Another year has come and gone, but the retail industry chugs ever onward.
A 2025 retrospective would no doubt include both tariff upheaval and a surge in generative AI investing — two trends Retail Dive expects to continue in the year ahead. Retail also continues to face a challenging economic landscape, which impacts the outlook for core pieces of the industry, including consumer spending, deal-making and distressed retail.
Last year, Retail Dive tracked more than 40 deals across the industry, the vast majority of which were acquisitions or sales. 2026 will be a “complex, less predictable landscape,” according to a December report from PwC, and may feature fewer, higher-value deals.
This year is “a critical moment for business leaders to reevaluate their portfolios, doubling down on category strengths, accelerating innovation, and potentially exiting lines where competitive edge has faded,” PwC wrote. The firm expects retailers to divest underperformers and refocus on growth areas, though buyers may look different. Private equity companies have become more cautious, while international buyers are eyeing acquisitions as a way into the U.S. market.
Conversely, the distressed retail market gives an indication of what sectors remain pressured and where shoppers are spending their money. The home industry, which has run into challenges ever since the category’s pandemic-induced highs, added a few more names to the list of bankrupt retailers in 2025. It’s unclear if the sector has further to fall or if 2026 may finally provide some much-needed stability.
PitchBook’s 2026 outlook predicts a K-shaped economy this year, deepening the divide between retail’s haves and have-nots. Specifically, companies within the AI ecosystem are expected to thrive, while others struggle with “weakened consumer buying power.” Forrester predicts specialty retailers will suffer the most, amid high interest rates, e-commerce popularity, and competition from mass merchants and value retailers.
All of this sets the stage for another year shaped by external forces. From pricing dynamics to the shifting state of malls, here are the trends we’ve got our eye on in 2026.
AI grows — but will its ROI?
Without a doubt, more individuals are using AI chat platforms for everything from product research to companionship.
That will likely continue into 2026, as the retail industry saw a significant year-over-year jump in AI-related online traffic during the 2025 holiday season. The growth in AI chatbot usage will continue to shift how consumers search for products and interact with retailers.
Retail lagged on AI adoption, but the number of AI use cases is expected to grow as the industry plays catch-up. The retail industry faces “higher organizational restrictions, more skepticism, and slower integration, suggesting a widening divide between leaders who embed Gen AI and those who risk being left behind,” according to the 2025 AI industry adoption study and report by the Wharton School at the University of Pennsylvania and GBK Collective.
Daily generative AI use grew across sectors last year, the report found. That’s true even for retail, which was the slowest to adopt the technology.
And as AI investment ramps up in retail this year, so might the pressure on seeing a return on that spent capital. While some sectors may be seeing tangible returns already, the Wharton report found that the retail industry — with its reliance on physical goods — is still looking to prove that value.
Consumers continue to look for value
Consumers in 2026 will look much like they did in 2025: worse for the wear, but still spending, according to several analysts and economists. Still, a weakening job market, rising health care costs and other affordability pressures continue to undermine discretionary budgets, as Moody’s Ratings analysts led by Claire Li said in a Dec. 9 research note.
Moody’s expects real personal consumption expenditure growth to slow to about 1.5% next year, down from the annual 2.5% to 3% growth seen from 2023 to 2024.
“Momentum is fading for consumer spending growth as softening labor conditions and other late-cycle pressures increase,” Li said, adding that real incomes will be squeezed, “weighing on household demand.”
The latest jobs data indicates 3.5% wage growth next year, just above inflation, according to Heather Long, chief economist at Navy Federal Credit Union.
“Compare that to April when wage growth was 3.8% and inflation was almost down to 2%,” she said by email. “People’s wallets are getting squeezed by rising prices, and their pay isn’t going to go up much in the coming months. More and more families are turning to value and discount retailers to try to make every dollar stretch as far as possible.”
Long said this explains Navy Federal’s finding that spending through November was up 11% at Amazon and 12% at Costco.
The situation will continue to favor retailers that differentiate by offering value or service, according to a Dec. 10 report from Fitch Ratings analysts led by Senior Director David Silverman.
“In a highly dynamic and competitive landscape, Fitch expects market share gainers to be retailers with a strong set of assets, including robust supply chain infrastructure, a well-maintained store network and e-commerce platforms, healthy cash flow generation to invest in new capabilities, and clear differentiation that inspires customer loyalty,” Silverman said.
A new phase for malls
Thanks to high-profile mixed-use projects and renewed attention to B malls, retail shopping centers are on the rebound, and that is set to continue in 2026.
Simon Property Group, Dillard’s department store and Walmart are among the companies whose investments signaled a focus beyond occupancy, cash preservation and simply “avoiding obsolescence,” according to Bryn Feller, managing director and senior vice president at commercial real estate firm Northmarq. It’s not only that the volatility inherent to retail has disappeared, but also that, five years from the pandemic, even B malls are viewed as investments with upsides, she said by email.
“We’re entering a more evolutionary phase, where malls are increasingly being viewed as viable platforms for reinvention rather than assets in managed decline,” she said.
Mixed-use projects work at B-rated properties but will mostly be found at A-rated ones, according to Vince Tibone, a managing director at Green Street who leads U.S. mall and industrial research.
“This trend should continue in ’26 as mall owners seek to maximize the highest and best use of the overall site, which often includes non-retail development,” he said by email.
Many people won’t recognize some of these developments as traditional malls at all, Feller said.
“I don’t see the next phase of malls as a comeback story so much as a reclassification,” she said. “The centers that will matter in 2026 and beyond aren’t asking how to replace retail — they’re asking how retail anchors a much broader ecosystem of uses.”
Pricing continues to confuse
Pricing will continue to be in the limelight in 2026. Last year, consumers became more aware, and sometimes more wary, of how companies were delivering price changes in stores and online.
New York now requires businesses to disclose when they use personal data to deliver individualized pricing.
“The law is clear: If businesses use algorithmic pricing, they must notify consumers,” New York Attorney General Letitia James said in November. “New Yorkers deserve to know whether their personal information is being used to set the prices they pay, and if businesses are charging customers different prices for the same products.”
Next year will likely bring additional laws around AI algorithms used to set consumer pricing, according to Lily Li, data privacy and AI risk management attorney and founder of Metaverse Law.
“While it is perfectly legal to test prices and adjust them to market conditions, retailers should be careful when reviewing and adopting AI pricing tools,” Li said in an email to Retail Dive.
Best practices for retailers include not adjusting prices dynamically based on consumer profiles or sensitive personal information and confirming that price adjustments based on location reflect legitimate market conditions rather than historic bias. Retailers and brands can also confirm that AI tools use de-identified and/or aggregated data, both to train models and during deployment.
Fast delivery gets faster
Big-box retailers over the past few years have developed strategies and provided financial backing to accelerate delivery as a value-add to consumers. As retailers go into 2026, though, efforts are speeding up further, specifically when it comes to same-day delivery.
Amazon is growing its fulfillment network and recently announced same-day perishable delivery. At the end of last year, the e-commerce giant began testing delivery in half an hour or less, dubbing the new, speedy service Amazon Now.
Walmart is using a multi-channel approach to quickly get products to customers. “Whether it’s being delivered from a store, a club, or a fulfillment center, or whether it arrives on the ground or through the air with a drone, we’re getting things to people faster,” Walmart CEO Doug McMillon said during an April 9 investment community meeting.
Immediacy in obtaining goods is one of the most common reasons people select to go to a store versus shopping online, Lee Peterson, executive vice president of thought leadership at WD Partners, said in an email to Retail Dive.
For Peterson, Amazon’s 30-minute delivery is a boon. “That’s better than you could possibly do by going to a store. Hell, so far this winter, it takes me 30 minutes to get out the door. If they’re going to come and hand it to me before I can get another cup of coffee — of course I won’t go to a store!”
“Can Walmart and Target compete with that? No,” Peterson said. “Will it eventually catch up with them? Probably, but both brands still own so much mind-equity, it’ll take a while.”
Tariffs will continue to shake the industry
Much of 2025 was defined by the uncertainty that ever-evolving tariff policies presented.
While some companies opted to diversify their supply chains and shift production to countries less impacted by trade policies, the effects of tariffs will continue throughout 2026.
To deflect the impact of tariffs, many retailers pulled forward inventory purchases ahead of the implementation of country-specific levies in August. But as retailers look to buy more inventory, higher costs may lead to price increases for consumers, according to Kirthi Kalyanam, professor and executive director of the Retail Management Institute at Santa Clara University’s Leavey School of Business.
“There is some concern that retailers will run out of the inventory that they forward bought pre tariffs,” Kalyanam said in an email. “New inventory will cost more, and this will eventually raise prices.”
PVH Corp., which owns Calvin Klein and Tommy Hilfiger, last month said inventory costs increased 3% year over year in Q3, 2% of which was attributed to tariffs. Many retailers, including On, E.l.f. Cosmetics and Lululemon have already announced plans to pass some of those costs onto consumers by raising prices.
