Retail in a State of Chaos: How to Navigate the New Normal

If the word “chaos” feels like an overused descriptor in retail these days, the latest report from RSR Research (Retail Systems Research) makes a compelling case that it’s not hyperbole—it’s our new normal.

Titled “Chaos: How Retailers Are Coping and Planning in a Market of Permanent Instability,” this timely benchmark report surveyed 133 U.S. retailers during the first half of 2025, and the findings are sobering. While 2024 offered relative calm and cautious optimism, that narrative unraveled quickly this year with the introduction of erratic tariffs, geopolitical shocks, and continued consumer price sensitivity. We are no longer waiting for disruption—we’re living in it.

Key Findings: A Perfect Storm of Supply Chain, Price, and Planning Headaches

• 82% of retailers have already felt the sting of tariffs this year, but many—particularly large retailers—are still operating as if this storm might pass. Spoiler alert: it probably won’t.

• 62% of all retailers surveyed believe they won’t remain financially healthy for more than 9 months under continued tariff pressure. Small to mid-size retailers are especially vulnerable.

• Labor cuts are looming. Nearly half of retailers cite reduced headcount or operational costs as their top short-term strategy to absorb rising costs, putting front-line service levels and employee morale at risk.

• Near-sourcing is gaining traction—but slowly. While 93% of retailers agree it makes business sense to source more products closer to home, most say it will take 3–5 years or more to reduce foreign dependency in a meaningful way.

• Price sensitivity among consumers is worse than ever. Retailers anticipate a drop in both traffic and average transaction size, with 48% expecting consumers to become even more selective about what they buy.

• Most retailers are holding off on price hikes—but not forever. While many are trying to “eat the tariffs” for now, only 9% say they can absorb the increased costs indefinitely. This restraint won’t last.

Recommendations from the Report: What Retailers Must Do Now

The report doesn’t just sound the alarm—it offers actionable advice. Here’s what I believe every retail executive should take to heart from RSR’s recommendations:

1. Acknowledge the chaos—and stop waiting for normal to return. Permanent instability is the new baseline. Retailers must get comfortable operating in ambiguity.

2. Adopt a “Sense and Respond” model. Agile planning and rapid response mechanisms—powered by analytics and real-time data—are more important than rigid forecasts or year-old strategies.

3. Forecast continuously. Season-long or annual plans are no longer sufficient. In-season adjustments based on real-time demand, customer behavior, and geopolitical news are vital.

4. Lean into scenario planning and predictive modeling. Advanced analytics, digital twins, and AI-based modeling are now essential to anticipate disruptions and reroute supply chains quickly.

5. Get pricing right—with technology. Modern price optimization tools allow retailers to adjust prices at a granular level, balancing margin protection with customer loyalty. If you’re not already investing here, you’re behind.

6. Protect flexibility at all costs. From inventory allocation to staffing and logistics, nimbleness is your competitive edge.

7. Double down on supply chain visibility. You can’t respond to what you can’t see. Retailers need end-to-end visibility and the tools to act quickly.

My Take

For those of us who have spent decades on the front lines of retail—as merchants, buyers, consultants, or operators—this moment feels eerily familiar and completely unprecedented at the same time. We’ve weathered recessions, digital disruption, and a global pandemic. But what’s different now is the speed, scale, and randomness of change. Tariffs might change overnight. Consumer confidence might swing with the next news cycle. A sourcing strategy that worked last year might be untenable tomorrow.

That’s why I believe the most successful retailers and brands in this environment will be those who embrace resilience, not resistance. Who chooses adaptive over reactive. Who are not just supply chain experts—but scenario planners, agile operators, and price strategists.

Yes, it’s chaotic. But in chaos, there’s also clarity—if we’re willing to see it. Adaptability is one of the key traits I've sought to gain from a lifetime in retailing, and I'll bet I'm not the only one.

To read the whole report from RSR Research (Retail Systems Research), visit their website here. It's definitely worth the read!