How retail is responding to shifting market forces

First U.S. Consumer Price Index drop since start of Iran conflict

• The U.S. Consumer Price Index (CPI) dropped by 0.4% in June, marking the first monthly decline since the start of the Middle East conflict in February. But the June CPI was still up 3.5% compared to the same period last year.
• The June decline was driven largely by a sharp drop in gasoline and energy prices following a temporary easing of Middle East tensions. However, underlying inflation remained relatively firm.
• National gas prices fell about 10% in June, while the broader energy category fell by 6%. But even with those declines, gas prices were up 27% over the previous year, while fuel oil was up 43% and total energy up 16%.
• Because energy costs influence manufacturing, transportation and distribution expenses, sustained fuel volatility remains a key inflation risk for retailers and retail suppliers.
• The Consumer Price Index for July is scheduled to be released 12 August.

Fast fashion moves toward a closed-loop supply chain

With fast fashion growing steadily for 20 years, parts of the world have begun regulating these garments that are made faster, sold cheaper, worn fewer times and disposed of sooner. Now, the fast-fashion industry increasingly must invest in circular supply chain practises that emphasise reuse and recycling to reduce waste and the need for new resources.

Fast fashion by the numbers

• The global fast-fashion market is expected to more than double by 2034, to more than $385 billion.
• Top producers of fast fashion release as many as 9,000 new designs a day. Approximately three-quarters of those are made of virgin polyester.
• Fewer than 2% of 60 million garment workers globally earn a living wage.
• The U.S. second-hand apparel market is growing nearly four times faster than new retail.

What regulators are doing

• Regulations on garment makers include restrictions on chemicals, mandates for recycling textile waste, requirements for wastewater treatment and rules governing fair wages and worker safety. These affect both material sourcing and production costs.
• In California, which accounts for roughly 13% of U.S. garment manufacturing jobs and produces 50% of all U.S. cut-and-sew garments, the Responsible Textile Recovery Act of 2024 is a landmark law requiring producers to fund reuse, repair and recycling programmes for textiles and apparel. As of 2026, companies must join an approved Producer Responsibility Organisation and submit waste-reduction plans.
• Fast fashion brands in California are also required to disclose environmental factors including carbon emissions, water usage and fibre sourcing. Producer responsibility systems typically charge more for low-recycled content or high-waste products.
• Similar concepts are emerging in other states, mostly affecting fast-fashion producers.

What it means for fashion supply chains

• New regulations are forcing fast-fashion producers to restructure their supply chains, create and manage recycling infrastructure and collaborate with retailers on take-back programmes and sorting garments for recycling.
• Due to the fragmented regulatory landscape, fast-fashion brands must work with multiple compliance programmes and state-specific costs and penalties. Many are teaming up with existing Producer Responsibility Organisations.
• Because fast-fashion items are often made of low-quality fabrics and more expensive to recycle, garment producers are looking to reduce costs in other areas.

What to do

• Build traceability into the supply chain. Companies that can quickly document origin, chain of custody and supplier practices will be better positioned to reduce compliance risk.
• Design for circularity from the start to avoid having to improvise on the tail-end of manufacturing.
• Invest in reverse logistics and networks that can efficiently handle returns, repair, refurbishment, resale and textile recovery while using AI and visibility tools to manage inventory and transportation costs.

For grocery retailers, 2026 is the year of the cabbage

Thanks to its versatility and affordability, the once lowly cabbage is this year’s superstar vegetable. Cabbage is long-lasting and nutrient dense, making it a top choice for households making healthier choices.

About the trend

• Pinterest searches for cabbage are up more than 100% in 2026 and social media feeds are filled with cabbage recipes and cabbage-themed parties.
• Cabbage has developed a reputation as a superfood, providing vitamin K, vitamin C, folate, manganese and other vitamins and minerals. It’s versatile, easy to prepare and part of the fermented food trend.
• Cabbage is also great for those watching their grocery budgets this year. A head of cabbage can last up to two months in the refrigerator, cut cabbage a week or more.
• Regional cabbage shortages have occurred this year due to weather-related conditions as well as the increase in demand, but overall, widespread supply chain disruptions are not predicted.

What to know about the cabbage supply chain

• Unlike highly perishable produce, the long shelf life for cabbage gives retailers and distributors more flexibility to build inventory ahead of demand spikes, helping reduce spoilage and improve in-stock performance.
• Despite cabbage's durability, cold chain execution remains critical. Maintaining temperature control and minimising damage during handling will extend shelf life and reduce waste.
• Weather disruptions highlight the value of diversified sourcing. Regional shortages demonstrate why produce shippers and retailers benefit from maintaining flexibility in sourcing across multiple growing regions.

U.S. tariff changes

The latest changes to U.S. tariff policy underscore that trade compliance and customs expertise remain critical supply chain capabilities:

• Across-the-board Section 122 tariffs expired in July and were immediately replaced with Section 301 tariffs tied to screening for forced labour in supply chains. Imports from 60 countries are subject to these new tariffs, at rates of 10% or 12.5%.
• While negotiations on the U.S.-Mexico-Canada Agreement continue, Canadian goods face the threat of 50% tariffs under Section 338, which allows for additional duties when a foreign country is found to be treating U.S. commerce unfairly or discriminatorily. The implementation date is 19 August 2026.
• In retaliation for certain taxes on U.S. tech companies’ revenues, the U.S. administration has threatened 25% tariffs under Section 301 on goods from several European countries. It is currently unclear if and when these may be implemented.

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