The CQ | Plunging U.S. Retail Sales, and How a Loneliness Epidemic Becomes a Security Crisis
The Forerunner Team's Must-Reads of the Week
The CQ is Forerunner’s weekly newsletter rounding up the most pressing consumer news and analysis, plus some bonus musings from our investment team. Subscribe now to get the latest edition in your inbox every weekend.
Last week, our Founder and Managing Partner Kirsten Green spoke at South Park Commons about why we believe 2025 will be one of the most dynamic times for consumer investing. A group of 100+ soon-to-be entrepreneurs (in the “minus 1” stage) gathered to hear about Kirsten’s experience starting her career (there’s a fun throwback to her time trying to develop an edge in analyzing retail public equities, which led her to count inventory in a frozen meat locker at Safeway) to what she’s most excited about today — and looking ahead to tomorrow. Some highlights:
An unparalleled platform shift, like the one we’re in now, means everything is up for reimagination. This doesn’t just mean new product experiences and service capabilities, but new mediums for advertising and building defensible moats.
We’re in a new era of startup building where the opportunity to differentiate through pure play technology is shrinking (see: commoditization at LLM level), making the less tangible, creative elements the true edge. Foresight into human adaptation and elegance in delivery will win tomorrow.
There’s a foreground of new business models that will define tomorrow's winners, because in a platform shift, winning is as much about introducing new technology-driven experiences as it is about mastering the new business models that come with them.
See the full interview here.
And for more, see Kirsten’s recent interview with Mario Gabriele in The Generalist, where she writes a letter recounting her non-traditional start in venture.
What We’re Talking About on Slack:
U.S. retail spending plunged last month, falling for the first time since August. Retail sales in January fell 0.9% from December, missing economists' expectations of a 0.4% decline. Specialty stores and auto dealers experienced the sharpest declines, with sales down 4.6% and 3%, respectively. A key potential factor: Americans are finding it harder and harder to pay off debt, as household debt rose by 0.5% to $18.04 trillion in Q4 of 2024. Credit card balances hit $1.2 trillion, a 7.3% increase from the previous quarter. Delinquency rates also climbed, with auto loans and credit cards seeing the highest share of serious delinquencies in 14 years. “This report feels like further proof that Americans are generally doing OK financially, but it wouldn’t take much for things to go from pretty good to pretty scary,” said one credit analyst. “If they were to face a job loss, medical emergency or some other big unexpected financial crisis, things could get tough in a big hurry.”
From WSJ: With falling U.S. sales, companies are trying to hit the sweet spot for prices. The makers of all kinds of consumer products, from Newport cigarettes to PineSol, and Estée Lauder, are adjusting their products and prices, prioritizing smaller or more affordable product sizes or concentrated formulas that offer more value to meet the needs of increasingly cost-conscious consumers. For instance, PepsiCo is working on a broader range of multipacks of chips that come with as few as six bags or as many as 18 “to serve shoppers at different times of the month, when they may have more or less cash on hand.”
‘The Great Detachment’ has 79% of employees disengaged at work. The factors behind this lack of motivation range from low pay (33%) to misalignment of values (23%), and unclear expectations (14%). Nearly half of employees (47%) are also seeking better work-life balance and flexibility, especially as workplace stress is high, with 49% citing heavy workloads. About 44% said clearer communication and guidance from managers could improve engagement.
How do young men see the world? While viewpoints varied, there were common themes that came up: mainly feeling sidelined or misunderstood as well as a prevailing sense of frustration. Says one 21-year-old: “My generation is not in an optimal position. Honestly, it kind of feels like I was born too late. Like I missed out on something. It feels like I’m living in a generation where we’re cleaning up after someone else’s mess.”
Time investigates the race to explain why more young adults are getting cancer. From 1990 to 2019, early-onset cancer diagnoses and deaths rose globally by 79% and 28%, respectively. Although cancer remains mostly a disease of older adults, those under 50 are seeing an increasing risk, with a particularly alarming rise in colon and rectal cancer cases. Young adults are now about twice as likely to develop colon cancer and four times more likely to develop rectal cancer than those born around 1950. Researchers suspect that modern diets, environmental toxins, microplastics, or prenatal exposures—or even a combination—is causing cancer in younger people, though it’s still unclear. “It could take years, if not decades, to sort out what’s causing early diagnoses, and perhaps even more time to figure out how to stop them.”
Gen Z teens tell us why they stopped trusting experts in favor of influencers on TikTok. “Doctors, journalists, and scientists are dismissed, not because they are wrong, but because they are inconvenient…Influencers, on the other hand, are fast, familiar, and on the medium we turn to most: our phones.” And besides, “a well-edited, engaging video is much more convincing than a long, complicated explanation from a professional.” That checks out: A 2022 Reuters study found that 55% of young people get their news from social media platforms like TikTok, YouTube, and Instagram, rather than traditional outlets. The thing is that social media algorithms tend to reinforce existing beliefs, making it harder for people to access diverse perspectives, which contributes to the spread of misinformation.
Walmart is Retail King again. Can it keep the crown? The big-box retailer has seen significant growth, with its shares up 72% in 2024 and another 16% in 2025. It has expanded its e-commerce business, attracted both low- and high-income consumers, improved its merchandising, launched Walmart+, and invested heavily in automation, helping reduce U.S. delivery cost per order by about 40%. This growth could be seen as short-lived, however signs like the weak competition in the discount space and their recent store remodels with a “higher-end feel” suggest otherwise. Plus, “the Walmart+ membership looks relatively sticky, with about 90% of members surveyed by Evercore ISI Research last year saying they are definitely or maybe renewing.”
AI companions: the future of friendship or a dangerous illusion? Fast Company takes a look at the booming market for AI companionship, with platforms using premium subscriptions and “digital twins” of celebrities and influencers to generate revenue. Users claim chatting with AI companions reduces stress, anxiety, and loneliness, “offering a safe space to express thoughts without fear of judgment,” though experts warn that getting too attached may push users further into isolation. Bloomberg delves a bit deeper into the impact on humans, asking, with AI friends like these, who needs humans? “The latest capabilities of generative AI threaten to enfeeble skills that make us fundamentally human: socializing and handling conflict. The risk is that as artificial relationships become normalized—as they seem well on their way to being—they’ll reshape human social development and inadvertently make it even more difficult to connect.”
Meanwhile, Wired thinks the loneliness epidemic is a security crisis. With the prevalence of dating apps and the decline of dating IRL, more and more people are falling vulnerable to “love bombing” via romance scams. Scammers are increasingly using generative AI chatbots to create online dating profiles and a recent United Nations report says “organized crime efforts have been generating personalized scripts to deceive victims while engaging in real-time conversations in hundreds of languages.” In the U.S., losses from romance and confidence scams have totaled nearly $4.5 billion over the past decade. “In a lot of cases, criminals find romance scam success with people who are struggling with feelings of loneliness. Especially with romance scams, it’s very difficult to convince the person that the person they’re speaking with is not in love.”
Portfolio Highlights:
For the seventh year in a row, Chime makes Forbes’ Fintech 50 list.
Tally Health CEO Melanie Goldey, along with three other executives in the industry, discussed female longevity at a Fortune Most Powerful Women panel at the CES conference last month.
Job of the Week:
Head of Marketing at Topline Pro, the Shopify for Home Services pros.
There are ~640 other jobs open at portfolio companies, check ‘em out.
Extremely interesting with the article that’s dives into why Gen Z turn to influencers over experts. So how would one combat that growing trend? How do you make the hard-to-understand- long formatted information from the experts into bite sized pieces that are easy to read and understand from a laymen’s perspective….I’m currently trying to figure this out within the health and wellness industry.
Thanks for the interesting articles!