind of, like I said, building out this flywheel, trying to kind of create what Amazon has, but with Walmart's unique store network and Walmart's low discount focus.