6 retail trends to watch in 2026

Core Insights - The retail industry is expected to continue facing challenges in 2026, influenced by tariff upheaval and a surge in generative AI investments [1][2] - Retailers are likely to reevaluate their portfolios, focusing on strengths and innovation while divesting underperforming segments [3] - The distressed retail market indicates sectors under pressure, particularly the home industry, which has seen increased bankruptcies [4] Deal-Making Trends - In 2025, over 40 deals were tracked in the retail industry, primarily acquisitions or sales, with expectations for fewer but higher-value deals in 2026 [2] - Private equity firms are becoming more cautious, while international buyers are looking for U.S. market entry through acquisitions [3] Consumer Behavior - Consumers are expected to continue seeking value in 2026, influenced by a weakening job market and rising costs, with personal consumption expenditure growth predicted to slow to about 1.5% [11] - Spending at value retailers like Amazon and Costco has increased, with 11% and 12% growth respectively through November [12] AI Adoption - The retail industry is lagging in AI adoption but is expected to see growth in AI use cases as it catches up, with a significant year-over-year increase in AI-related online traffic during the 2025 holiday season [7][8] - Retailers are under pressure to demonstrate ROI from AI investments, with the industry still proving its value [9] Mall Evolution - Retail shopping centers are rebounding, with a focus on mixed-use projects and a shift in perception towards B-rated malls as viable investment opportunities [15][16] - The future of malls is seen as a reclassification rather than a comeback, with a broader ecosystem of uses beyond traditional retail [19] Pricing Dynamics - Pricing strategies will be scrutinized in 2026, with new laws requiring businesses to disclose the use of personal data for individualized pricing [20][21] - Retailers are advised to adopt best practices in AI pricing tools to avoid potential legal issues [23] Delivery Innovations - Big-box retailers are accelerating delivery strategies, with Amazon testing same-day delivery and Walmart employing a multi-channel approach to enhance speed [24][26] - The immediacy of obtaining goods is a key factor for consumers choosing in-store shopping over online options [27] Tariff Impacts - Tariff policies continue to create uncertainty, with retailers having pulled forward inventory purchases to mitigate impacts, but higher costs may lead to price increases for consumers [29][30] - Retailers like PVH Corp. have reported inventory cost increases attributed to tariffs, with plans to pass some costs onto consumers [31][32]