Eat, Don’t Treat - And Other Retail Realities of 2025.

Good morning, ! This week we’re diving into the consumer cooldown, Gift cards are popular employee rewards, but don’t forget the tax strings attached. Farmer J bags $23M to plant its first NYC flagship, and Retailers are betting big in their own channels, vertical concentration is the new alpha. 

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TREND OF THE WEEK

The Return of Frugal Fever

After months of revenge spending, consumers are quietly putting their wallets back in their pockets. KPMG’s latest data shows broad pullbacks across discretionary categories—from apparel (-7%) to entertainment (-8%)—as the 2025 summer outlook cools. Groceries remain the lone bright spot (up 8%, down from 25% during the holidays), suggesting the new retail mantra is: “Eat, but don’t treat.” The culprit? Inflation fatigue, high borrowing costs, and a collective hangover from the post-pandemic splurge. For brands, the mission is clear: sell value, not vibes. Consumers are trading “want” for “need”—and loyalty may depend less on novelty than on necessity. (More)

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ECOMMERCE

Retailers Bet Big on Their Own Channels

Retailers are doubling down on direct-to-consumer strategies, with 81% expecting sales via their own websites to grow in the next five years—beating out marketplaces (77%), social media (76%), and apps (73%). This signals a clear strategic preference: own the customer, own the margin.

The rising confidence in owned channels stems from mounting pressure to capture first-party data, defend pricing power, and mitigate platform risk. While marketplaces and social media remain essential for reach, they also dilute brand control and compress margins.

Still, this shift won’t be easy. Scaling site traffic, maintaining UX standards, and integrating logistics across platforms will require significant investment—especially for mid-market players lacking Amazon’s playbook.

Bottom line: Retailers believe their best growth will come from what they own, not what they borrow. But in a fragmented ecommerce landscape, execution—not optimism—will separate winners from the rest. (More)

DEAL OF THE WEEK

From City Suits to Wall Street Eats

Farmer J, London’s fast-casual cult favorite, just bagged $23M in fresh funding to launch its first New York flagship. Led by Beringea with support from a new hospitality backer, the round also fuels three more London locations by year-end. With sales up 55% in 2024 and EBITDA doubling, the brand’s “honest, forkin’ good food” is proving recession-proof—and globally scalable. Call it the Sweetgreen of the Square Mile, but with better meatballs and more cauliflower. As Pret A Manger nurses UK-heavy woes and a £553M goodwill write-down, Farmer J’s transatlantic play looks less like ambition and more like insurance. (More)

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BROUGHT TO YOU BY THE GIFT CARD CAFE

The IRS Sees That Starbucks Card Too

Gift cards are the employee reward that keeps on giving—until tax season. While companies love their flexibility, the IRS isn’t handing out any freebies. Gift cards, even $10 ones, are cash equivalents, and thus fully taxable. That means payroll reporting, withholding, and documentation are all non-negotiable. Misclassify them as de minimis fringe benefits and you're asking for an audit. Smart employers are now “grossing up” rewards to cover the tax hit or pivoting to non-cash perks (hello, coffee mugs and logo hoodies). In a world of choose-your-own-reward, make sure you’re not choosing your own penalty. (More)

CONSUMER BEHAVIOR

Scroll, Tap, Buy

Social media is now retail’s loudest salesperson. Roughly one-third of shoppers say they’ve bought something online just because it was trending. The biggest culprits? Gen Z (40%) and Millennials (39%), whose shopping carts follow their For You Page. Authenticity, peer validation, and visual storytelling aren’t buzzwords—they’re conversion tools. Even Gen X (33%) and Boomers (23%) are catching the viral wave. For brands, the memo’s simple: content drives commerce. Tap into trends, amplify what feels organic, and build communities that sell without selling. In today’s attention economy, every scroll is a potential checkout. (More)

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