Investing.com — In its ‘2025 International Shopper Outlook’ report launched Monday, RBC Capital Markets outlines important challenges and alternatives shaping international shopper markets.
Drawing from views throughout areas and sectors, the report emphasizes key traits and themes anticipated to affect shopper habits and retail efficiency within the 12 months forward.
A Difficult Shopper Panorama
RBC analysts spotlight the monetary pressures confronted by international shoppers as a result of elevated inflation, excessive rates of interest, and unemployment. These components are anticipated to weigh on shopper fundamentals at the very least via the primary half of 2025
The report additionally notes a noticeable shift in shopper habits towards value-seeking methods, similar to diminished basket sizes, elevated reliance on non-public labels, and a choice for low cost retail channels. Luxurious spending seems muted, with shoppers gravitating towards value-oriented restaurant choices and at-home eating.
Regional and International Themes
Whereas shopper traits range by geography, a number of international themes emerge:
1) With inflationary pressures easing, quantity and unit development are anticipated to drive relative inventory outperformance.
“Our international workforce’s view is that natural development will probably be extra reliant on quantity subsequent 12 months as inflation/ pricing capability fades and promotional spend ramps as a result of a troublesome shopper atmosphere,” RBC analysts famous.
2) RBC notes that with the US election concluded, consideration has turned to the potential coverage impacts of a second Trump administration. Among the many key considerations is the introduction of latest tariffs, which might create important regulatory challenges.
Firms are already exploring price mitigation methods, similar to boosting productiveness and adjusting pricing. Nevertheless, analysts warn that these price pressures are more likely to be handed on to shoppers, probably hindering development and exacerbating inflationary pressures.
3) Commerce insurance policies, similar to tariffs proposed by the Trump administration, and geopolitical dangers in areas like China and Europe, current challenges. The report underscores considerations about slower development in Latin America and potential foreign money fluctuations impacting efficiency.
4) Rising prices, moderated demand, and overseas trade volatility are more likely to problem profitability.
“We consider that 2025 will probably be one other 12 months of balancing margin dynamics together with moderating demand, muted volumes, slowing pricing profit, FX, rising/declining commodity prices, elevated promotional atmosphere, a necessity in elevated advertising spend, and normalizing elasticities,” analysts stated.
5) Regardless of expectations of gradual enchancment, shopper sentiment and spending in China stay subdued. Structural modifications, similar to a rising choice for secondhand items and different retail platforms, sign a shift in shopper preferences.
6) With natural development more durable to attain, RBC believes M&A exercise could speed up. The report anticipates favorable situations for consolidation within the latter half of the 12 months, pushed by stabilizing rates of interest and cheap valuations.
By way of sector-specific insights, RBC highlights a number of key themes throughout Shopper Staples, Luxurious & Premium Manufacturers, and Eating places & Leisure sectors.
For Shopper Staples, analysts word that the sector faces ongoing stress from lackluster quantity development and macroeconomic uncertainties. Regardless of underperformance lately, RBC stays cautious about potential earnings dangers tied to inflation and regulatory developments.
In Luxurious & Premium Manufacturers, the funding financial institution expects stabilization or modest enchancment in income development, notably in North America. LVMH (EPA:) stands out as a prime decide at RBC. The agency believes the inventory “is healthier positioned for this state of affairs, given its scale, diversified class combine, barely larger US income combine and comparatively softer income development traits in Vogue & Leather-based which supply larger chance of inflection in our view. “
Lastly, analysts stated they’re “cautiously optimistic” in regards to the restaurant house for 2025.
“Latest macro knowledge factors counsel a stabilizing financial backdrop the place enhancing shopper sentiment might translate into site visitors development after a difficult 2024, although we anticipate enchancment to be extra gradual as shoppers proceed to grapple with elevated pricing,” analysts famous.
They really feel extra bullish in regards to the health sector, as they anticipate shoppers to proceed prioritizing well being and wellness.
