Retail sales growth is set to slow across the US, UK, France, and Germany in 2026 as households face ongoing financial pressures and discretionary spending remains muted, according to Bain & Company’s latest Global Retail Sales Outlook.
The consultancy warned that macroeconomic uncertainty, cost-of-living pressures, and cautious shopper behaviour would weigh on growth, even as inflation eases in most markets.
“Consumers continue to face financial pressure, driving our forecast for slower retail sales growth in the US and Europe in 2026,” said Aaron Cheris, global head of Bain’s retail practice. He added that retailers would need to sharpen their value propositions and use artificial intelligence in ways that genuinely enhance customer experience rather than simply cutting costs.
Bain projects US retail sales growth of 3.5 per cent year on year in 2026, taking the market to $5.3 trillion. This marks a slowdown from an estimated 4.0 per cent growth in 2025. Underlying volume gains are expected to remain modest as inflation hovers between 2.6 per cent and 3.0 per cent.
The report highlights rising unemployment, slowing labour supply growth, and declining consumer confidence as key challenges. Higher-income households, which account for more than half of US retail spending, are reportedly feeling the strain. Bain said many shoppers are trading down to lower-priced or private-label products, creating a “flight to value” that could limit overall sales growth. Lower fuel prices, tax reductions, and potential interest rate cuts may help stabilise demand.
In the UK, retail sales are expected to grow by 2 per cent in 2026, with inflation stabilising at around 2.5 per cent. Volume growth is likely to be flat in food retail and slightly negative in non-food sectors. Elevated mortgage rates, ongoing cost-of-living pressures, and a gradually softening labour market are suppressing consumer confidence, with discretionary spending likely to remain weak.
France is forecast to see near-flat growth of 1.5 per cent, down slightly from 1.7 per cent in 2025, while Germany is expected to post 2.5 per cent growth, lower than 3.6 per cent in 2025. In both countries, households are prioritising saving over spending amid rising unemployment and cost pressures, although France’s high savings levels and Germany’s wage growth outpacing inflation provide some cushion.
Across all four markets, Bain said retail growth in 2026 would increasingly depend on value perception rather than volume expansion. Cheris noted that retailers who succeed will be those that clearly communicate why they are the best choice for shoppers, whether through price, experience, or relevance, while using AI to boost overall value.
The outlook suggests that while the worst of the inflation shock may be over, a full recovery in consumer-driven retail growth remains some distance away, leaving retailers facing a challenging year ahead.
