This Week in Retail #118
Denim is back, luxury stores are disappearing, and AI commerce hits a reality check
Hey Friends,
From mixed retail sales data to major strategic shifts across fashion, luxury, and technology, today we are discussing how companies are navigating a consumer environment that remains steady but increasingly selective. We will look at what the latest spending data says about where shoppers are pulling back and where they are still opening their wallets, how brands like Fabletics and Levi’s are reshaping their portfolios, why Saks Global is dramatically shrinking its store footprint, and what OpenAI’s latest commerce pivot signals about the future of AI driven shopping.
Let’s get into it……..
Let’s start with some industry figures shall we? The United States Census Bureau reported total U.S. retail and food services sales of $733.5 billion in January 2026. Sales declined 0.2 percent compared with December but were still 3.2 percent higher than January 2025, reflecting continued but uneven consumer spending. For the three month period from November 2025 through January 2026, total sales increased 2.9 percent compared with the same period a year earlier.
Performance across retail categories was mixed. Motor vehicle and parts dealers saw sales drop 0.9 percent month over month, while gasoline stations declined 2.9 percent. Electronics and appliance stores fell 0.6 percent from December but remained up 2 percent year over year. Clothing and accessories stores dropped 1.7 percent month to month but grew 3 percent compared with last year. Sporting goods, hobby, and bookstore sales also fell 1.2 percent from December while still rising 3.2 percent year over year.
Some sectors showed modest gains. Food and beverage stores increased 0.2 percent from December and were up 1.4 percent annually. Furniture and home furnishings rose slightly month over month by 0.7 percent but were still down 3.5 percent compared with January 2025.
Online retail continued to be one of the strongest performing segments. Non store retailers posted 10.9 percent year over year growth, while miscellaneous store retailers grew 10.8 percent. Meanwhile, food service and drinking establishments generated $92.2 billion in January sales, representing a 3.9 percent increase from the same month last year.
Retail sales across sectors tracked by industry analysts rose 5.7 percent year over year in January to $243.5 billion, according to data from the United States Department of Commerce. E-commerce continued to lead growth, increasing 8.6 percent to $127.2 billion, while apparel sales rose 4 percent to $20.2 billion. Other categories showed mixed results: sporting goods sales climbed 2.8 percent, general merchandise increased 3.2 percent, and electronics grew 1.6 percent. However, several sectors struggled. Home furnishings declined 3.5 percent to $10.1 billion, and department store sales fell nearly 10 percent year over year, highlighting ongoing pressure on traditional retail formats. Analysts noted the data may be more backward looking than usual because reporting delays followed the federal government shutdown in late 2025. Economists at Wells Fargo said early indicators suggest February spending may soften slightly. Retail experts say consumers remain selective and value driven, with some homeowners delaying furniture purchases amid concerns about tariffs and inflation. At the same time, stronger sales at building supply stores and lower mortgage rates could signal improving activity in the housing market later in the year.
