US retail sales forecast to hit $1 trillion during holiday season

NEW YORK, US retail sales are forecast to break the $1 trillion mark for the first time during the November-December holiday season, according to a report by Bain & Company. The robust growth, driven by a 4.5% year-over-year increase, far surpasses the 3.5% growth recorded in the previous holiday season.

Despite this positive outlook, the report highlights that inflation will significantly contribute to the nominal rise in sales, accounting for more than half of the growth. Online shopping is expected to accelerate, with nonstore sales projected to increase by 9% year-over-year, making up 60% of the overall sales growth.

In-store sales, which typically drive 70% of the holiday season, are forecast to grow 2.5% year-over-year. The clothing and accessories segment, along with health and personal care products, are expected to show the strongest performance. Shoppers anticipate spending more this year, with men, higher-income earners, and younger consumers leading the trend.

The holiday season is also seeing a rise in AI-assisted shopping, with 24% of online shoppers planning to start their holiday shopping on platforms like Claude, Google Gemini, and ChatGPT, up from 17% in the previous year. An additional 13% of shoppers plan to use retailer AI agents, reflecting a 9% increase from the previous year.

Aaron Cheris, a partner at Bain & Company and global head of the firm’s Retail practice, noted, "US retailers have reason to be optimistic as the industry reaches the trillion-dollar milestone for the first time. However, the key for retailers is to balance pricing and promotions effectively and leverage new AI capabilities to enhance the customer experience and stay ahead of competitors."

Several factors are expected to support nominal sales growth, including higher tax refunds, increased stock prices, and retailers passing on tariff refunds to customers. However, retailers must navigate several headwinds, including high gasoline prices, geopolitical uncertainty, and lower personal savings rates.

Cheris added, "The emotional stakes are high during the holiday season, and a bad experience can have lasting consequences. Retailers need to invest in the customer experience and utilize AI to create can't-miss events and promotions."

Bain & Company recommends four key tactics for retailers to outperform during the holiday season: 1. Focus on pricing, given increased price sensitivity. 2. Emphasize unique assortments that cannot be easily cross-shopped or price-matched. 3. Capitalize on big shopping days like Black Friday, Cyber Monday, and October promotional events. 4. Enhance the customer experience with AI to create memorable events and promotions.

This report marks the first of a series of retail holiday updates from Bain & Company, which will continue through January 2027.

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