The latest Bain & Company 2026 Global Retail Sales Outlook signals a significant cooling period for major Western markets, with growth projections for the US, UK, France, and Germany all trending downward. Despite a resilient 2025, the retail sector is entering a phase of diminished volume gains as economic pressures and softening labor markets weigh heavily on household balance sheets. Bain forecasts, US retail sales will grow by 3.5 per cent Y-o-Y in 2026, reaching $5.3 trillion - a deceleration from the 4.0 per cent growth estimated for the previous year.
Intensifying value-seeking behavior
As inflation hovers between 2.6 per cent and 3.0 per cent, a prominent ‘flight to value’ is reshaping the apparel and general merchandise landscapes. Higher-income households, which traditionally drive over 50 per cent of US retail spending, are showing marked declines in confidence according to Bain’s Consumer Health Index. Retailers are seeing shoppers gravitate toward private-label goods and discount tiers to preserve disposable income. Aaron Cheris, Global Head – Retail, Bain & Company, notes, success in 2026 will depend on sharpening customer value propositions to compete not just with peers, but with emerging AI-driven shopping platforms.
Stagnation across European markets
The European forecast is even more conservative, with the UK projected to grow by just 2 per cent, while France and Germany are expected to see gains of 1.5 per cent and 2.5 per cent respectively. Persistent cost-of-living challenges and elevated mortgage rates continue to dampen discretionary appetite, resulting in flat-to-negative volume growth in non-food categories. While potential interest rate cuts offer a glimmer of relief, Bain suggests these measures are unlikely to materially impact consumer purchasing power until at least 2027. To navigate this low-growth environment, retailers are increasingly deploying AI for margin management and operational efficiency.
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