Consumer spending keeps defying gravity, even as sentiment hits a 12-year low and mortgage rates climb. Steve Dennis and Michael LeBlanc dig into Nike's struggles, Sephora's move into Marks & Spencer, and a luxury check-in on two of Steve's predictions, from the fragile Saks-Neiman reset to Hermès and Coach pulling ahead. Plus: Walmart's pledge to "price the product, not the person," and Steve's four types of AI shopping agents and why trust will pick the winners.
Can consumer spending keep defying gravity? Steve Dennis and Michael LeBlanc open Episode 314 by untangling a contradictory economy. GDP growth is solid and spending is holding up, yet consumer sentiment sits at its lowest since 2014, the latest jobs report came in weak, inflation won't budge, and mortgage rates are the highest since 2002. As one commentator put it, the U.S. is a tortoise economy in a greyhound costume. Nike offers little relief: sales down 4%, another round of restructuring and layoffs, and a stock down 75% over five years as On, Hoka, and New Balance keep taking share. Across the Atlantic, Marks & Spencer is bringing Sephora to 100 UK shop-in-shops and online, a far more natural fit, Steve argues, than Sephora at Kohl's.
The heart of the episode is a luxury check-in on two of Steve's annual predictions. Fresh from a suburban Chicago store walk, Steve explains why the new two-level Bloomies at Old Orchard Mall delivers a sharper, more edited contemporary point of view than a traditional department store. Prediction #7, that Saks Fifth Avenue and Neiman Marcus would emerge from bankruptcy leaner, meaner, and still fragile, is playing out. The renamed Exemplar Group has cut full-line stores from 69 to 49 and largely exited off-price, but still faces overlapping markets and unpaid vendors. Prediction #8, that luxury's gains would be unevenly spread, is holding too. Hermès grew 17% in the U.S. on an already large base, and Prada, Brunello Cucinelli, and Coach are surging while Kering and parts of LVMH lag. Coach's 23% jump, Steve notes, owes a lot to sharp, targeted marketing.
Walmart's promise to "price the product, not the person," timed to its electronic shelf label rollout, kicks off a lively debate about surveillance pricing, personalization, and how much retailers already know about their customers.
Then it's on to AI. Steve sorts the crowded field of shopping agents into four types: vertical agents inside retailers, like Walmart's Sparky and Amazon's Alexa for Shopping; search agents like Gemini and Perplexity; narrow specialists like Daydream; and broad life assistants, a category Meta's Muse and the startup Instinct are heating up. Cutting through the hype, he argues agents may send shoppers into stores as often as away from them, and that trust will decide who wins.
On the radar screen, Steve is watching rising buy now, pay later use and shrinking savings, especially as shoppers start financing groceries and takeout. Michael tracks Canada's push for growth abroad, with the Weston family eyeing the 1,800-store Boots chain and Couche-Tard making an $8.7 billion offer for Polish convenience chain Żabka Group.
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