# Retail Market Research Report - United States

**Generated on:** 2026-05-08 19:16:09.680159  
**Industry:** Retail  
**Geography:** United States  
**Details:** None specified

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# U.S. Retail Industry: A $7.52 Trillion Market Navigating AI Disruption, Tariff Pressures, and Consumer Bifurcation

## Executive Summary

- **Resilient Market Growth Above Historical Norms**: U.S. retail sales reached **$7.52 trillion** in 2025, up 3.50% year-over-year, and the NRF forecasts **4.4% growth** in 2026 - exceeding the 10-year average of 3.6% - driven by continued consumer spending despite macroeconomic headwinds -> Retailers should plan inventory and capital expenditure around above-trend growth, but hedge for downside scenarios tied to geopolitical risk and tariff escalation.

- **E-Commerce Outpaces Physical by 160%**: Online retail hit **$1.43 trillion** in 2025 (19% of total sales, up 7.02% YoY) while brick-and-mortar grew more modestly to $6.088 trillion - yet physical stores remain the dominant channel at 81% share -> Invest in omnichannel integration rather than choosing between digital and physical; stores increasingly function as last-mile delivery nodes and experience destinations.

- **Agentic AI Poised to Collapse the Shopping Journey**: Gartner projects **40% of enterprise applications** will include task-specific AI agents by end of 2026, with global AI spending exceeding **$2 trillion** (+36.8%); Forrester predicts one-quarter of shoppers will use specialty retail chatbots in 2026 -> Retailers must build AI-native discovery and checkout pathways or risk losing share to competitors whose agentic systems capture purchases before traditional search even begins.

- **Tariff Pass-Through Gradually Raising Consumer Prices**: Federal Reserve research shows Chinese imported goods prices rose **8.5%** by December 2025 with a consumer pass-through rate of **28-32%**; overall CPI increased 2.7% in 2025 -> Accelerate supply chain diversification through nearshoring and onshoring; 66% of retailers already plan restructuring in response to trade policy volatility.

- **Consumer Spending Bifurcation Becoming Structural**: High-income households are driving retail growth while nearly **25% of U.S. households** live paycheck to paycheck; consumer sentiment fell to **48.2** in May 2026 (down 3.2%); 70% of retail executives believe value-seeking behavior is a permanent structural shift, not a temporary response to inflation -> Develop dual-tier strategies targeting both premium experiences for affluent consumers and value-driven assortments for cost-conscious segments.

- **Walmart and Amazon Dominate With Converging Strategies**: Walmart posted **$681 billion** in FY2025 revenue (up 5.1%) while Amazon commands **40.5%** of U.S. e-commerce; a 2026 price analysis of 10,000 products found Amazon 3.9% cheaper on average, yet Walmart leads in groceries -> Mid-market retailers face existential pressure as the top two players converge across channels and categories.

- **Retail Casualties Accelerating in the Middle Tier**: Forever 21 shuttered approximately 500 stores, Joann closed after 80+ years, Rite Aid's final 89 stores shut in October 2025, and Walgreens plans **1,200+ closures** over a multi-year restructuring -> Retailers without a clear value proposition, strong balance sheet, or digital capability face accelerating risk of failure.

- **Secondhand Market Emerges as $56 Billion Structural Disruptor**: The U.S. secondhand market grew **14.3%** in 2025 to $56 billion, with resale alone surging 650% since 2018; **83% of Gen Z** have bought or are interested in secondhand goods -> Integrate resale and circular economy programs into core retail operations rather than treating them as peripheral initiatives.

- **Retail Media Networks Become the Third Revenue Stream**: U.S. advertisers spent **$60.32 billion** on retail media in 2025 and are forecast to spend **$71.09 billion** in 2026; Walmart Connect alone generated $4.4 billion (up 27%) -> Retailers with first-party data and significant traffic should aggressively develop retail media capabilities as a high-margin revenue diversifier.

- **GLP-1 Weight-Loss Drugs Reshaping Food and Apparel**: The share of Americans taking weight-loss drugs doubled to **12.4%** in 2025, contributing to an estimated **$6.5 billion** in lost U.S. grocery sales from reduced snacking; apparel retailers are shifting inventory toward smaller sizes -> Category managers must model GLP-1 adoption curves into demand forecasting for food, beverage, and apparel assortments.

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## U.S. Retail Market Reaches $7.52 Trillion as Growth Moderates to Pre-Pandemic Norms

The U.S. retail sector generated **$7.52 trillion** in total sales in 2025, representing a **3.50% increase** from the $7.265 trillion recorded in 2024 ([Capital One Shopping Research](https://capitaloneshopping.com/research/retail-statistics)). This growth rate, while healthy, marks a continued normalization from the volatile pandemic-era swings that saw double-digit spikes followed by sharp corrections. The United States accounts for approximately **24%** of global retail sales, which totaled $31.3 trillion in 2025 ([Capital One Shopping Research](https://capitaloneshopping.com/research/retail-statistics)).

Quarterly performance throughout 2025 revealed a market that accelerated through the year before moderating in Q4:

| Quarter | Total Sales | YoY Growth |
|---------|------------|------------|
| Q1 2025 | $1.74 trillion | +3.20% |
| Q2 2025 | $1.89 trillion | +3.77% |
| Q3 2025 | $1.90 trillion | +4.21% |
| Q4 2025 | $2.00 trillion | +2.83% |

The Q3 peak at 4.21% growth coincided with back-to-school spending (average family spend of **$858**) and pre-holiday inventory building, while Q4's moderation to 2.83% reflected cautious consumer behavior despite holiday season sales topping **$1.01 trillion** - up 3.95% from 2024 ([Capital One Shopping Research](https://capitaloneshopping.com/research/retail-statistics)).

The NRF's 2026 forecast projects core retail sales (excluding auto dealers, gas stations, and restaurants) will reach **$5.6 trillion**, representing **4.4% growth** over 2025. This exceeds the 10-year historical average of 3.6% (excluding the pandemic period), signaling a stronger-than-normal year driven by continued consumer spending resilience ([NRF](https://nrf.com/blog/nrf-is-forecasting-u-s-retail-sales-to-grow-4-4-in-2026)). NRF Chief Economist Mark Mathews notes this growth is expected to be "real" growth rather than merely inflation-driven, as goods inflation is expected to remain in a lower band.

**Case Study: Post-Pandemic Normalization.** The contrast between 2025's measured 3.50% growth and the pandemic-era volatility is instructive. During 2020-2021, U.S. retail experienced unprecedented swings driven by stimulus checks and channel shifts. By 2025, growth has settled into a corridor between 2.7% (2024) and 3.5% (2025), approaching the projected CAGR of **4.25%** through 2030 when the market is expected to surpass $9.25 trillion ([Capital One Shopping Research](https://capitaloneshopping.com/research/retail-statistics)). The mechanism driving this normalization is a combination of depleted excess savings, stabilizing supply chains, and a consumer base that has largely absorbed post-pandemic channel shifts. For retailers, this means strategic planning can once again rely on trend-line projections rather than crisis-mode forecasting - but only if tariff and geopolitical risks remain contained.

State-level data reveals concentration in the largest economies: California led with **$748.5 billion** in 2024 retail sales, followed by Texas ($577.2 billion), Florida ($448.8 billion), and New York ($362.2 billion) ([Capital One Shopping Research](https://capitaloneshopping.com/research/retail-statistics)). These four states alone account for roughly 29% of national retail volume, making them bellwethers for industry health.

---

## Walmart's $681B Revenue Machine vs. Amazon's 40.5% E-Commerce Dominance

The U.S. retail competitive landscape is increasingly defined by a duopoly at the top. Walmart and Amazon together accounted for over **$842 billion** in U.S. retail sales in 2024, representing roughly 11.6% of total U.S. retail volume. Their strategies, however, are converging from opposite directions - creating a competitive dynamic that is squeezing mid-tier retailers out of the market.

| Rank | Company | 2024 U.S. Sales | YoY Growth | Market Cap | Headquarters |
|------|---------|----------------|------------|------------|--------------|
| 1 | Walmart | $568.70B | +7% | $808.3B | Bentonville, AR |
| 2 | Amazon | $273.66B | +9% | $2,431B | Seattle, WA |
| 3 | Costco | $183.05B | +4% | $435.0B | Issaquah, WA |
| 4 | Kroger | $150.79B | +2% | - | Cincinnati, OH |
| 5 | Home Depot | $148.21B | +5% | $405.1B | Atlanta, GA |
| 6 | CVS Health | $124.50B | - | - | Woonsocket, RI |
| 7 | Walgreens | $110.38B | +5% | - | Deerfield, IL |
| 8 | Target | $106.73B | +1% | - | Minneapolis, MN |
| 9 | Lowe's | $81.50B | -3% | - | Mooresville, NC |
| 10 | Albertsons | $79.57B | +2% | - | Boise, ID |

Source: [NRF Top 100 Retailers 2025 List](https://nrf.com/research-insights/top-retailers/top-100-retailers/top-100-retailers-2025-list). The top three retailers alone command over $1 trillion in combined U.S. sales, underscoring the concentration of market power.

**Case Study: Walmart's Multi-Front Expansion.** Walmart's fiscal year 2025 (ended January 2025) results reveal a company executing on multiple growth vectors simultaneously. Total revenue reached **$681.0 billion** (up 5.1% YoY) with net income of **$19.4 billion** ([Walmart SEC Filing](https://www.sec.gov/Archives/edgar/data/104169/000010416925000010/earningsreleasefy25q4.htm)). U.S. comparable store sales grew **4.6%** in Q4, with Sam's Club posting an even stronger 6.8%. E-commerce surged **20%** in the U.S. during Q4, driven by faster delivery times and expanded assortment.

What makes Walmart's performance particularly notable is its deliberate pivot upmarket. Market share gains were primarily driven by **upper-income households** - a demographic traditionally associated with Amazon and specialty retailers. Walmart's advertising business, Walmart Connect, generated **$4.4 billion** in revenue (up 27%), establishing retail media as a significant margin contributor. The company plans to build or convert more than **150 stores** and remodel over **650 locations** in 2026, doubling down on its physical footprint even as digital grows ([NRF](https://nrf.com/blog/10-trends-and-predictions-for-retail-in-2026)).

Amazon maintains commanding e-commerce dominance with **40.5% market share** of U.S. online retail, followed distantly by Walmart at 9.2% and Apple at 3.2% ([Statista](https://www.statista.com/statistics/274255/market-share-of-the-leading-retailers-in-us-e-commerce/)). A 2026 analysis of 10,000 identical products found Amazon was on average **3.9% cheaper** than Walmart, with particular strength in electronics (8.2% price advantage). However, Walmart led in groceries and select home goods categories ([MSN/Price Analysis](https://www.msn.com/en-us/news/other/amazon-edges-walmart-in-2026-price-battle-but-category-wins-vary/gm-GMB5EB7262)). Approximately **24% of consumers** now hold both Amazon Prime and Walmart+ memberships, rising to 37% among Millennials - indicating shoppers are choosing retailers by category rather than brand loyalty.

The implication is clear: competition in U.S. retail has evolved from a channel war (online vs. offline) into a capability war (logistics, AI, data monetization, and customer experience). Mid-tier retailers that cannot match investment in these areas face accelerating competitive disadvantage.

---

## E-Commerce Hits $1.43 Trillion While Physical Retail Reinvents as Experience Destinations

U.S. e-commerce sales reached **$1.43 trillion** in 2025, growing **7.02% year-over-year** and claiming **19% of total retail** ([Capital One Shopping Research](https://capitaloneshopping.com/research/retail-statistics)). E-commerce growth outpaced brick-and-mortar expansion by **160%**, and the U.S. Census Bureau reported Q4 2025 e-commerce was up **5.6%** from Q4 2024 ([U.S. Census Bureau](https://www.census.gov/retail/ecommerce.html)). The online channel is projected to reach **$1.98 trillion** by 2030, implying steady but decelerating growth as the market matures.

Yet the narrative of physical retail's decline has been decisively overturned. Brick-and-mortar stores generated **$6.088 trillion** in 2025 - **81% of total retail** - and consumer preferences reveal a more nuanced picture: **45.4%** of shoppers still prefer in-store shopping, compared with just **28.4%** who prefer online ([Capital One Shopping Research](https://capitaloneshopping.com/research/retail-statistics)). The remaining consumers are channel-agnostic, choosing based on product category and convenience.

**Case Study: The Mall Revival.** Indoor malls saw a **1.8% increase** in visits during the first half of 2025, with visit durations rising **3.3%** compared with the prior year ([NRF](https://nrf.com/blog/10-trends-and-predictions-for-retail-in-2026)). This counter-intuitive resurgence reflects a fundamental repositioning: malls are transforming from transactional spaces into multisensory destinations that serve as an "antidote to screen time," as NRF's Katherine Cullen describes it. The **100,000-square-foot Netflix House** concept exemplifies this shift, merging entertainment with retail in ways that drive foot traffic without depending on traditional store economics. Ralph Lauren's immersive coffee pop-ups represent another variant - using experiential formats to build brand equity and capture consumer time.

The mechanism driving this convergence is the redefinition of what a "store" means. Physical locations increasingly function as **last-mile delivery nodes, showrooms, and brand experience hubs** rather than purely inventory-stocked sales floors ([CBI Commercial](https://www.cbicommercial.com/blog/us-retail-market-2025-recap-and-2026-outlook)). Retailers are shrinking average store sizes (right-sizing) while upgrading the quality of their best locations. Flexible floor plates support diverse service-oriented tenants including fitness, wellness, and restaurant concepts.

Retail real estate fundamentals support this evolution. Vacancy remained at or near **historic lows** in 2025, with rents growing in the **high-1% range** ([CBI Commercial](https://www.cbicommercial.com/blog/us-retail-market-2025-recap-and-2026-outlook)). Open-air grocery-anchored centers and high-traffic suburban locations captured most demand, while weaker Class B/C assets faced ongoing pressure and often became redevelopment candidates. Net new brick-and-mortar openings totaled **851 locations** in 2024, up **19.2%** from 2023 ([Capital One Shopping Research](https://capitaloneshopping.com/research/retail-statistics)).

For retailers and investors, the implication is that the physical-digital binary is obsolete. The winners are those who treat their physical footprints as strategic assets within an integrated omnichannel ecosystem - supporting click-and-collect, enabling returns, generating experiential traffic, and serving as nodes in an increasingly sophisticated logistics network.

---

## Agentic AI and the $2 Trillion Technology Revolution Reshaping Retail

Artificial intelligence in retail has moved beyond the hype cycle into operational deployment, and 2026 marks the inflection point where AI transitions from a competitive advantage to a baseline requirement. Global AI spending is forecast to exceed **$2 trillion** in 2026, a **36.8% increase** from 2025, according to Gartner ([NRF](https://nrf.com/blog/10-trends-and-predictions-for-retail-in-2026)). IDC projects year-over-year spending on AI will grow **31.9% annually** between 2025 and 2029.

The most consequential development is the emergence of **agentic AI** - autonomous systems that can independently reorder essentials, suggest products, reroute shipments, and rebalance inventory in real time. Gartner projects that **40% of enterprise applications** will include task-specific AI agents by the end of 2026 ([NRF](https://nrf.com/blog/10-trends-and-predictions-for-retail-in-2026)). NRF's Christian Beckner notes the industry is closely following "agentic AI-enabled applications and systems designed to manage fleets of AI agents." Meanwhile, **68% of retail executives** plan to deploy agentic AI for operations within 12 to 24 months ([Deloitte](https://www.deloitte.com/us/en/insights/industry/retail-distribution/retail-distribution-industry-outlook.html)).

The disruption extends to the consumer-facing shopping journey. Forrester predicts that **one-quarter of shoppers** will use specialty retail chatbots in 2026 ([NRF](https://nrf.com/blog/10-trends-and-predictions-for-retail-in-2026)). More dramatically, **90% of executives** expect AI to be used more than traditional search engines by 2026, and **50%** expect the multi-step shopping journey to collapse into a single AI-driven interaction by 2027 ([Deloitte](https://www.deloitte.com/us/en/insights/industry/retail-distribution/retail-distribution-industry-outlook.html)). AI chat referrals already account for **15 to 20%** of total referrals for some retailers. This shift threatens traditional SEO and paid advertising models that have anchored digital marketing budgets for two decades.

**Case Study: Walmart's AI-Driven "Stores of the Future."** Walmart exemplifies the aggressive AI adoption strategy. The company is deploying AI-driven recommendation engines, implementing QR codes for digital engagement within physical stores, and building "Stores of the Future" concepts that blend physical and digital experiences. Analysts at Jefferies and UBS note that CEO John Furner's focus on "accelerating growth" and "optimizing digital and supply chain investments" positions Walmart to "continue to steamroll the competition" ([NRF](https://nrf.com/blog/10-trends-and-predictions-for-retail-in-2026)). Walmart's advertising technology platform, Walmart Connect, generated **$4.4 billion** in revenue in FY2025 (up 27%) - demonstrating how AI-driven targeting and first-party data monetization create high-margin revenue streams ([Walmart SEC Filing](https://www.sec.gov/Archives/edgar/data/104169/000010416925000010/earningsreleasefy25q4.htm)).

However, a significant execution gap persists. While ambition runs high, **44% of respondents** in the Deloitte survey report that legacy systems are slowing down innovation ([Deloitte](https://www.deloitte.com/us/en/insights/industry/retail-distribution/retail-distribution-industry-outlook.html)). Richard Kestenbaum of Triangle Capital LLC observes that "AI isn't going away, it's becoming entrenched because the opportunity of it can't be ignored... those [that] adapt best and fastest are going to win" ([NRF](https://nrf.com/blog/10-trends-and-predictions-for-retail-in-2026)). Furthermore, **81% of executives** believe generative AI will weaken brand loyalty by 2027, as AI agents optimize for price and feature matching rather than brand preference.

**Retail media networks** represent a parallel technology-driven revenue revolution. U.S. advertisers spent **$60.32 billion** on retail media in 2025 and are projected to spend **$71.09 billion** in 2026, according to EMARKETER ([EMARKETER](https://www.emarketer.com/content/faq-on-retail-media-networks-how-marketers-should-allocate-budgets-2026)). This approximately **18% growth rate** makes retail media one of the fastest-growing segments in advertising, driven by retailers' ability to offer closed-loop attribution using first-party transaction data. Retailers with significant traffic and data assets should prioritize building or expanding retail media capabilities as a high-margin diversification play. Those without the scale to build proprietary networks should explore partnership models with existing platforms.

---

## The Bifurcated Consumer: How Income Divergence Is Splitting U.S. Retail Into Two Markets

The most consequential structural shift in U.S. retail is not a technology trend or a competitive dynamic - it is the widening gulf between consumer cohorts. The University of Michigan's Index of Consumer Sentiment fell to **48.2** in May 2026 (down 3.2% from the prior month), with the Current Economic Conditions sub-index dropping even more sharply to **47.8** (down 9.0%) ([University of Michigan Surveys of Consumers](https://www.sca.isr.umich.edu/)). These readings sit near historically depressed levels - yet retail sales continue to grow. This paradox reveals a market that is splitting into two distinct economies.

The NRF's 2026 forecast explicitly acknowledges this bifurcation: "The consumer is likely to remain bifurcated, with higher-income households accounting for more of the growth than lower- and middle-income households" ([NRF](https://nrf.com/blog/nrf-is-forecasting-u-s-retail-sales-to-grow-4-4-in-2026)). The Philadelphia Federal Reserve's research confirms this divergence, finding an "apparent divergence in consumer spending growth between high- and low-income consumers" ([Philadelphia Fed](https://www.philadelphiafed.org/consumer-finance/evidence-of-diverging-spending-behavior-by-income)). High-income spending growth is sustained by wealth gains from technology-related equities, while nearly **25% of U.S. households** live paycheck to paycheck ([Deloitte](https://www.deloitte.com/us/en/insights/industry/retail-distribution/retail-distribution-industry-outlook.html)).

**Four in ten Americans** now demonstrate deal-driven or cost-conscious habits, and critically, **70% of retail executives** believe this value-seeking behavior represents a permanent structural change rather than a temporary response to inflation ([Deloitte](https://www.deloitte.com/us/en/insights/industry/retail-distribution/retail-distribution-industry-outlook.html)). This has profound implications for assortment strategy, pricing architecture, and store formats.

**Case Study: The Secondhand Market as a Structural Disruptor.** The U.S. secondhand market reached **$56 billion** in 2025, up **14.3%** from 2024 ([The Earth and I / Capital One Shopping](https://www.theearthandi.org/post/thrifting-outpaces-brand-new-in-2025-report)). Since 2018, the total secondhand market has grown **143.5%**, with resale alone surging **650%** over that period. The secondhand apparel market specifically grew **14%** in 2024 - five times faster than the broader retail clothing market ([ThredUp 2025 Resale Report](https://cf-assets-tup.thredup.com/resale_report/2025/ThredUp_Resale_Report_2025.pdf)). Traditional thrift and donation operations represent $26 billion (46.4%) of the market, while commercial resale accounts for $30 billion (53.6%).

The demographic engine behind this shift is generational: **83% of Gen Z** have bought or are interested in secondhand goods, and **34%** shop thrift stores first ([The Earth and I](https://www.theearthandi.org/post/thrifting-outpaces-brand-new-in-2025-report)). Overall, **58% of U.S. shoppers** purchased secondhand apparel in 2024. Secondhand apparel sales are projected to grow **9% annually** through 2029. This is not a recession-driven phenomenon - it reflects a values-based shift toward sustainability and individuality that transcends income levels.

A separate but intersecting force is the **GLP-1 weight-loss drug revolution**. The share of Americans taking these medications doubled to **12.4%** in 2025, contributing to an estimated **$6.5 billion** in lost U.S. grocery sales from reduced snacking behavior ([NRF](https://nrf.com/blog/10-trends-and-predictions-for-retail-in-2026)). Apparel retailers are simultaneously shifting inventory toward smaller sizes due to surging demand from GLP-1 users. CPG brands are responding by launching high-protein, GLP-1-friendly products to counter the snacking decline. This pharmacological intervention in consumer behavior is unlike any previous demand driver and requires entirely new demand forecasting models.

Consumer behavior data reinforces the digital sophistication of today's shopper: **98%** research products or brands before purchasing, **76%** use mobile devices to shop (with 80% using them while in physical stores), and **86%** read customer reviews before online purchases ([Capital One Shopping Research](https://capitaloneshopping.com/research/retail-statistics)). The average annual retail spend per U.S. consumer stands at **$21,127**, distributed across 288.5 million online shoppers (84.4% of Americans).

Retailers must develop dual-tier strategies - premium experiences and curated assortments for affluent consumers alongside expanded private-label and value-priced lines for cost-conscious segments. Deloitte reports that **70% of retail executives** plan to expand value-priced assortments in 2026, while strengthening private-label products was cited as the second-highest growth opportunity ([Deloitte](https://www.deloitte.com/us/en/insights/industry/retail-distribution/retail-distribution-industry-outlook.html)).

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## Tariff Pass-Through and the Slow Climb: How Trade Policy Is Reshaping Retail Economics

The Federal Reserve Board published a landmark analysis in March 2026 documenting how tariffs gradually raised retail prices throughout 2025. The study, tracking approximately 27,000 products, found that price pressures developed **gradually rather than as a single one-time spike**, as retailers initially delayed price hikes by working through excess inventory and absorbing costs due to high consumer price sensitivity ([Federal Reserve](https://www.federalreserve.gov/econres/notes/feds-notes/the-slow-climb-how-tariffs-gradually-raised-retail-prices-in-2025-20260305.html)).

**Case Study: The Federal Reserve's Tariff Price Tracking.** The timeline of tariff impact unfolded in three phases. Following initial tariff announcements in **April 2025**, retail prices for imported goods remained relatively stable with near-zero year-over-year inflation through July. Prices for goods from Canada, Mexico, and other partners began a slight upward trend in **June 2025**. The significant inflection came in **August 2025**, when retail prices for Chinese imported goods began manifesting meaningful increases. By **December 2025**, Chinese imported goods had risen **8.5%** year-over-year, while imports from other countries exceeded **5.0%** increases. U.S.-produced goods saw more modest increases of less than 2.0% ([Federal Reserve](https://www.federalreserve.gov/econres/notes/feds-notes/the-slow-climb-how-tariffs-gradually-raised-retail-prices-in-2025-20260305.html)).

The consumer pass-through rate for Chinese goods was estimated conservatively at **28 to 32%**, meaning consumers absorbed roughly a third of the full tariff cost. The average study participant spent **$17,019** on tracked retail categories in 2025, representing approximately 17% of average household income. The primary sectors impacted by expenditure share included grocery (44.1%), health and beauty (8.7%), home and garden (8.3%), electronics (3.3%), and apparel, footwear, and accessories (3.0%).

Broader inflation data from the Bureau of Labor Statistics confirms the broader pricing environment: the Consumer Price Index for all items rose **2.7%** from December 2024 to December 2025 ([BLS](https://www.bls.gov/opub/ted/2026/consumer-price-index-2025-in-review.htm)). Food prices increased **3.1%** (food at home +2.4%, food away from home +4.1%). Notable category spikes included beverage materials including coffee and tea (+11.8%), utility gas service (+10.8%), and electricity (+6.7%).

The retail industry is responding on multiple fronts. According to Deloitte, **95% of retail executives** anticipate rising costs due to global trade policies, while **73%** plan gradual upward retail price adjustments in 2026 ([Deloitte](https://www.deloitte.com/us/en/insights/industry/retail-distribution/retail-distribution-industry-outlook.html)). More strategically, **66% of retailers** plan to restructure supply chains via onshoring or nearshoring if costs continue to rise. Despite rising costs, **82% of executives** forecast margin increases in 2026 through cost discipline and productivity initiatives.

The casualties of this environment are concentrated among retailers that lacked the scale, balance sheet strength, or operational flexibility to absorb shocks:

| Retailer | Closure Details | Context |
|----------|----------------|---------|
| Forever 21 | Approximately 500 stores closed; 2nd bankruptcy | Filed March 2025; exited U.S. operations entirely |
| Joann | Entire business wound down | Filed 2nd Chapter 11 in Jan 2025 after 80+ years |
| Rite Aid | Final 89 stores closed Oct 2025 | CVS acquired prescription files from 625 locations |
| OpenStore | Nearly all 40+ storefronts shuttered | Valuation collapsed from $1B to $50M |
| Walgreens | 1,200+ closures planned | Multi-year restructuring program |

Source: [Modern Retail](https://www.modernretail.co/operations/in-memoriam-brands-we-lost-in-2025/); [Yahoo Finance](https://finance.yahoo.com/news/brands-lost-2025-100100525.html). These closures illustrate a "barbell effect" in which large-scale retailers gain share while mid-tier and specialty retailers without differentiated value propositions face accelerating decline.

---

## Macroeconomic Crosscurrents: Tax Stimulus, Geopolitical Risk, and the 2026 Outlook

The NRF's 2026 retail forecast of **4.4% growth** rests on a complex and somewhat fragile macroeconomic foundation. On the positive side, the **Working Families Tax Cut Act** is expected to generate larger tax refunds in the first half of 2026, providing a direct stimulus to consumer spending ([NRF](https://nrf.com/blog/nrf-is-forecasting-u-s-retail-sales-to-grow-4-4-in-2026)). NRF Chief Economist Mark Mathews notes that inflation is expected to remain elevated above the Federal Reserve's target through the first half of 2026 but is projected to begin **tailing off by Q3 2026**, potentially providing spending relief in the second half.

The labor market presents a nuanced picture. Unemployment is expected to remain **below 4.5%** throughout 2026, providing a floor for consumer spending. However, non-farm employment is expected to remain "muted" - a disconnect that NRF attributes to **GDP growth being driven by productivity improvements** rather than headcount increases ([NRF](https://nrf.com/blog/nrf-is-forecasting-u-s-retail-sales-to-grow-4-4-in-2026)). The retail sector specifically experienced a **hiring pullback in 2025** that is reshaping 2026 operations, with retailers increasingly turning to automation and AI to fill workforce gaps rather than expanding headcount. Immigration policy changes may further tighten labor availability in retail and logistics.

The most significant unpriced risk is **geopolitical instability**. NRF explicitly notes: "It is still early to assess the potential that a long, drawn-out conflict in the Middle East might create for the retail economy. We have not factored this scenario into our forecast" ([NRF](https://nrf.com/blog/nrf-is-forecasting-u-s-retail-sales-to-grow-4-4-in-2026)). A Middle East escalation could disrupt supply chains, spike energy prices, and undermine the consumer spending resilience that underpins the 4.4% growth projection.

Retail real estate conditions provide a counterbalancing source of stability. Vacancy rates remained at or near **historic lows** throughout 2025, with rents growing in the **high-1% range** ([CBI Commercial](https://www.cbicommercial.com/blog/us-retail-market-2025-recap-and-2026-outlook)). Open-air grocery-anchored centers and high-traffic suburban locations captured most demand. Investment sales volumes improved in 2025, with a rise in large single-asset trades signaling growing institutional confidence in retail income streams. Capital remained selective, favoring necessity-based centers and strong-credit tenants on longer terms.

| Macro Factor | Current Status | 2026 Outlook | Risk Level |
|-------------|---------------|--------------|------------|
| Consumer spending | Resilient but bifurcated | Above-trend growth projected | Medium |
| Inflation (CPI) | 2.7% (Dec 2025 YoY) | Elevated H1, tailing off Q3 | Medium-High |
| Unemployment | Below 4.5% | Expected to hold | Low |
| Tariffs | Chinese goods +8.5% | 95% of execs expect rising costs | High |
| Geopolitical | Middle East uncertainty | Not priced into forecasts | High (tail risk) |
| Retail real estate | Historic low vacancy | Stable to improving | Low |
| Labor availability | 2025 hiring pullback | Automation filling gaps | Medium |

Deloitte's survey reinforces cautious optimism: **82% of executives** forecast margin increases in 2026 through cost discipline and productivity initiatives, while **67%** foresee increasing the threshold required for customers to receive free shipping to manage logistics costs ([Deloitte](https://www.deloitte.com/us/en/insights/industry/retail-distribution/retail-distribution-industry-outlook.html)). The recommendation for retailers is to plan for a two-halves year: capitalize on tax-refund-driven spending in H1 while preparing for potential volatility in H2 as tariff effects compound and geopolitical risks evolve.

---

## Synthesis: Five Strategic Tensions Defining the Future of U.S. Retail

The U.S. retail landscape in 2025-2026 is defined by a series of counter-intuitive frictions that defy traditional economic modeling. While the industry has reached $7.52 trillion, the path to 2030 is not a linear expansion but a volatile restructuring shaped by five core tensions.

**1. The Growth vs. Sentiment Paradox.** NRF forecasts 4.4% growth for 2026 while consumer sentiment sits at 48.2 - near historic lows. The resolution lies in the bifurcation mechanism: high-income households, buoyed by technology-related equity wealth, continue spending robustly and account for a disproportionate share of growth. Aggregate retail numbers mask the reality that a significant portion of American consumers are retrenching. The University of Michigan's Current Economic Conditions sub-index at 47.8 (down 9.0% month-over-month) suggests this divergence may widen further. For retailers, this means topline growth coexists with margin pressure as value-seeking behavior intensifies across the majority of households.

**2. Physical vs. Digital Convergence.** The narrative of e-commerce "killing" physical retail has been definitively overturned. E-commerce grew 7.02% to $1.43 trillion while indoor mall visits simultaneously rose 1.8% with longer visit durations. Both channels are growing because they now serve fundamentally different functions: digital channels optimize for convenience and price comparison, while physical stores deliver sensory experiences, social connection, and immediate gratification. The 45.4% of consumers who still prefer in-store shopping are not technophobic holdouts - they are seeking what screens cannot provide. The winning strategy is not channel selection but channel orchestration, using stores as fulfillment nodes, experience centers, and data-collection touchpoints within an integrated ecosystem.

**3. Walmart vs. Amazon - The Great Convergence.** The traditional dichotomy of Walmart as the physical retail champion and Amazon as the e-commerce king is dissolving. Walmart's U.S. e-commerce grew 20% in Q4 FY2025 while gaining market share among upper-income households - Amazon's traditional territory. Meanwhile, Amazon is on average 3.9% cheaper across 10,000 products but trails Walmart in groceries. With 24% of consumers now holding dual Prime and Walmart+ memberships, shoppers are selecting by category rather than platform loyalty. This convergence intensifies pressure on every other retailer, as the top two players now compete effectively across all channels and most categories.

**4. AI Ambition vs. Legacy Reality.** There is a striking gap between executive aspirations and operational capability. While 90% of executives expect AI to surpass traditional search and 68% plan to deploy agentic AI within 12-24 months, 44% acknowledge that legacy systems are actively slowing innovation. The retailers that will benefit most from the $2 trillion AI spending wave are not necessarily the most ambitious but the most architecturally prepared. Walmart's success with AI (including its $4.4 billion advertising technology platform) stems from years of infrastructure investment that most mid-tier retailers cannot replicate in a 12-24 month timeframe.

**5. Consolidation vs. Fragmentation - The Barbell Effect.** Walmart grew 7%, Amazon grew 9%, and Costco grew 4% in 2024 U.S. sales. In the same period, Forever 21 shuttered approximately 500 stores, Joann closed after 80+ years, and Rite Aid completed its liquidation. The middle of the retail market is hollowing out. The mechanism is a reinforcing cycle: scale enables investment in AI, logistics, and retail media (now a $60+ billion market); those investments drive traffic and efficiency; and the resulting competitive advantages make it harder for smaller players to compete. The secondhand market's $56 billion scale and 14.3% growth rate adds another layer of fragmentation, as value-conscious consumers increasingly choose between mega-retailers and resale platforms, skipping the mid-tier entirely.

**Looking Toward 2027-2030.** Several forces will shape the next phase of U.S. retail evolution. AI agents handling an estimated 25% of global e-commerce sales by 2030 will fundamentally alter how consumers discover and purchase products, weakening traditional brand loyalty (81% of executives expect this outcome by 2027). The secondhand market's 9% projected annual growth through 2029 will increasingly pressure new-goods retailers on both price and sustainability credentials. Supply chain restructuring toward onshoring and nearshoring (planned by 66% of retailers) will reshape cost structures and potentially moderate tariff exposure. And the GLP-1 pharmaceutical revolution - with 12.4% adoption and rising - will continue to reshape demand curves across food, beverage, and apparel categories in ways that defy historical forecasting models. The retailers that thrive will be those that build adaptive capabilities across all five tension dimensions rather than optimizing for any single one.

---

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