Retail sales growth to slow in US, UK, France, Germany: Bain & Company

“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. “This year's industry leaders will need to sharpen their customer value propositions, giving shoppers compelling reasons to choose them over competitors and AI platforms. They must utilise AI in ways that expand the value-creation capability of the entire business.”

Bain projects US retail sales to grow 3.5 per cent year-over-year in 2026, to $5.3 trillion, slightly down from estimated 4.0 per cent growth in 2025. Volume growth will be modest, with inflation projected to hover between 2.6 per cent and 3.0 per cent. 

Key factors include mounting consumer strain and waning consumer confidence amid economic uncertainty, rising unemployment, and slowing labour supply growth. Bain’s Consumer Health Index finds that sentiment among higher-income US households, who account for more than half of spending, declined in January 2026. As shoppers increasingly gravitate toward lower-priced and private-label goods, a ‘flight to value’ could temper nominal sales growth. However, reduced taxes, declining fuel prices, and potential interest rate cuts could bolster shopper sentiment and spending power, supporting Bain’s sales forecast. 

In the UK, Bain forecasts retail sales growth of 2 per cent in 2026. With inflation expected to stabilise around 2.5 per cent this year, volume growth is likely to be flat in food sales and slightly negative in non-food categories.

Ongoing cost-of-living pressures, elevated mortgage rates, and a gradually softening labour market are shaping consumer sentiment. Discretionary demand will likely remain subdued, as value-focused shoppers trade down and seek discounts. Recent interest rate cuts, with the potential for more, could offer modest relief, but likely won’t have a meaningful effect on disposable incomes before 2027.

France’s retail sales growth should remain near-flat at 1.5 per cent in 2026, says Bain, compared with estimated 1.7 per cent growth in 2025. Volume growth will likely be largely flat as inflation is projected to normalise between 1.3 per cent and 1.7 per cent. 

Rising unemployment and elevated mortgage rates are pressuring household finances. But elevated savings and a declining household debt-to-income ratio are cushioning budgets, contributing to positive sales growth. 

Bain projects Germany’s retail sales to grow 2.5 per cent in 2026, down from 3.6 per cent in 2025. Inflation is forecast to remain around 2.2 per cent this year, supporting moderate underlying volume growth.  

Consumer confidence remains fragile amid cost-of-living concerns, households are prioritising saving over spending, and rising unemployment is constraining purchasing appetite. Additionally, ongoing discounting—particularly in grocery—may further limit nominal upside. Offsetting factors include wage growth that is outpacing inflation and increased government spending on infrastructure and defense.

Fibre2Fashion News Desk (RR)