As retailers enter the 2026 holiday season, the question is not whether consumers will spend, but which consumers will spend and where that demand will materialize. Despite resilient retail sales and continued consumer spending, sentiment remains deeply depressed as household debt, slowing wage growth, elevated inflation, and persistently high borrowing costs strain budgets. The defining trend of our Holiday 2026 Outlook is growing consumer bifurcation: Affluent households continue to spend on premium goods, travel, and discretionary purchases, while financially constrained consumers increasingly trade down, delay purchases, and concentrate spending around promotions. For retailers, success will depend on recognizing these diverging behaviors, delivering targeted value propositions, and balancing promotional intensity with margin discipline. Winning organizations will be those that adapt to a fragmented consumer landscape and align assortment, pricing, and marketing strategies with the evolving financial realities of distinct customer segments.
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