As the first quarter wraps up and earnings season approaches, the U.S. retail industry stands on the cusp of a defining moment. Fueled by resilient consumer spending and strategic investments, retailers are poised to deliver results that could reshape market expectations. In this article, we examine the latest forecasts, earnings outcomes, property trends, technological drivers and strategic imperatives that underpin the sector’s accelerating momentum.

Sector Growth and Forecasts

Industry executives remain upbeat about near-term prospects. For 2025, most predict growth in the mid–single digits, reflecting steady consumer confidence. According to the National Retail Federation (NRF), total U.S. retail sales are projected to hit between $5.42–$5.48 trillion, marking a year-over-year growth of 2.7% to 3.7% compared to 2024’s $5.29 trillion.

Online and non-store channels continue to outpace traditional formats, demonstrating the industry’s adaptability and digital focus:

• Online and non-store sales projected to grow 7–9% year over year, reaching $1.57–$1.6 trillion in 2025
• Deloitte forecasts U.S. real GDP growth of 2.8% in 2024 and 2.4% in 2025, with consumer spending as the primary venture driver
• Longer-term estimates from IBISWorld suggest a modest 0.9% annualized revenue CAGR from 2025–2030, reaching nearly $7.7 trillion by 2030

These figures underscore a balanced outlook: robust short-term momentum moderated by cautious medium-term expectations.

Q1 2025 Earnings Scorecard

With 156 out of 197 major retail and restaurant companies reporting, the first quarter delivered encouraging results. Earnings growth stood at 8.0%, while revenue climbed 2.9%. On earnings per share (EPS), 65% of firms beat analyst estimates, 3% matched forecasts and 32% fell short. Revenue surprises were split evenly, with half of companies outperforming and half missing expectations.

Notable contributors include Deckers Outdoor Corporation, which reported EPS of $1.00 versus the $0.60 consensus, driven by brands Hoka and UGG achieving 6.5% year-over-year revenue growth.

This mix of earnings strength and selective revenue challenges highlights the importance of cost control, inventory management and strategic brand positioning as retailers head into the next reporting cycle.

Retail Investment and Property Trends

The physical real estate market is reflecting this positive sentiment. Early 2025 saw retail property sales volumes surge by 13% compared to Q1 2024 and 15% above Q1 2023. For the first time in years, retail leads all commercial property types in value growth.

Modest new construction has kept supply balanced, while existing asset values climb thanks to strong occupancy rates and consumer foot traffic. Developers are targeting mixed-use centers and lifestyle hubs that blend shopping, dining and entertainment to meet evolving consumer desires.

Retailers are expanding selectively, prioritizing markets with favorable demographics and high digital engagement. This strategic footprint management reflects a shift from broad-scale expansion to precision store placement and experience-driven locales.

Macro Drivers and Consumer Behavior

Several overarching themes are shaping the retail environment. Low unemployment and real wage gains underpin household budgets, while elevated savings rates offer a buffer against economic shocks. Retailers are capitalizing on these tailwinds by investing in digital engagement and loyalty initiatives.

• 70% of retail executives are pursuing new AI capabilities for personalized customer experiences
• 3–6 in 10 retailers report measurable benefits from AI-driven demand forecasting and inventory optimization
• Sustainability is rising in importance, with circular economy models and eco-friendly product lines gaining traction

Consumers now demand speed, convenience and seamless omnichannel integration. Livestreaming commerce, which generated nearly $450 billion in China last year, is gaining momentum in the U.S., offering immersive shopping events and real-time interaction.

Strategic Focus Areas for Retailers

To maintain and build on current gains, leading retailers are concentrating on several key pillars:

• AI-enabled marketing, supply chain and merchandising investments to drive efficiency
• Upgrading loyalty programs and personalized engagement platforms
• Enhancing e-commerce and omnichannel integration for unified experiences
• Selective store expansion and experiential retail concepts
• Future tech pilots such as AR shopping, drone deliveries and robotic fulfillment

By aligning resources with these priorities, retailers aim to strengthen competitive positioning, improve margins and deepen customer relationships.

Outlook Summary

The retail sector enters the next earnings cycle with robust consumer demand and strategic investments propelling its trajectory. Short-term metrics exceed decade-long averages, while thoughtful medium-term caution tempers expectations. Macro factors such as low unemployment, real wage growth and high savings support spending, even as risks like policy uncertainty and import cost volatility linger.

Investors and industry leaders must watch for signs of persistent margin expansion, inventory discipline and adoption of advanced technologies. Those who leverage AI for predictive analytics, refine omnichannel operations and offer compelling in-store experiences will likely outperform peers.

As retailers reveal their Q2 guidance and full-year projections, momentum appears firmly in place. With the right blend of innovation, discipline and customer focus, the retail sector is well positioned to deliver meaningful growth for stakeholders in 2025 and beyond.