What: US retail sales grew 4.5% year-over-year in October 2025, with strong performances in apparel, personal care, and department stores despite economic headwinds.

Why it is important: The strong sales highlight the effectiveness of omnichannel strategies and the appeal of discount and off-price formats in attracting shoppers during uncertain times.

US retail sales defied expectations in October 2025, rising 4.5% year-over-year even as consumer sentiment weakened amid the federal government shutdown and the temporary suspension of SNAP benefits. Growth was broad-based, with apparel, personal care, and department stores all showing notable improvement. Shopper visits to physical retail locations increased by 1.9% compared to the previous year, reflecting sustained demand for in-store experiences despite the continued outperformance of e-commerce. Discount and off-price retailers, warehouse clubs, and Walmart emerged as the season’s major winners, attracting both value-conscious and higher-income shoppers through rapid delivery, membership perks, and competitive pricing. While some traditional department stores and big-box retailers like Target and Macy’s saw flat or declining store traffic, specialty apparel chains and off-price formats reported robust gains. As the holiday season progressed, projections suggested that total retail sales growth would remain strong through the end of the year, buoyed by adaptive merchandising, targeted promotions, and the enduring appeal of physical retail.

IADS Notes: Despite persistent economic headwinds and volatile consumer sentiment, the 2025 US holiday retail season has demonstrated remarkable resilience and adaptability. As PwC (September 2025) notes, value-driven shopping and generational shifts have shaped spending patterns, with older consumers maintaining or increasing their budgets while Gen Z cuts back. The NRF (November 2025) projects that holiday sales will surpass $1 trillion for the first time, with growth rates between 3.7% and 4.2%, even as inflation and tariffs continue to pressure both retailers and shoppers. BoF (November 2025) and The Economist (December 2025) highlight the paradox of low consumer confidence paired with robust spending, particularly among upper-income households and at off-price and discount retailers. Forbes (October and December 2025) underscores the impact of rising costs, tariffs, and the growing importance of digital channels, with record online sales during Black Friday and a shift toward value-driven, calculated purchases. WWD (February 2025) and Deloitte (September 2025) further confirm that department stores and specialty retailers have seen modest gains, while the overall sector benefits from adaptive strategies, omnichannel integration, and the continued appeal of physical retail experiences.

US holiday retail sales defy weak sentiment