Bain & Company predicted U.S. retail sales over the upcoming November-December holiday shopping season to increase 4.5 percent year-on-year (YoY), well ahead of a 3.5 percent YoY rise recorded in the 2025 holiday season and topping $1 trillion for the first time.
However, Bain tempered its upbeat view of the holiday outlook for retailers by noting that more than half of the nominal sales growth will come from higher inflation. The consultancy also noted that whilei in-store sales drive 70 percent of the holiday season, most new growth coming from nonstore sales.
The strongest sales growth in the holiday period is expected to come from a further jump in online buying, Bain forecasts based on findings from its Consumer Lab’s survey of more than 1,100 consumers. Today’s analysis projects that nonstore retail sales will grow 9 percent YoY, accelerating compared with last year and generating 60 percent of overall sales growth, up from 50 percent last year.
Alongside, growth in in-store sales is expected by Bain to remain in line with last year, at 2.5 percent YoY, with the strongest performance predicted to come from the clothing and accessories segment, as well as from health and personal care products. Consumers say they expect clothing (43 percent) to overtake groceries (37 percent) as their highest-spending category in the holiday season, with gift cards (named by 36 percent of respondents) coming a close third.
Shoppers say they anticipate spending more this year, especially among men, higher income earners, and younger consumers. More online shoppers plan to start the coming season’s holiday shopping experience on AI platforms such as Claude, Google Gemini and ChatGPT (24 percent this year, up from 17 percent in 2025), as well as on retail and brand websites (60 percent, up from 51 percent in 2025), where an additional 13 percent plan to use retailer AI agents.
Headwinds weigh on shoppers, but tailwinds may support holiday sales growth
While Bain forecasts most categories will post nominal sales growth this holiday season, inflation is expected to count for much of the increase. Sales in some retail categories will remain flat, including furniture and home furnishings, electronics and appliances, and food and beverage. General merchandise, clothing and accessories, and e-commerce are expected to see both price and unit growth.
Underlying the headwinds faced by retailers are cautious consumers whose spending power is being weighed down by gasoline prices that remain stubbornly high, as well as the impact of tariffs, geopolitical uncertainty, labor market participation at a five-year low (despite a stable national unemployment rate of 4.1 percent), and lower personal savings rates twinned with increasing credit card delinquency above the 10-year average.
Despite these pressures, several factors are expected by Bain to help support nominal sales growth, including higher tax refunds that are up $43 billion from last year, higher stock prices with a 23 percent increase of the S&P 500 index YoY buoying the outlook of upper-income households, and also plans by some retailers to pass on tariff refunds to shoppers in the form of cuts in prices.
“While US retailers have reason to rejoice this holiday season as the industry reaches the trillion-dollar milestone for the first time, there are underlying factors that will temper bottom lines,” said Aaron Cheris, partner at Bain & Company and global head of the firm’s Retail practice. “The key for retailers is to make the most of the crucial holiday season by striking the right balance when it comes to price and promotions, and making the most of new AI capabilities to enhance the customer experience and get ahead of competitors.”
This is the first of a series of retail holiday updates from Bain & Company that will publish through January 2027.
Image courtesy Dick’s Sporting Goods
