US Retail Holiday Sales Forecast: Over $975B Despite Economic Caution

U.S. Retail Holiday Sales to Exceed $975 Billion

In its annual assessment, Bain & Company has announced that U.S. retail sales are expected to reach more than $975 billion during the upcoming holiday season. This forecast, although promising, reflects a growth rate of only 4% compared to last year, which falls below the 10-year average of 5.2%. As consumers navigate a landscape marked by economic uncertainties, the projected growth highlights both a recovery in certain areas and continued caution in spending habits.

Key Insights from the Forecast

Bain’s analysis indicates that the increase in sales, while significant, is characterized by a multitude of complexities. In-store shopping is anticipated to see a resurgence, with consumers expressing a preference for physical stores over online shopping, a shift from previous years. The forecast predicts that in-store sales may rise by approximately 2.75% year-over-year, significantly contributing to overall growth. Sectors such as clothing, general merchandise, and health products are anticipated to flourish, each showing a potential increase of 5% or more.

On the other hand, e-commerce and nonstore sales—which previously drove record growth—are now projected to slow down to a 7% increase, down from the impressive 9-10% growth seen in the past two years. Nevertheless, these nonstore channels are expected to continue being a major part of the sales landscape, constituting about 50% of all retail sales growth this year.

Factors Influencing Consumer Behavior

The Consumer Health Index developed by Bain reflects a troubling shift in financial outlook among households across various income brackets. Although upper-income households (which contribute roughly 54% of consumer spending) remain optimistic compared to last year, there are signs of a slowdown. Significant issues such as rising credit delinquencies and decreasing savings rates paint a challenging picture for many consumers.

Despite these headwinds, several factors may bolster sales growth this holiday season. The average hourly wage has increased by 3.7% year-over-year, outpacing inflation, giving consumers a bit more spending power. Additionally, a strong performance in the stock market, with the S&P 500 rising 21% since last year, helps boost consumer confidence, particularly among wealthier households. Furthermore, the possibility of interest rate cuts could further enhance consumer sentiment leading up to the holidays.

Expert Opinions on Retail Strategies

Aaron Cheris, a partner at Bain, commented, "This holiday season will be a mixed one for U.S. retailers. Customers are cautious and facing economic pressures, yet they also derive comfort from higher wages and stock market performance. Successful retailers will need to find the right balance between offering value, ensuring a warm customer experience, and embracing innovative technologies. They should also leverage significant sales events such as Black Friday to gain an edge over competitors."

Bain identifies four strategies retailers can implement to maximize their performance this holiday season:

1. Emphasize Major Sales Events: An increasing number of consumers plan to shop on Black Friday and Cyber Monday, suggesting retailers should focus on these dates to attract customers.
2. Value-Driven Pricing: As the report shows that 55% of consumers cite high prices as a major concern for their holiday budgets, emphasizing value is crucial.
3. Enhance In-Store Experience with Personal Touch: While technology can enhance shopping experiences, it’s vital to maintain a human element in customer service, especially as in-person shopping resumes.
4. Targeted Advertising: With a notable increase in consumer openness to personalized advertisements, well-crafted campaigns can significantly influence purchasing decisions.

These insights will guide retailers as they navigate the complexities of consumer behavior and economic conditions throughout this holiday shopping season, ensuring they are well-positioned to meet and exceed customer expectations.

This is the first of several updates Bain & Company will share regarding the retail landscape leading into January 2026.