Retail Giants Facing Their Biggest Challenge Yet!

Hey,

Forget the old retail playbook. The game has changed. We’re not talking about a slow shift; you’re seeing it right now: AI-powered robots handling your shopping, tariffs pushing prices up, and consumers making decisions faster than you can react. Amazon, Walmart, and the rest are scrambling to keep up, and it’s up to you to figure out where you fit in this fast-paced, tech-driven world. In this edition of Xena Insider, we break down the disruptions shaking the retail world and how you can capitalize on them—before your competitors do.

The Impact of Tariffs on Temu

In a move that underscores the broader impact of shifting tariffs, Temu, the fast-growing eCommerce platform, has lost 58% of its daily U.S. users in May after the U.S. imposed tariffs on Chinese imports. The end of the de minimis exemption has made it harder for Temu and other Chinese retailers to offer low-cost goods to U.S. consumers.

What’s the fallout?

• Sales and customer growth dropped sharply, as highlighted by a report from Bain & Company.

• With higher prices resulting from these new tariffs, Temu has scaled back its advertising, leading to an 80% downturn in paid search traffic.

• Temu’s response? Shifting to local inventory fulfillment to mitigate rising costs, but the question remains: Can these changes keep the platform competitive in the U.S.?

For global eCommerce sellers, this is a critical lesson on how tariff changes can dramatically impact consumer behavior, especially in a market where cost-driven shoppers are the norm.

Amazon and Walmart’s Battle for the Future

Amazon and Walmart are both doubling down on AI technology to redefine their competitive edge, but with different approaches.

• Amazon is using AI-driven models to optimize its supply chain, improve delivery precision, and enhance customer experience across platforms. Recently, Amazon launched AI-powered robots that can understand natural language commands, making operations smoother and faster.

• Walmart is working on generative AI tools to enhance the shopping experience and streamline eCommerce operations. Their focus on AI-enhanced inventory management is setting a new standard for operational efficiency.

As consumer expectations evolve, both companies are heavily invested in AI as the core of their strategy. Retailers must understand that in this race, AI isn’t optional—it’s the driver of future growth and customer loyalty.

The Changing Consumer Wallet

The first quarter of 2025 has brought tough news for both Amazon and Walmart: retail sales growth has slowed to the weakest levels since pre-pandemic times. While they still lead the retail market, consumer spending is being reallocated towards services and experiences instead of products.

Here’s what we learned:

• Walmart’s discretionary spending share grew by 6.4% in Q1 2025—its strongest performance in two years. This signals a shift as price and value-driven consumers increasingly turn to Walmart for their discretionary spending needs.

• Amazon’s share of total consumer spending fell to 3.3%, down from last year, indicating competition from other sectors, including services and healthcare, is impacting their retail dominance.

For eCommerce brands, rethinking pricing strategies and adapting to new consumer spending patterns will be crucial. Is your brand ready to compete in this evolving landscape?

TL;DR

The retail industry is undergoing a fundamental shift. From AI-powered innovations to tariff-driven pricing changes, brands need to stay agile to succeed.

Here’s what retailers can do now:

• Integrate AI into every facet of your strategy: From inventory management to customer experience, AI is the backbone of future growth.

• Optimize your pricing strategy in response to global changes like tariffs, ensuring you stay competitive without sacrificing profitability.

• Stay ahead of evolving consumer preferences: Adapt to instant retail and the shift towards dual memberships, offering value across multiple platforms.

Where Xena fits into all of this

Our platform is a decision engine. We take the flood of unstructured eCommerce data, search terms, reviews, product performance, competitor shifts, and turn it into focused, actionable intelligence.

We’re the layer between raw data and smart moves. Whether it’s launching a new SKU, optimizing pricing, or decoding buyer sentiment across marketplaces, Xena lets you do it faster, with confidence.

What you can do with Xena today:

• Run a full performance audit to spot hidden revenue gaps

• Build a predictive GTM model tailored to your product and category

• Replace spreadsheets with automated insights that actually scale

Book a strategy session to see what AI-led growth really looks like

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