Consumer Durables Retail Industry Trends, March 2025

Global: Growth in advanced markets to accelerate

We expect consumer durables sales in advanced markets to accelerate in 2025, while growth in the Asia Pacific region will cool down somewhat, mainly due to lower demand in China. This year we forecast global consumer durables production to increase by 2.6% and sales by 3.4%.

The consumer durables sector is exposed to geopolitical and economic downside risks such as tumbling stock markets and volatile commodity prices. Currently the most imminent threats are the increased use of trade tariffs and protectionism.
Tariffs weigh on economic growth directly through higher costs of trade, which in turn often result in increasing consumer prices and a reduction in disposable household income.

The credit risk of consumer durables retailers in advanced markets remains elevated, with smaller players especially vulnerable to defaults and insolvency. The sector operates in a fiercely competitive environment with thin margins.

USA: Solid growth outlook, but import tariffs are a downside risk

US economic growth continues to sustain robust consumer spending. We expect US consumer durables sales to grow 2.3% in 2025, followed by a 4.9% increase in 2026.

For US retailers, inventories that are not properly managed could lead to lower profit margins and higher credit risk. Bricks-and-mortar retailers continue to lose market share to ecommerce.

High import tariffs are a downside risk as they set to drag on US economic growth through stickier inflation, weighing on real disposable incomes and, in turn, reducing consumption growth.

The US has recently imposed 25% import tariffs Canada and Mexico (currently paused until early April) and 20% additional levies on China. Should these tariffs put place for a notable period, they would strongly affect the US consumer durables retail sector, resulting in higher inflation and market instability. More than 50% of consumer electronics, household appliances and furniture goods imported by the US come from the three countries.

China: Government subsidies support consumer durables sales
 
Chinese consumer sentiment remains volatile, mainly due to the ongoing issues in the property sector, where home buyers are confronted with negative wealth effects due to price pressures. 

In order to boost consumer spending, the government introduced a trade-in programme for passenger cars, household appliances and consumer electronics. This has led to a boost in consumer durables sales in late 2024 and early 2025. We expect retail sales to increase by 4%-5% annually in 2025 and 2026.

The imposition of large import tariffs by the US could hurt Chinese exports of consumer electronics and white goods. Any major escalation of the trade dispute with the US could adversely affect China´s economic performance and subsequently dampen consumer spending.

India: Ongoing growth and good long-term prospects

Household spending in India will be strong in 2025, as the growth of India's wider economy continues. Although inflationary pressures will remain elevated across 2025, price growth is moderating. 

We expect consumer durables sales to increase 5.3% this year after a whopping 22% rebound in 2024.

Japan: Easing consumer price inflation

After a 2.6% decline in 2024 we expect consumer durables sales in Japan to rebound by the same amount in 2025, as recovery in households' real income will support consumption. 

In the long-run, the ageing and declining population size will mean weaker consumption prospects.

European Union: Consumer durables sales to rebound modestly in 2025

After contractions in 2023 (-5.2%) and 2024 (-0.9%), we expect consumer durables sales in the EU to rebound by 0.9% in 2025. With inflation below wage growth, there is a positive increase in consumers’ purchasing power.  

Signs of softening across labour markets are emerging, but a small rise in the unemployment rate over the next 12 months is more likely than a more severe deterioration.

France: Credit risk remains high in the retail sector

We expect French consumer durables performance to remain subdued in 2025 after a 1.9% contraction last year. Recent wage increases have been outpacing inflation, but consumer sentiment remains muted.

Credit risk in the retail segment remains high, with tight margins, restricted access to loans and a high level of payment delays and insolvencies. 

Germany: No recovery for the time being

After a 2.4% contraction in 2024, consumer durables sales in Germany are expected to decrease again this year, by 1.4%. Wage growth will drive gains in real income, but private consumption remains subdued in 2025. US tariffs could hurt industries that are already suffering, which could accelerate job cuts. 

Input costs for retailers remain high, credit is expensive and already thin margins have decreased further. The credit risk of retailers has increased as a result, along with rising insolvencies.

United Kingdom: A subdued outlook

After contractions in 2023 (-0.7%) and 2024 (-4.1%), we expect consumer durables sales in the UK to rebound, but by only 2.5% in 2025. Household spending power will be impacted by higher inflation and lower wage growth. 

An increase in National Insurance rates for employers and a higher national living wage is likely to lead to retailers having to make some difficult decisions on investment pricing and employment levels. 2025 will be another challenging year for the sector, and an increase in insolvencies is likely.