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October 2025 | Newsletter No. 27
Baker Retail Rundown
Stay in the know with monthly retail challenges and our rundown of top retail industry news, curated by our talented Penn student analysts.
Professionals in commercial real estate are looking to find new ways to win over buzzy brands to smaller markets or older development, in a time when closure of traffic drivers likeJoann, Party City and Rite Aid means more vacancies. In the second quarter of 2025, nationwide retail availability increased to 4.9%, largely due to retailer bankruptcies and companies reducing their store counts. Developers are shifting from traditional anchors, such as movie theaters, to a mixed-use outdoor amenity environment, including pickleball, VR, putting greens, and activated outdoor space. Moreover, they are carving up big box vacancies to smaller pieces to be leased out separately or into food halls with stalls and stands inside. Meanwhile, smaller cities are looking into relative value, affordability, and speed. Towns like Manteca, CA are growing rapidly and have already landed big brand names like Ikea and Top Golf, while places like Fairfield can approve permits in about two to three months instead of most of a year in big cities. For brands who want to make the most of up and coming locations, relationships built with property owners, tenents, and the community is crucial.
In just over a decade, Apple Pay has become a dominant force in U.S. payments, accepted by 85% of retailers compared to only 3% in 2014. A key catalyst was a separate but related change in the country’s payment infrastructure: in 2015, Europay, Mastercard, and Visa mandated the adoption of EMV chips – the gold squares on your credit card allowing you to tap rather than swipe – and, as merchants upgraded terminals, many added NFC, the backbone of Apple Pay. With that tech in place, your iPhone effectively became your credit card. Apple also launched with backing from major banks like Capital One, Chase, and Bank of America, and widespread consumer adoption driven by convenience made it hard for any remaining banks not to support Apple Pay. The result: Apple Pay didn’t just spread – it saturated retail.
ChatGPT has emerged as a major referral traffic driver for retailers, now accounting for 20 percent of Walmart's referral clicks in August, up 15 percent from July, according to Similarweb data. Other retailers are seeing similar gains with ChatGPT driving over 20 percent of Etsy's referrals, nearly 15 percent for Target and 10 percent for eBay. Amazon deliberately sits out this trend, blocking AI crawlers to protect its $56 billion advertising business built around on-site browsing, causing its ChatGPT referral traffic to drop 18 percent to under 3 percent in August. OpenAI research shows 2 percent of ChatGPT's 2.5 billion daily queries involve shopping—about 50 million shopping-related searches daily—as consumers increasingly ask for product recommendations traditionally handled by Google search. Amazon's defensive stance effectively removes 600 million product listings from AI results while pushing its own Rufus chatbot, which has fielded over half a billion customer questions. Unlike Amazon, Walmart remains open to third-party AI shopping agents while developing its own tools. The free traffic won't last as OpenAI reportedly develops payment systems within ChatGPT, with experts predicting AI companies will eventually monetize through affiliate fees or transaction costs to offset massive infrastructure expenses projected to require $2 trillion annually by 2030.
Since April, China’s "instant commerce" boom—combining e-commerce with ultra-fast delivery—has turned online shopping into a battle of speed, price, and convenience, reaching hundreds of millions of consumers. Companies like Meituan, Alibaba, and JD.com have aggressively competed with deep discounts, lightning-fast food and product delivery, and major investments in infrastructure like central kitchens and AI-powered logistics. The competition escalated to the point where users could get full meals or even iPhones delivered within 30 minutes, but also led to enormous financial losses and regulatory pushback. Now, the once-intense price war is cooling as platforms prioritize efficiency and sustainability over subsidies. Analysts predict that although promotional volume may decrease, instant commerce is transforming the future of retail, blending physical stores, data-driven tech, and lightning-speed service.
Luxury brands are leaning into the Labubu craze, elevating the $27 “ugly-cute,” rabbit-esque stuffed monsters from collectibles into high-fashion accessories. Now, retailers are testing premium demand for the status symbol: at the U.S. Open, Naomi Osaka sported a crystal-encrusted Labubu (~$500 from A-Morir), and Parisian maison Moynat is rolling out high-end bags and charms featuring the character. Created by Hong Kong-Dutch artist Kasing Lung, Labubu fits a broader playbook in which luxury houses incorporate characters – think Tiffany or Loewe tapping Pikachu and Totoro – to court Gen Z and digitally native shoppers. This formula travels especially well on TikTok, where virality and cultural relevance are central, though questions linger about the frenzy’s staying power. For now, Labubu manufacturer Pop Mart’s shares remain up ~200% YTD, and Labubu fans remain enchanted.
September Challenge Winner
Owning the Experience: Retail x Real Estate
Identify one way a retailer can use real estate ownership or control to drive competitive advantage, deepen customer engagement, or unlock long-term value.
Crystal Yeh
"Creating experiential flagship stores as cultural landmarks—immersive destinations blending brand, personalization, community—sparks organic storytelling, global visibility, and enduring differentiation that transcends traditional retail."
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