Tariff impact will be the headwind for retail in 2026, says top retail analyst Dana Telsey

Core Viewpoint - The luxury consumer segment is showing resilience, but overall consumer sentiment is low, which may impact spending during the holiday season [1][2][3]. Consumer Sentiment - Recent consumer confidence numbers from the University of Michigan indicate a decline in sentiment, particularly affecting lower to middle-income consumers [1][2]. - The K-shaped economy is widening, with a need for improvement in spending from lower to middle-income consumers [3]. Luxury Consumer Behavior - The luxury consumer and upper middle-income segments are still spending, as evidenced by positive sales results from companies like Tapestry and Ralph Lauren [2]. - The stock market's resilience is contributing to continued spending on new products and differentiation among luxury consumers [4]. Inventory Management - Overall inventory levels appear to be well-managed, with some companies bringing in inventories early to mitigate tariff impacts [5]. - There is a concern about how lean companies are running their inventories given the uncertainty in consumer sentiment [4]. Holiday Season Outlook - The upcoming holiday season is affected by one fewer shopping day, and there is no significant increase in promotions leading up to Black Friday [6]. - The focus for lower-income consumers is shifting towards necessities and value pricing [7]. Value Perception in Retail - Value is defined by brand and price, with off-price retailers and major players like Walmart and Costco being perceived as value leaders [8]. - Retailers that focus on value are experiencing strength, as seen in the leasing results from retail real estate landlords [9].