This Week in Retail #115

Back like I never left

Hey Friends,

Welcome back! As you may have noticed, I decided to take the last two weeks off to regroup and come back refreshed, but I’m back and more ready than ever to bring you the latest in retail content.

We have missed a lot together so without further delay, let’s get into it……

December retail sales data paints a nuanced picture of the U.S. consumer heading into 2026. Overall spending was relatively flat month over month, suggesting shoppers are becoming more selective after years of inflation. Unit volumes declined in some discretionary categories even as dollar sales held up, indicating that price increases rather than demand growth are driving topline performance.

At the same time, year-over-year holiday sales still showed modest growth, particularly in apparel, beauty, and general merchandise. Consumers are not pulling back entirely but they are prioritizing value, promotions, and necessity-driven purchases. This reinforces the idea that shoppers remain resilient but increasingly disciplined, trading down where possible and delaying non-essential purchases.

The bottom line: Retailers can no longer rely on pricing power alone. Winning in 2026 will require sharper value propositions, targeted promotions, and better inventory discipline.

New research from the Federal Reserve Bank of New York reinforces a long-running concern in retail and supply chain economics. Tariffs intended to pressure foreign manufacturers are largely being absorbed domestically. The analysis shows that between 86 and 94 percent of tariff costs are paid by U.S. importers and ultimately passed through to consumers via higher prices. Foreign exporters have absorbed only a small share of the impact, and in many cases none at all.