Global retailers face a challenging 2026 retail environment, according to the latest analysis from Mastercard Economics Institute (MEI).
The institute highlights a cooling global economy, rising cost pressures and diverging regional growth — all of which suggest slower consumer demand and increased pressure on retail businesses worldwide.
Global economic slowdown and retail headwinds
MEI’s 2026 global economic outlook points to a moderation in global growth, which may weigh on household spending and broadly dampen retail demand.
In a climate of economic caution, consumers are likely to prioritise essentials over discretionary purchases — heightening the risk for retailers that depend on robust demand for non-essential goods.
Price pressures from tariffs and inflation may further erode real purchasing power in key markets, complicating retailers’ ability to maintain margins without turning away value-conscious shoppers.
Holiday spending growth slows and online retail gains ground
According to MEI’s 2025 holiday retail forecast — a useful leading indicator for 2026 trends — overall U.S. retail sales (excluding autos) are expected to rise just 3.6 per cent year-on-year between November 1 and December 24, down from 4.1 per cent last season.
Within that, e-commerce sales are projected to grow by 7.9 per cent, while sales in physical stores may only increase by 2.3 per cent.
These figures suggest the ongoing shift towards online channels will continue, driven by consumers seeking value, convenience and flexibility in a tougher economic backdrop.
Retailers that rely heavily on in-store traffic may face greater challenges unless they adapt their omni-channel strategies.
Regional variation and strategic implications for global retailers
MEI warns that the slowdown will not be uniform — growth prospects will vary significantly across regions, and so will consumer behaviour.
For retailers operating internationally, this means careful region-by-region planning will be necessary. In slower-growing areas, premium or discretionary categories may underperform, while demand for value-oriented goods could remain stable or even rise.
Retailers may need to rethink product mix, pricing strategies, inventory levels and promotional timing to remain competitive and profitable.
With holiday season performance already moderating, building agility into operations and supply chains could become critical heading into 2026.
Ultimately, the 2026 outlook from Mastercard underscores a more cautious retail environment: slower economic growth, rising cost pressures and uneven regional demand.
For retail executives, success next year will likely depend on flexibility — balancing online and offline channels, aligning assortments with changing value-driven consumer behaviour, and adapting pricing and inventory strategies to shifting demand.
