What: Retail sales growth is set to decelerate in key Western markets in 2026, as macroeconomic pressures and cautious consumer behaviour limit volume increases.

Why it is important: Slower growth and shifting consumer priorities underscore the need for operational efficiency and strategic agility in retail.

Retail sales growth in the US, UK, France, and Germany is expected to slow in 2026, with much of the nominal increase attributed to inflation rather than real volume gains. Consumers across these markets are grappling with persistent cost-of-living pressures, rising unemployment, and elevated mortgage rates, all of which are dampening sentiment and curbing discretionary spending. As a result, shoppers are increasingly prioritising value, trading down to lower-priced and private-label goods, and seeking discounts, which is reshaping the competitive landscape for retailers. While government measures such as interest rate cuts and increased spending may offer some relief, they are unlikely to drive a significant rebound in consumer confidence or disposable income before 2027. Retailers are therefore compelled to sharpen their value propositions, streamline operations, and invest in efficiency and agility to remain competitive in a subdued growth environment. The outlook for 2026 points to a challenging year ahead, with success hinging on the ability to adapt to evolving consumer behaviours and macroeconomic realities.

IADS Notes: In January 2026, Fashion Network reported Bain’s forecast of slower retail sales growth in major Western markets, driven largely by inflation. Euromonitor’s December 2025 outlook highlighted the impact of economic uncertainty and value-seeking behaviour, while Visa’s January 2026 report detailed structural headwinds in Europe. Alix Partners’ December 2025 analysis emphasised the shift toward operational efficiency, and The Economist in January 2026 noted that policy support in the US may not fully offset cautious consumer spending.

Expect slower retail sales growth in US, UK, France, Germany, says latest Bain report