Bain: Holiday retail sales to reach record high

NEW YORK — U.S. retail sales during the critical November-December holiday shopping season are expected to reach a record high this year, surpassing $1 trillion for the first time, according to Bain & Company's annual U.S. retail holiday forecast released Thursday.

Bain projects holiday sales will rise 4.5% year over year in nominal terms, accelerating from the 3.5% growth recorded in the 2025 holiday season. The increase would push total holiday spending to an all-time high, Bain said in its annual U.S. retail holiday outlook.

However, Bain cautioned that the outlook is not driven solely by stronger consumer demand. More than half of the projected sales growth is expected to come from higher inflation, which is pushing prices up for shoppers across physical stores and online channels.

The strongest sales growth during the holiday period is expected to come from a further jump in online buying, according to Bain’s forecast 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% YoY, accelerating from last year and accounting for 60% of overall sales growth, up from 50% last year.

Alongside this, Bain expects in-store sales growth to remain in line with last year at 2.5% YoY, with the strongest performance predicted to come from the clothing and accessories segment and from health and personal care products. Consumers say they expect clothing (43%) to overtake groceries (37%) as their highest-spending category in the holiday season, with gift cards (named by 36% of respondents) coming in a close third.

Shoppers say they expect to spend more this year, especially among men, higher-income earners, and younger consumers. More online shoppers plan to start the holiday shopping season on AI platforms such as Claude, Google Gemini, and ChatGPT (24% this year, up from 17% in 2025), as well as on retail and brand websites (60%, up from 51% in 2025), where an additional 13% 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%), 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% 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 to making the most of new AI capabilities to enhance the customer experience and get ahead of competitors.” 

Four key tactics for winning retailers in this holiday season  

Bain’s report maps out four key tactics that it recommends winning retailers should deploy to outperform during the forthcoming holiday shopping season: 

1. Get in the zone on price, as price sensitivity returns to the forefront of purchase decisions, and AI-enabled comparison makes gaps easier to spot  

1. 2. Emphasize assortment that can’t be cross-shopped or price-matched line for line  
2. 3. Win the big shopping days: Black Friday, Cyber Monday, and October promotional events, with around 90% of shoppers planning to spend in at least one major retail sale event this holiday season, through personalized promotions and can’t-miss events 
3. 4. Invest in the customer experience and use AI to bolster it, knowing that emotional stakes are high over the holidays and a bad experience travels into next year 

This is the first of a series of retail holiday updates from Bain & Company that will publish through January 2027.