Navigating the Retail Shift: Strategic Sectors in Construction, Engineering, and Energy for 2025

The U.S. retail landscape in Q4 2025 is marked by stark divergences. While the Redbook Index—a sales-weighted measure of same-store retail growth—reveals declining momentum in traditional sectors like automotive and consumer staples, it simultaneously highlights surging demand in logistics and fintech. This bifurcation is not merely a retail phenomenon; it is a seismic shift in consumer behavior that demands a reevaluation of investment strategies across construction, engineering, and energy.

The Redbook's Dual Narrative

The Redbook data underscores a critical inflection point: e-commerce and digital infrastructure are outpacing traditional retail. Logistics and fintech sectors, driven by AI-driven supply chains and Federal Reserve rate cuts, are expanding rapidly. This has created a surge in demand for warehousing, distribution centers, and data infrastructure. Conversely, auto and staples sectors face structural headwinds, including the expiration of EV tax credits and the rise of off-price retail models. For investors, this duality signals a clear sector rotation: away from legacy retail and toward digital-first infrastructure.

Construction: The Logistics Boom and Data Center Surge

The construction sector is experiencing a realignment. While total engineering and construction spending is projected to decline by 1% in 2025, sub-sectors tied to logistics and digital infrastructure are thriving. Prologis and C.H. Robinson, for instance, have seen robust growth as e-commerce demand for warehousing and last-mile delivery accelerates. Similarly, data center construction is surging, with U.S. data centers now consuming 4% of national electricity—a figure expected to rise to 12% by 2028.

However, this growth is not without challenges. Rising input costs, driven by tariffs on steel and aluminum, and labor shortages are squeezing margins. Contractors must prioritize projects with stable demand, such as infrastructure and public-sector work, while avoiding speculative commercial ventures.

Engineering: AI-Driven Innovation and Energy Infrastructure

Engineering firms are at the forefront of adapting to these shifts. The integration of AI into design coordination, safety protocols, and energy efficiency is becoming a competitive imperative. For example, modular construction and prefabrication are gaining traction, reducing costs and timelines. Additionally, the One Big Beautiful Bill Act (OBBBA) has incentivized R&E expenses, encouraging innovation in advanced manufacturing and energy-efficient systems.

The energy sector, in particular, is a focal point. Data centers require not only construction but also specialized engineering for power transmission, cooling, and renewable integration. Firms with expertise in grid modernization and renewable energy solutions—such as solar and wind infrastructure—are well-positioned to capitalize on this demand.

Energy: Powering the Digital Economy

The energy sector's role in this transformation is pivotal. As data centers expand, so does their appetite for electricity. This has created a dual opportunity: first, for energy providers to meet the surging demand for power, and second, for engineering firms to design and implement energy-efficient solutions. The Redbook's emphasis on digital retail growth underscores the need for energy infrastructure that can support high-capacity AI/data centers.

Moreover, geopolitical factors—such as U.S. sanctions on Russian oil and trade agreements for rare earth minerals—are reshaping energy markets. While oil prices remain stable at $60/barrel, the push for clean energy and infrastructure modernization aligns with long-term investment themes. Energy firms that can balance traditional power generation with renewable expansion will likely outperform.

Strategic Investment Recommendations

1. Logistics and Data Center Infrastructure: Prioritize firms like Prologis and C.H. Robinson, which are benefiting from e-commerce growth. Additionally, consider energy providers with expertise in data center power solutions, such as NextEra Energy or Duke Energy.
2. Engineering Firms with AI and Energy Expertise: Target companies like Burns & McDonnell or Mortenson, which are integrating AI into project management and energy infrastructure.
3. Avoid Traditional Retail and Automotive Construction: Sectors tied to declining consumer demand, such as office real estate and automotive dealership construction, face prolonged headwinds.

Conclusion

The Redbook Index for Q4 2025 is more than a retail indicator; it is a compass for navigating the evolving interplay between consumer behavior, technology, and infrastructure. Investors who align their portfolios with the winners of this transition—logistics, data centers, and energy infrastructure—will be well-positioned to capitalize on the decade's defining trends. The key lies in recognizing that the future of retail is not in bricks and mortar, but in bytes and watts.