A Look at the Data

On an annualized basis, overall retail sales were expected to grow in 2026 to $5.6 trillion dollars, up 4.4% from 2025. Bain and Company also just released their annual forecast, suggesting 4.5% year-over-year growth in November and December 2026. This would mark the first time holiday sales spending exceeded $1 trillion.

Retail categories are not all created equal, though. Consumer trends and preferences shift throughout the year, causing some to rise and fall. Bain reviewed these segments and provided sector-level forecasts suggesting rising sales for categories such as clothing, personal care, and sporting goods. In contrast, categories like home furnishings and food and beverage are projected to see higher inflation and lower unit sales.

Inflation is playing a significant role in this revenue growth. In fact, more than 50% of the projected spending is expected to come purely from higher prices, not because more products were purchased.

Some additional core data points to consider:

• More than 70% of retail holiday shopping will take place in a brick-and-mortar location
• Approximately 60% of the total sales growth will come from online store sales

In addition, AI shopping, while fairly new last year, will continue to accelerate during the holiday shopping season. Bain’s forecast suggests platforms such as Claude, Gemini, and ChatGPT will see use increase from 17% in 2025 to 24% in 2026, mostly to help consumers plan and recommend purchases.

Finally, several macro variables are affecting consumer spending. These include rising gas prices, continued and accelerating tariffs, declining labor participation, and rising credit card delinquencies above the 10-year average. On the other hand, retailer pricing elasticity and inventory control strategies can reduce their impact.

Holiday Strategies for Main Street Businesses

• Build a calendar you can execute. Start with the end of the holiday shopping season after New Year’s and work backward.
• Start your marketing as early as possible. According to Meta, most AI and internet algorithms need time to learn.
• Make sure your digital footprint is accurate and complete. Even small things, like keeping your Google Profile up to date with accurate hours and contact information, can have a huge impact. Even if you don’t have an e‑commerce component to your business, set up a simple website with information about you as the owner, your business, and the products you sell.
• Choose marketing platforms that align with your customers. Don’t rely only on your comfort zone on Facebook if new customers expect more video content on TikTok.
• Hold in-store events and activities that create an experience during the holiday season. The data indicates that 70% of consumers will spend in brick-and-mortar locations. But they’ll want to do so in an environment that feels special and produces memories.
• Hire and train before the rush. According to American Express, 66% of small businesses say holidays drive overall financial health.