This article was written by Bob Hoyler and Ratna Sita Handayani. The original article was published by Euromonitor International. You can find the article here.
In 2025, a handful of tectonic shifts are reshaping the global retail industry. One of these developments is the unrelenting rise of discount-orientated retail formats, which continue to outperform the rest of the market as economic uncertainty weighs on the global consumer base. Another is the ongoing evolution of social media platforms into important retail channels in their own right, a trend that has sparked a revolution in the e-commerce space.
Low prices are an evergreen consumer concern. In tough economic times, however, the allure of low prices becomes greater, as more middle-income consumers seek to stretch their savings further. Unsurprisingly, then, store-based retail channels that prioritise low prices – discounters, warehouse clubs, and variety stores – did particularly well, on a relative basis, in 2024, recording steady growth in real terms, even as overall offline retail sales declined. Discounters and warehouse clubs, in particular, benefit from having robust private label strategies, a factor that has helped to power sales growth for these channels as shoppers looking to cut costs are enticed by the relatively low price points that have traditionally made store brands a safe haven for consumers in times of economic stress. As a result, these discount-focused channels are again projected to significantly outperform top-line offline retail sales in 2025.
The economic uncertainty currently roiling the globe will continue to be a boon for discount retailers. These players are successfully leveraging their reputation as purveyors of “everyday low prices” to attract customers. This includes a growing number of shoppers hailing from beyond discount formats’ traditional base of lower-income consumers, signalling a broadening of discount retail’s appeal. As a result, the outlook for discount retail remains overwhelmingly positive. Indeed, discount retail is expected to remain one of the few bright spots for a store-based retail sector facing mounting competition from online players. In light of this, retailers that can credibly do so should increase their exposure to discount retail formats.
For name brand manufacturers, however, the rise of discount retail is likely an ill omen, as the retailers recording the most robust sales gains are also likely to be the ones most adept at negotiating their supplier partners down on pricing.
As consumers spend more of their time in brick-and-mortar stores at outlets operated by discount-orientated retailers, they are also spending more of their time online on social media platforms. Consumers increasingly view these platforms not only as places to connect with others, but also as places to shop.
Source: Euromonitor International
Realising s-commerce’s potential, social media firms are making their apps more shoppable. Brands and creators on platforms like Instagram and YouTube also increasingly utilise shoppable videos, which allow consumers to simply click on a link embedded within a video to buy an item. Furthermore, some social media platforms are transforming into full-blown online marketplaces in their own right. ByteDance-owned platforms TikTok and Douyin, the latter serving as the equivalent of TikTok in the company’s home market of China, are at the forefront of this trend, combining livestreaming, shoppable videos, marketplace features, and s-commerce to emerge as modern retail powerhouses.
The retail transformation of social media will continue, with global s-commerce sales projected to grow at a CAGR of 21%, in constant terms, during 2024-2029 – three times faster than the growth of retail e-commerce as a whole. Clearly, consumers are willing to shop where they are already scrolling.
As social media becomes more central to consumers’ lives, the balance of power between social media platforms and brands is shifting towards social media platforms. Brands now find that they not only need to advertise on these platforms but must also increasingly abide by their seller requirements – just as they must do with online marketplaces like Amazon. In this new era, brands need to shift their attention, and spending, towards social media platforms to avoid falling behind the competition. This also means, however, that brands need to become more efficient with their social strategies, cutting spend on platforms that are losing eyeballs.
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