Holiday Retail Spending Crosses $1 Trillion in 2026

Despite a cautious consumer environment and the lowest consumer confidence reading in over a decade, holiday retail sales in 2026 are projected to surpass the $1 trillion threshold for the first time, according to forecasts from Bain & Company and Deloitte. The milestone reflects a complex retail landscape where inflation-driven price increases account for much of the headline growth, even as shoppers become increasingly strategic about every dollar they spend.

Record Spending Masks Inflation-Driven Growth

Bain & Company’s annual holiday forecast projects a 4.5% year-over-year growth in retail sales, pushing total holiday spending past $1 trillion. Deloitte’s parallel forecast is even more bullish, anticipating total holiday retail sales of $1.7 trillion. However, both reports caution that inflation is doing much of the heavy lifting behind these impressive numbers.

The Federal Reserve’s primary inflation gauge, the personal consumption expenditures report released in late September, showed consumer prices posting a smaller-than-expected increase, with the 12-month gain at 3.4% — below the 3.7% that economists had anticipated. Still, even with inflation cooling slightly, the cumulative effect of sustained price increases means that actual unit growth across many retail categories remains thin.

Categories most affected by inflation-driven unit declines include:

• Food and beverage — where higher shelf prices have reduced basket sizes even as total spend rises
• Furniture — a discretionary category squeezed by both inflation and a soft housing market
• Health and personal care — essentials where consumers are trading down to private-label alternatives

Consumer Confidence Plummets to Decade Low

The spending forecasts land against a backdrop of deteriorating consumer sentiment. The Conference Board reported in late September that consumer confidence fell to its lowest level since 2014, with respondents citing concerns about inflation and a weakening jobs outlook. This presents a paradox that retailers must navigate: consumers are spending more in dollar terms but feel less secure about their financial futures than at any point in the past twelve years.

Several factors are propping up holiday spending despite this confidence gap. Tax refunds are up $43 billion, or 17% year-over-year, injecting additional cash into household budgets. However, Bank of America estimates that roughly half of that benefit has already been absorbed by higher gas prices, which have significantly squeezed consumer wallets throughout the year.

Value-Seeking Behavior Dominates Across Income Levels

Perhaps the most significant shift in the 2026 holiday shopping season is the ubiquity of value-seeking behavior. No longer confined to lower-income households, the hunt for discounts and promotions has become a cross-income phenomenon that is reshaping how retailers approach pricing and merchandising.

“As they look to get more out of their dollars, we continue to see value-seeking behaviors across income levels, including switching among brands and retailers and using promotions to manage spending,” said Natalie Martini, vice chair of Deloitte and U.S. retail and consumer products leader. “These behaviors are expected to shape how consumers approach holiday shopping this season.”

Adobe’s holiday shopping report echoes this trend, projecting that value-first shopping will power growth and market share gains this year. The company also expects buy-now-pay-later spending to hit a record $21.3 billion as consumers become more intentional about spreading out their purchases over time.

Changing Shopping Patterns Reshape Retail Strategy

Smaller Baskets, More Frequent Trips

AlixPartners’ holiday projections reveal a notable shift in shopping behavior: consumers are checking out with smaller baskets but making more frequent trips, particularly in grocery shopping. This pattern suggests that shoppers are managing cash flow more actively and avoiding large stock-up trips in favor of need-based purchasing.

Private Label Gains Momentum

The shift from premium brands to private-label products is accelerating. Consumers are increasingly willing to trade brand prestige for value, a trend that benefits retailers with strong store-brand portfolios. Major chains have invested heavily in improving the quality and breadth of their private-label offerings over the past several years, and that investment is now paying dividends as trade-down behavior intensifies.

Quality Over Quantity

Another emerging pattern is the preference for fewer, higher-quality items. Rather than filling baskets with multiple lower-quality goods, consumers are consolidating their spending around durable, well-made products that offer better long-term value. This shift has implications for inventory planning and product mix across the retail sector.

The E-Commerce vs. In-Store Balance

While e-commerce continues to gain share year after year, Bain’s forecast indicates that in-store sales will still account for approximately 70% of holiday retail spending. This underscores the enduring importance of the physical retail experience, particularly during the holiday season when shopping is as much a social and experiential activity as a transactional one.

However, the continued growth of online channels means that retailers must excel in both environments. The most successful retailers this holiday season will be those that offer seamless omnichannel experiences — allowing consumers to research online, purchase in either channel, and return wherever is most convenient. Click-and-collect services, in particular, are expected to see strong growth as they combine the value transparency of online shopping with the immediacy of in-store pickup.

What This Means for Businesses

For retailers and consumer brands, the 2026 holiday season presents both opportunities and challenges. The headline numbers are positive, but the underlying dynamics require careful strategic positioning:

• Promotion strategy is critical — with value-seeking behavior at an all-time high, retailers must balance the need to offer compelling discounts against the risk of margin erosion
• Inventory discipline matters — consumers buying fewer, higher-quality items means that broad assortments of mediocre products are less likely to sell through
• Private-label investment pays off — retailers with strong store brands are better positioned to capture trade-down spending while maintaining margins
• Omnichannel excellence is table stakes — the 70/30 in-store/online split demands excellence in both environments
• Flexible payment options drive conversion — the projected $21.3 billion in buy-now-pay-later spending signals that payment flexibility is a meaningful driver of consumer demand

Broader Economic Context

The holiday retail forecast does not exist in a vacuum. The 10-year Treasury yield has climbed to its highest level since 2002 as a global bond rout gathers pace, creating headwinds for consumer credit and mortgage rates. Oil prices have risen with Brent crude back above $100 per barrel, feeding through to higher gas prices that directly constrain discretionary spending.

Yet the resilience of consumer spending — even when confidence is low and economic headwinds are mounting — demonstrates the underlying strength of the American consumer. Tax refunds are providing a cushion, wages are still growing in many sectors, and households have generally maintained spending discipline by becoming more intentional about their purchases.

For businesses looking ahead to 2027, the key takeaway from the 2026 holiday season is clear: the consumer is not pulling back, but they are fundamentally changing how they spend. Success in this environment requires understanding that higher dollar spending does not necessarily mean higher unit demand, and that value — defined broadly to include quality, convenience, and price — is the dominant factor driving purchase decisions across all income levels.

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Edited by Palawan @QUE.COM
Website: https://QUE.COM Intelligence
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