August 1st, 2025: Liberation Day part 2. With new tariff headlines (and rising consumer fears on what this means for their discretionary income), making smart production decisions that align supply with demand is imperative for retail brands to protect their margins. But between new rates and pushed implementation dates, uncertainty won’t subside until the ink dries. AI-powered supply chain forecasting software that integrates supply and demand data can empower retailers to plan ahead and make decisions that improve the bottom line.

Supply Side: Tariffs, Risks and Disruptions

10%. 20%. 30%. Tariff pricing is continuing to fluctuate and markets are reacting (albeit not as sharply as on the first Liberation Day). With varying degrees of diversification and globalization, brands will feel the effects of additional tariffs differently.

Regardless, most brands have begun implementing a variety of mitigation strategies including vendor negotiation and stockpiling products. According to a recent 7thonline survey, the most common move is likely to be price hikes—35% of retail leaders surveyed claimed price adjustments as their first response to new tariffs. Budget-friendly brands such as Shein and Temu have already increased their prices as they have lower margins than others. While others such as Gap and Urban Outfitters are choosing to absorb the additional costs, and are using this as an opportunity to obtain more market share. Some brands have opted for a wait-and-see approach, not allowing the headline-driven fears to falter their strategy.

Our survey revealed that over 20% of retail executives are not confident in their supply chain’s ability to manage disruptions, aiming to improve flexibility and resilience through infrastructure changes. The most common actions? Reducing overall inventory levels, diversifying suppliers and shifting to just-in-time inventory models. 

Demand Side: Capturing Trends in Consumer Behavior and Fears

Recent retail sales data revealed slower demand in the American market, with May seeing the biggest drop. However, economists think the worst is yet to come. Our survey revealed declining spending remains the top concern for this year with 39% of retailers already seeing lower demand in the past year. 

With a weak sentiment index, smarter assortment planning is critical to ensure each SKU earns its place on the shelf—especially as tariffs eat away at margins.

A demand-driven, data-informed approach empowers businesses to stay agile, plan accurately and protect margins. Assortment planning—part art, part science—not only anticipates relevant trends but also leverages data to analyze and forecast demand. With AI-powered retail planning software, retailers can seamlessly blend analytics with merchant intuition and creativity to engage shoppers and deliver what they truly want—down to style, color, size.

Getting the right products to shoppers, wherever and whenever they’re looking, is essential in ensuring shoppers keep shopping with your brand. Using AI, you can understand consumer behavior and maximize inventory productivity based on the item’s propensity to sell across channels.

Aligning Supply and Demand: Designer Changes Tailored to Shoppers

Business of Fashion states: Suppliers could start getting pickier about what products they’ll produce, and brands on what they’ll make, simplifying design components or opting only for higher margin products. Hardware store Home Depot, for example, warned it may stop selling some products if increased costs make them unprofitable to sell.

“We need to have certainty. Companies can’t make decisions on investment and shifting supply chains and so on with the rates constantly changing. And as it starts hitting demand it’s going to be really important for the economy that we get clarity on it so that supply and demand can normalize.”  — Aneesha Sherman, Bernstein US apparel and retail analyst. 

While the delayed go-to-effect date might have softened the blow for holiday planning—a crucial period for retailers—shopping behavior and appetite for the rest of the year is still up in the air; leaving retailers confused and screaming for certainty. 

To learn more about how AI can help brands and retailers stay ahead of consumers, book a demo or email us at info@7thonline.com. 

“Sorry, we don’t have any more in that size.”

Out-of-stock sizes rank as the top complaint among shoppers. Inaccurate stock purchasing across sizes is estimated to result in profit loss of up to 20% on average a month. In today’s retail climate, precision is everything. With shifting consumer preferences and compressed product lifecycles, the margin for error has never been smaller. One area where we consistently see brands leaving revenue on the table? Size allocation.

The Power of Localized Size Profiles

Too often, size profiles are applied broadly across regions—or worse, chain-wide—without accounting for localized demand signals. A best-selling medium in one district could be deadstock in another. Getting the right products in the right size, to the right store, at the right time is no longer optional—it’s essential.

Localized size profiles enable brands to fine-tune allocations down to the store or region level based on actual demand, not assumptions. But creating these profiles manually is time-consuming, and static models quickly fall out of sync with current selling trends.

That’s where AI steps in.

AI + Real-Time Data = Smart Allocation and Assortment Planning Software

Retailers are increasingly turning to AI tools to overcome challenges in balancing demand, availability and profitability. AI enables a more agile, responsive approach to assortment planning through granular insights on real-time data. Risk is reduced as production decisions are informed by what actually sells, cutting down on waste and markdowns.

Leverage advanced AI and machine learning models to analyze real-time POS data, identify emerging demand drivers and detect shifting size curves as they happen. This means brands can automatically adjust allocations based on what’s actually selling—down to the store level.

Our AI models factor in:

• Local climate and demographics
• Historical sell-through performance
• Category-level trends and seasonality

The result? More accurate demand forecasts, optimized size runs and fewer markdowns.

The Bottom Line

Localized size profiles powered by AI aren’t just a nice-to-have—they’re a competitive advantage. With today’s tools, retailers can stop relying on intuition and start making data-backed allocation decisions that drive full-price sell-through, reduce stockouts and increase margins.

Are you ready to turn your size profile strategy into a growth driver? Talk to the team at info@7thonline.com or book a demo. 

According to a recent survey conducted by 7thonline, 34% of retail leaders are concerned about declining consumer spending for this year—and this fear isn’t unfounded. May’s retail sales data was released this week, declining more than expected with the biggest drop in four months. However, apparel sales tell a different story. 

Excluding automobiles, gasoline, building materials and food services, May’s “core” retail sales increased .4%, after an upwardly revised .1% fall in April, suggesting a modest pick up in consumer spending this quarter; clothing sales rose by 10bps between April and May. However, downside risks to consumer spending are rising: slower labor market, student loan repayments resuming, tariff-induced stock market volatility, etc. While tariffs have had a clearer impact on large-ticket items, markets are signaling a slowdown for the second half of the year as tariffs begin to weigh on disposable incomes, according to Michael Pearce, deputy chief economist at Oxford Economics. 

7thonline’s survey of 100+ retail executives revealed that 73% of leaders are expressing concern over rising tariffs over the next year, with over 1 in 3 confessing their first response to new tariffs would be to adjust product pricing. Some retailers have been transparent about their plans to hike prices but others have not yet disclosed their strategies. 

“Past experience suggests the biggest price rises will come in July, though the full impact of the tariffs likely will emerge across the whole of the remainder of the year,” said Samuel Tombs, chief US economist at Pantheon Macroeconomics.

Despite distress around consumer spending, price adjustment is the go-to move due to low margins—over 75% of retailers said that they would be unable to absorb more than a 25% increase in tariff costs. 7thonline CEO, Max Ma, shared with Sourcing Journal that because margins are slim, navigating spending discretion amid increased tariffs is especially challenging but “many retailers…are pressuring their suppliers to lower prices, so they’re trying to do it on both sides.”

Here are five more strategies retailers and wholesalers can adopt to offset the cost of tariffs: https://www.7thonline.com/post/five-tariff-strategies-for-retail

While tariff news and fears may have come off their peak, the effects are still yet to be fully seen. To learn more about how your team can use AI to navigate shifting consumer demand, email us at info@7thonline.com or book a demo with our team.

Key Takeaways

• 33% of retail executives are currently using AI to analyze data/forecast demand.
• Over 1 in 5 retail executives lack confidence in their supply chain’s ability to handle disruptions.
• 73% of retail executives express concern about additional increases in tariffs over the next 12 months.
• 35% of retail executives say their first response to a new tariff increase would be to adjust product pricing. 

Evolving demand, rising tariffs and rapid advancements in AI are reshaping the retail landscape. This report analyzes how retail leaders are adapting their strategies in 2025, drawing on insights from a survey of over 100 retail executives. From supply chain confidence to technology adoption, the findings offer a look into the challenges and priorities shaping today’s retail strategy.

Demand Is Shifting—and Retailers Are Feeling the Pressure

While 36% of executives say demand has increased, a larger share (39%) report a decline. With 1 in 10 admitting their forecasting is poor and concerns mounting over consumer spending and rising costs, retail leaders are navigating a highly complex demand landscape.

As consumer demand shifts, retailers are seeing the strongest growth through branded ecommerce channels, with 33% reporting increased activity on their own sites. This suggests that more consumers are seeking direct-to-brand experiences, while traditional in-store retail and social commerce are capturing a smaller share of emerging demand.

Retailers Are Reinforcing Supply Chains—But Confidence Remains Mixed

More than 1 in 5 retail executives say they’re not confident in their supply chain’s ability to manage disruptions. To reduce risk, many are cutting inventory levels, diversifying suppliers and making infrastructure investments aimed at improving flexibility and resilience.

To reduce inventory risk, retailers are taking tactical steps like cutting inventory levels and diversifying suppliers—but their long-term focus is shifting toward smarter merchandise planning. More responsive pricing strategies (20%) and speed to market (14%) top the list of investment priorities, reflecting a push to become more agile amid ongoing supply chain uncertainty.

Tariff Pressures Are Forcing Retailers to Rethink

With 73% of retail executives expressing concern about rising tariffs over the next year, many are already weighing how to manage increased costs. From passing costs onto consumers to renegotiating supplier terms, retailers are navigating complex decisions in an uncertain economic environment.

Half of retail executives have yet to take specific action in response to rising tariff costs, but among those who have, the most common strategies include passing costs to customers (24%) and absorbing them internally (22%). Most retailers say they could only absorb a 25% tariff increase or less before needing to raise prices, and 35% say their first response to a new increase would be to adjust product pricing—highlighting how limited their flexibility truly is.

Retailers Are Cautiously Exploring AI—But Barriers Remain

A third of retail executives are already using AI to forecast demand, and 34% expect it to play a major role in sustaining or growing profits within the next two years. While most are maintaining their current tech investments, adoption is still limited by internal expertise gaps, budget constraints and uncertainty about ROI.

Retailers are exploring a range of AI applications, with marketing, inventory management and pricing optimization leading the way. Only 16% are currently using AI for demand forecasting—despite growing recognition of its potential. 

What’s Ahead for Retail Strategy

Retailers are balancing immediate pressures with long-term priorities—from managing tariff impacts to cautiously adopting innovative technology such as AI. As 2025 unfolds, building flexibility, improving forecasting and investing in strategic planning will be key to staying competitive.

Methodology

7thonline surveyed 105 retail executives about their retail strategy from June 2-11, 2025. Of the respondents that disclosed their job title, 53% were C-suite executives, 16% were owners and 8% were directors. 

7thonline is a leading AI-powered retail planning and forecasting software, enabling more effective planning, demand forecasting and inventory optimization for leading retailers and wholesalers. With embedded business intelligence and rich analytics, the solution offers complete demand visibility and planning capabilities at the most granular level. To learn more about our suite of solutions, book a demo or email us at info@7thonline.com.