Top retail trends to watch in 2026

Immersive retail experiences. Predictive analytics. And sustainable ethics. What exactly does retail look like as we head into 2026? 

Understanding trends for the year ahead can help you predict key consumer and competitor shifts and help you build an effective proactive, rather than reactive, retail strategy. 

In this post, I explore some of the biggest retail industry trends for 2026. 

With rising inflation, mass layoffs and uncertainty around tariffs, most of the U.S. retail market saw slow growth in 2025. Consumer spending is down with many consumers feeling cautious about spending on non-essential goods in an unstable economy. Retail trade sales rose by just 4.8% from last year.

Despite a decline throughout 2025, only 39% of consumers plan to spend less in 2026 compared to 69% in 2025. Spending will mainly be driven by younger shoppers in the new year, with 41% of millennials and 37% of Gen Zers saying they plan to spend more next year. 

Let’s review these upcoming shifts in consumer spending in the context of the key retail trends for 2026.

Let’s take a look at some of the top emerging retail trends shaping the retail industry in 2026. 

AI-driven personalization and predictive merchandising

AI-driven personalization will continue to support increasing footfall in store and shopping online in 2026. 

71% of consumers now expect personalized retail experiences. 65% of customers see targeted promotions as one of the main drivers of a purchase — something that retailers are regularly using AI to deliver. 

AI can break down silos with ease and centralize data on purchase history, social media engagement, consumer insights research and location. AI can analyze these insights with a high degree of accuracy, gaining a detailed understanding of who consumers are and what they want from brands. Retailers can use this data to deliver hyper-personalized and targeted ads, responsive content tailored to the user and predictive personalization that recommends products based on past purchase behaviors retail. 

McKinsey Senior Partner Kelsey Robinson and coauthors say:

“To reach consumers where they are and how they want to be met, marketers can embrace two powerful innovations: AI-driven targeted promotions, and the use of gen AI to create and scale highly relevant messages with bespoke tone, imagery, copy, and experiences at high volume and speed.” 

AI will also continue to improve demand forecasting, going beyond analyzing historical seasonal sales data and providing new levels of accuracy by combining several sources of data and enhancing data analysis. AI can combine and analyze a range of internal and external datasets, combining sales history data with weather forecast, competitor and social listening data. 

Unlike traditional methods, this tech can uncover complex and often hard-to-spot patterns in the data, leading to highly accurate, granular predictions — such as SKU-by-store-by-day. AI-based demand forecasting will continue to help brands move toward their sustainability goals, supporting them to reduce waste and overstocking. 

Seamless omnichannel integration

Omnichannel integration will continue to evolve in 2026. Retailers will keep their focus on merging online and in-store channels for frictionless shopping journeys that support the standard modern, non-linear omnichannel customer journey. 

73% of retail consumers are omnichannel shoppers. The typical retail journey starts online for 62% of consumers and the average consumer engages with six touchpoints before making a purchase. 

Gen Z is a driving force behind this trend. Over half of Gen Z consumers say they feel more insecure without their smartphone than they do without their wallets. 

They use their phones to help manage anxieties around decision making, including when it comes to deciding what to buy. 

Two-thirds of Gen Zers report using their smartphones to search for offers and discounts when they're browsing items on the shelves, while 32% say a retailer’s mobile app helps them find out about new products and brands or products when they're shopping in-store.

IKEA, for example, excels when it comes to seamless omnichannel experiences. IKEA Kreativ offers AI-based room scanning and virtual design, allowing consumers to reimagine their bedrooms or living rooms while they sit on their sofa. Once they approve their design, they can automatically add all the products to their cart, straight from the app. 

Sustainability as a business imperative

As we head into 2026, consumer purchase decisions and brand loyalty will continue to be driven more and more by sustainable values. Younger generations, including Gen Z and millennials, are particularly concerned about the climate crisis with 6 in 10 saying they’re concerned about climate change. And consumers say they’re willing to pay 9.7% more for sustainable products.

In response, retailers are increasing their investment in sustainable processes and packaging. Going beyond shallow initiatives, many retailers are making sustainable policy and practices an essential part of their 2026 strategies.

Circular retail models will become more and more popular, as retailers continue to support consumers to reuse, repair, rent and recycle goods. Selfridges’ Reselfridges program for example encourages customers to shop from their pre-loved selection of designer goods. They also offer a range of other services to promote continued use and reduce waste including item repairs and recycling.  

Sustainable packaging will be another core focus. The global sustainable packaging market was valued at around $303.80 billion in 2025. It’s projected to reach over $433.49 billion by 2030, growing at a CAGR of 7.37%. 

Retailers will step up on innovation when it comes to sustainable packaging. Mainstays like cardboard and paper over plastic will still be in circulation, but forward-thinking retailers will also look to experiment with alternative sustainable packaging materials like sugarcane and bamboo. 

Retailers will keep their focus on ethical sourcing in the year ahead to match consumer sentiment. 88% of global consumers prioritize buying from companies with ethical sourcing practices. The most successful retailers will prioritize fair wages and business practices, safe working conditions, supportive rather than destructive environmental practices and transparency across the supply chain. 

Immersive retail experiences

Immersive retail experiences will also be central to retailers strategies in 2026. 

When online shopping offers some of the best deals and the ultimate convenience with services like next-day delivery so consumers don’t even need to leave their house, in-store retail needs to bring a level of fun, delight and engagement that online channels can’t deliver to keep footfall high. 

82% of retailers increased spend on experiential marketing in 2025. They’re set to drop more of their budget on engaging in-store marketing, brand experiences and events that elevate shopping in-store. 

For instance, from the mini florists and bakeries to the rotating conveyer-belts of bathbombs, every element of cosmetics and body-care brand Lush’s in-store retail strategy is experiential.

The Valley Group says: “With features such as a hair salon, coffee shop, florist, spa and perfume library (a space for shoppers to learn more about the science behind perfume), Lush stores are becoming a destination for shoppers to relax, recharge and refuel. Bright, colourful products are creatively displayed, with rotating sushi bar carousels adding to the theatre, collectively creating impactful moments in every part of the store, driving shoppers on a journey of discovery.

Lush is delivering experiences that can’t be replicated online. Physical experiences which appeal across age groups create a deeper understanding of products and a meaningful connection with the brand.”

Lush doesn’t share content on some of the main social media platforms including TikTok, Instagram and Facebook — putting increased pressure on them to deliver on their in-store retail strategy. To attract consumers and drive sales, Lush rolls out several exclusive in-store events each year including: 

1. Album release parties for local artists.

2. Bath-bomb-making kids parties.

3. Seasonal events, like festive Grotto’s where younger consumers can take photos with and collect gifts from Mrs Claus and Lush’s Snow Fairy.

4. “Sip and Soaps,” events where consumers can make their own beauty products while enjoying a beverage. 

5. Sampling and demo stations. 

Experiential marketing is also becoming more and more digital. 

In 2026, retail strategies will also look to blur channels with the support of AR, VR and AI — with many brands using the tech to help increase footfall in-store. Experts predict that the global experiential retail market will reach $543.45 billion by 2035, growing at a CAGR of 15.2% from 2025 to 2035. 71% of consumers say they’d shop more often if AR were available and 61% said they’re more likely to choose a store that uses AR over one that doesn’t. 

Farfetch founder José Neves sees virtual reality, emotion-scanning software and innovative payment options as transformative forces that enhance the in-store retail experience. He believes modern retail stores should support a complete omni-channel offering, using in-store technology to personalize consumers’ experiences based on the data brands have on them from across their digital and physical channels. 

He says:

“This division between physical retail and online, it’s imaginary. It’s only separated because companies have not had the technology and the strategy to really unify it. For me, that is the next frontier.”

Nike excels at creating unique immersive AR-based in-store experiences that supports its brand story. Take its PLAY NEW in-store experience, rolled out in three flagship stores  — including NYC, LA and Chicago. 

On entering the store, shoppers scan the QR code set up by the entrance and open up the PLAY NEW AR app, which directs them to find and scan five AR triggers hidden throughout the store. Each trigger launches an AR mini-game, like mini golf or soccer challenges — enhancing the in-store experience. 

Supply chain reinvention and automation

Global inflation, eco-political crises and extreme weather events continue to make retail supply chains expensive and complex. Retailers will look for new tech-powered ways to support speed, flexibility, stability and efficiency throughout 2026. We'll continue to see a jump in adoption of technologies like predictive analytics, smart warehousing and AI robotics. 

Some experts predict that robot shipments will jump by up to 50% each year through 2030, with warehouse automation growing by over 10% percent every year. 

Retailers note increases in efficiency and cost savings through warehouse automation and robotics with the average automated warehouse system cutting operation costs by up 40% and improving order accuracy by up to 99.9%. 

Companies will also increase their use of predictive analytics outside of demand forecasting, using it to improve decisions throughout the supply chain from procurement to route optimization. AI demand sensing can also help provide real-time monitoring of stock levels, minimizing waste and helping to avoid stockouts as AI can increase forecasting accuracy by up to 20% compared to traditional methods.

Now let’s take a look at some of the biggest emerging technologies in retail. 

Many retailers will look to combine technologies like Artificial Intelligence (AI), the Internet of Things (IoT) and blockchain to improve the efficiency of both their backend and frontend processes in 2026.

The global IoT retail market is projected to reach $488.53 billion by 2033. IoT creates "connected stores" and supply chains by using sensors and smart devices to gather real-time data on everything from inventory levels to customer movement and equipment health. This data provides the foundation for AI-powered analytics and automation. 

Many retailers will also look to combine AIIoT and blockchain to improve the efficiency of their backend processes, particularly inventory management and personalization. 

Retailers will increase their use of IoT, with technologies like smart shelf sensors and radio frequency identification technology (RFID) that can track stock to get real-time insights into inventory location and movement. 

The tech can help cut forecasting errors by up to 50%, more accurately predicting the level of inventory needed to fulfill real-time customer orders. It can signal when inventory is running low and automatically order the required inventory, helping retailers to avoid stockouts. 

Blockchain will mainly be used to help improve visibility, transparency and traceability throughout the supply chain — acting as a secure ledger for storing inventory data recorded by IoT sensors. The combination of these tools is particularly useful for brands looking to verify ethical and sustainable sourcing, allowing them to verify and track materials and products across global supply chains

Retailers will also increase their reliance on digital twins. Digital twins are an IoT-based virtual replica of a physical system or place such as a warehouse floor, store or the wider supply chain. Experts predict that digital-twin investments will reach more than $48 billion by 2026.

Digital twins allow retailers to test out different scenarios and see how helpful their responses are to them. For example, they could simulate disruptions to the supply chain or the impact of a severe weather event on a warehouse facility, analyze their impact and assess how effective their current solutions are at dealing with these issues. Digital twins can also be used to trial and optimize retail strategies, such as testing out and assessing different marketing tactics in-store. 

AI-based retail assistants that can provide personalized product recommendations, answer FAQs and help support product returns both online and off will continue to be adopted well into 2026. Jason Goldberg says: "Picture this: You ask Alexa to find the perfect winter coat. Alexa doesn’t just offer a list; it considers the weather in your location, your past style preferences, your budget, and customer reviews to present the ideal option. Or, imagine Perplexity’s recently unveiled “Shop Like a Pro,” where AI curates product suggestions based on social proof, your unique tastes, and emerging trends, allowing you to make a purchase with one click directly from its platform. Meanwhile, Google Lens now lets you snap a picture of a product and instantly discover where to buy it, compare prices, and check inventory—all in real time."

Retail media networks (RMNs) are also on trend for the year ahead. RMNs are currently one of the fastest-growing revenue streams in retail. RMNs forecasted to overtake combined Linear and Connected TV (CTV) ad spending in 2026 with 65% of global marketers saying that they’d be a bigger part of their media mix. Brands can use them to place highly-targeted advertisements on retailer's digital and physical properties with the help of proprietary first-party shopper data.

Beyond retail business trends, what does consumer behavior look like for 2026? 

Consumers will keep calling out brands on their ethics next year — demanding genuine ethical conduct from who they shop with. They’re no longer accepting greenwashing, price hikes that fail to reflect value, shady business practices and lack of transparency. 

Consumers no longer see brands as neutral entities — eight out of ten see them as political. 

83% of Gen Z’s want brands to take stands on ethical and social issues. And consumers will continue to vote with their wallets. As I note in my recent post on sustainability in CPG, 77% of consumers will ditch a brand that engages in greenwashing. 

Another growing consumer trend is the shift towards prioritizing experiences over things. Experience-driven loyalty will look to replace product ownership. Dubbed the “experience economy,” research shows that people who spend more on experiences rather than goods feel a deeper sense of wellbeing and a greater connection to humanity. 

57% of consumers say they’d rather pay for a great experience than buy something new. To continue to appeal to consumers, brands must be able to deliver elevated emotional returns  — finding ways to engage consumers emotionally and experientially.

Consumer demand for hybrid shopping options and faster fulfillment will also rise. In 2025, retailers using buy-online-pickup-in-store strategies saw a 30% increase in in-store traffic and a 25% growth in basket size due to in-store impulse purchases during pickup.

Here’s three things you can do to prepare for the year ahead: 

1. Invest in AI infrastructure and data-driven retail systems

Where can you introduce AI to help improve accuracy, efficiency, customer satisfaction and cost savings? Review both your backend and frontend processes. Trial small-scale AI solutions such as AI agents that can not only deliver customer support and personalized product recommendations, but also help you uncover what's resonating most with your consumers. 

2. Align your marketing and operations with your sustainability goals

As we’ve seen, consumers spend with and remain loyal to sustainable companies. One of the best things you can do for the year ahead is to review your current policies, processes and strategies in the context of your sustainability goals. 

Did you meet your sustainability goals this year? Were there any gaps between what you promised and what you managed to achieve? Set quantifiable, measurable goals for managing greenhouse gas (GHG) emissions, reducing waste and ensuring ethical sourcing and audit your current processes to see how you can adapt and improve for the year ahead.

3. Build adaptable omnichannel strategies

Make sure you’re supporting the customer journey as best as possible with a highly-responsive, flexible omnichannel strategy. 

How well do you currently support consumers’ jump between digital and physical channels as they shop? Does your in-store environment support engagement on your digital channels? For example, can consumers scan QR codes that take them to online product reviews? And can consumers easily move from online to in-store? 

Support your in-store, ecommerce and marketing teams to work under shared KPIs, such as overall customer satisfaction (CSAT), rather than competing for channel-specific growth and revenue. Centralize your data and reduce silos as much as possible to make sure each team has access to a holistic view of the customer and can take action on real-time data. 

Want to find out more about how consumer sentiment will shift in 2026 and what that means for your retail strategy? Find out more about how our AI-powered consumer insights platform can help you deepen your understanding of consumer behavior and sentiment throughout the year ahead.