The retail and apparel sector has weathered countless storms, from pandemics to inflationary pressures. Yet through it all, resilience has emerged as the defining trait of both consumers and businesses alike. Here, Eric Fisch, head of retail and apparel, U.S. Commercial Banking at HSBC, shares insights about the current state of the industry, revealing why strong employment metrics, evolving shopping behaviors and balanced strategies across e-commerce and physical retail continue to drive optimism in this dynamic market.
HGI: Thanks for taking the time to talk with us today, Eric. Let’s start with a big-picture question. How would you describe the current state of the market from the perspective of both consumers and the apparel and fashion brands you work with?
EF: If I had to summarize it in one word, I’d say ‘resilient.’ I use that term intentionally because both consumers and businesses have proven remarkably adaptable. While we did see a brief dip in spending around early April when tariffs were announced, consumer behavior has largely returned to more historical levels.
On the business side, companies haven’t significantly raised prices. There was a bit of increased demand in April—some think it may have been driven by people purchasing ahead of potential price hikes, while others credit factors like the timing of Easter or good weather. Ultimately, though, one thing remains clear: we haven’t seen a significant drop in demand.
HGI: So, would you say we’re improving at handling uncertainty?
EF: I wouldn’t necessarily frame it as us getting better at handling uncertainty. Fundamentally, consumer spending is tied closely to employment. Employment remains strong overall, and when people feel secure in their jobs, they tend to spend confidently. That’s the primary driver we’ve seen both in the U.S. and in other markets.
HGI: Speaking of other markets, what’s the consumer landscape like in Europe or Asia compared to the U.S.?
EF: The U.S. has been a stronger consumer market than Europe for over a decade, and that trend continued through COVID. Not only did the U.S. rebound much faster than Asia post-pandemic, but it has also become a key revenue driver for many international brands.
In fact, many European brands now generate the majority, sometimes 80 percent, of their revenue in the U.S. They see it as the cornerstone for future growth. The U.S., in essence, has become the market everyone is heavily committed to.
HGI: Shifting gears a bit—e-commerce exploded during COVID but has since leveled off. Where do things stand now?
EF: COVID essentially accelerated e-commerce growth by five years. While that growth trajectory isn’t as rapid, e-commerce remains strong and viable.
What we’ve observed is a shift toward equilibrium. Physical retail remains vital in giving shoppers a tactile, in-person experience, while e-commerce offers convenience and broader product selection, especially for niche categories.
That said, social media ad buys—central to many online marketing strategies—have become much more expensive and less effective. People are inundated with content on multiple platforms, making conversions less efficient. Because of this, brands are focusing more on driving in-store traffic by offering unique experiences and exclusive products in physical retail spaces.
HGI: Which brings us to mobile commerce. How does it fit into the picture?
EF: Mobile is definitely a major driver of e-commerce. It reduces friction—think Face ID and one-click purchases—which naturally boosts conversion rates. However, there’s an interesting nuance: while people are comfortable making lower-priced purchases on mobile, there’s still resistance to buying high-ticket items through their phones.
“Consumer spending is tied closely to employment. Employment remains strong overall, and when people feel secure in their jobs, they tend to spend confidently”
—Eric Fisch
HGI: Let’s talk more about physical retail. Many people still appreciate the experience of shopping in-store. How does that hold up in today’s market?
EF: Physical retail is incredibly important, especially for brands. When consumers visit a store, they’re immersing themselves in the brand—it’s about experiencing the product in a tangible way.
There’s no substitute for touching and feeling a product in a well-designed environment, especially with the guidance of knowledgeable sales staff. Brands crave that direct interaction with customers, and it’s why they often prefer every incremental sale to come from physical stores.
Additionally, physical retail offers lower return rates and, often, higher conversion rates, depending on the product category. Many retailers are also using free shipping strategically, such as offering it for loyalty members or above certain price thresholds, to offset the cost pressures of online shopping.
HGI: So online shopping is more transactional, while in-store offers a richer experience. Is that fair?
EF: That’s a fair way to put it. Online is great for convenience and a broad selection of products, especially when retailers can’t carry every available SKU in their physical stores. But when it comes to creating a deeper brand connection, physical retail has the edge.
HGI: You’re optimistic about the state of retail now, but will that optimism carry into the second half of the year?
EF: I believe it will. As I mentioned earlier, consumer spending is closely tied to employment, and employment metrics remain strong. Inflation and tariff concerns may pose challenges, but I don’t expect a major drop in spending.
What may change is the product mix. Many brands are taking a conservative approach to inventory due to economic uncertainty, which could reduce excess stock. As a result, we might see fewer promotions and more full-price sales—which could shift consumer behavior, but not necessarily diminish overall spending.
HGI: Some retailers, like Best Buy, seem cautious about high-ticket item sales. Do you think trends like buy now, pay later (BNPL) will help mitigate that?
EF: BNPL is definitely growing and could help boost sales for certain categories. However, we’re seeing some early signs of increased delinquencies, which raises questions about its long-term sustainability.
At its best, BNPL allows customers to make large purchases they might not be able to afford outright. But when it’s used regularly for smaller, routine purchases — groceries, for example — it can signal financial strain. It’s a debt product, so retailers and consumers alike need to approach it carefully, especially in uncertain economic times.
HGI: Let’s finish by discussing tariffs. Are they likely to cause major disruptions, like empty shelves in certain categories?
EF: I don’t think we’ll see shelves going empty. The retail and apparel sector is incredibly resourceful. This is an industry that has adapted to countless challenges—shifting production locations, economic recessions, the pandemic, and more.
There’s also nuance to how tariffs are calculated. Many companies have ways of reducing their exposure, such as leveraging methods like first-sale rules or working with overseas agents. Brands are figuring out how to navigate these headwinds, and I’m confident in their ability to continue delivering for consumers.
