The retail sector is entering the 2026 holiday season with a curious blend of guarded optimism and strategic restraint. According to the latest Modern Retail+ Research, the mood among marketers has shifted significantly from the conservative outlooks that defined the 2025 holiday period. While the macroeconomic environment remains fraught with inflationary pressures and the unique volatility of an election year, the data reveals a surprisingly bullish sentiment regarding revenue growth.
The State of Holiday Expectations: A Shift in Sentiment
For retailers and brands, the outlook for the 2026 holiday season is markedly more positive than the previous year. Data from the recent survey indicates that 76% of respondents expect their holiday revenue to grow between 1% and 31% or more compared to 2025. Perhaps even more telling is the lack of pessimism: zero percent of respondents anticipate a revenue decline of more than 11% compared to last year.
This optimism, however, is not blind. It exists in a tense equilibrium with the realities of a "soft" economy. While the numbers on paper suggest growth, the executives navigating these strategies are acutely aware that the path to profitability is narrower than ever. The primary tension lies in the divide between projected revenue gains and the rising operational costs that threaten to erode margins.
The Economic Backdrop: Inflation and the Election Factor
Despite the upbeat revenue projections, the internal consensus among industry leaders is that the consumer landscape is increasingly precarious. Inflationary pressures—rising fuel, logistics, and production costs—are forcing brands to move away from the "growth at all costs" mentality that defined the last decade.
Ari Bloom, founder and CEO of the brand incubator A-Frame Brands, describes the current environment as "brutal." According to Bloom, the combination of high costs and a weakening economy creates a significant hurdle for smaller firms. "The cost issue is going to be really hard for a lot of smaller companies to absorb with heavy discounting," he notes.
Furthermore, the 2026 political calendar adds a layer of complexity. Election years notoriously influence consumer sentiment, often amplifying discussions around the cost of living and affordability. As Bloom points out, the "affordability crisis" narrative dominates the national discourse, which in turn shapes how consumers perceive the value of a dollar. When shoppers feel the squeeze of inflation, their willingness to engage in discretionary spending is heavily tempered by their perception of the broader economic environment.
The Consumer Shift: From Mass Consumption to Intentional Living
Laura Brodie, Chief Growth Officer at supplement company Ritual, offers a more nuanced view of consumer resilience. Despite low historical confidence levels, she remains bullish, albeit with a focus on where, not just how much, money is being spent.
"Spending is resilient," Brodie observes. "It’s less about what happens in holiday spending growth year-over-year, which will probably be modest. Where the spend actually gets allocated will be interesting to see."
Brodie identifies a significant cultural pivot: consumers are moving away from mass-purchased goods in favor of items that feel personal, mission-driven, or experiential. This shift towards "intentionality" means that brands with a distinct point of view—particularly in the health and wellness sectors—have a prime opportunity to capture market share. The modern consumer is less likely to be swayed by a generic sale and more likely to be attracted to a brand that aligns with their personal values or offers an experience rather than just a commodity.
Strategic Pivot: The Death of the "Deep Discount" Era?
Perhaps the most striking finding in the 2026 research is the reluctance to engage in the "race to the bottom" regarding pricing. Eighty-one percent of brands and retailers surveyed do not plan to offer deeper holiday discounts than they did in 2025.
This is a calculated retreat. If costs are higher, cutting prices deeply is a fast track to insolvency. Instead, brands are pivoting to promotional strategies that protect margins while still providing "added value" to the customer.
The Rise of Bundling and "Gift-with-Purchase"
The strategy for 2026 is increasingly centered on bundles and gift-with-purchase (GWP) incentives. Bloom explains the logic: "We’ve been talking a lot about bundling versus discounting because holiday is a time when people will buy multiples. They might buy the same gift for three different people, and they may buy it for themselves to try on top of it."
Bundling serves a dual purpose: it increases the average order value (AOV) without requiring a direct price cut on the individual product, and it encourages the discovery of new items. GWP, particularly when it involves trial sizes, is an equally effective tool for acquisition. By including a "toss-in" item, brands can turn a gift-giver into a repeat customer.
Leveraging Existing Audiences
Ritual’s strategy emphasizes the importance of the existing customer base. "The cost of acquisition is high during the holiday," says Brodie. "Being able to tap an existing audience can be cost-effective."
Ritual has leaned into partnerships with "like-minded" brands, such as skincare company Osea, to swap gift-with-purchase items. This cross-pollination of customer bases allows brands to provide value without the heavy financial burden of a standalone discount campaign. It creates a sense of exclusivity and curation that resonates with the modern, intentional shopper.
Implications for the Future: Personalization as the New Discount
As the industry looks toward the conclusion of 2026, the consensus among experts is that the "blanket discount" model is becoming obsolete. The future of retail marketing lies in data-driven personalization.
Susan Grossman, EVP of consumer acquisition and engagement services at Mastercard, argues that the most sustainable approach is to redefine "value." "The more sustainable approach is to think about value more broadly," she suggests. "That could be a personalized offer, exclusive access, relevant recommendations, a seamless experience, or an incentive timed to the right moment."
The ability to offer this level of personalization, however, requires high-quality data and a sophisticated understanding of consumer intent. "When brands understand intent, they can be more precise with when, where, and how they use incentives," Grossman adds. "Instead of blanket discounting, they can create value for the consumers who need an extra nudge while continuing to build long-term loyalty."
Conclusion: The Path Ahead
The 2026 holiday season represents a maturation of the retail market. Gone are the days of relying solely on steep discounts to drive volume. In their place, we see a focus on:
- Operational Efficiency: Managing costs to survive an inflationary environment.
- Intentionality: Aligning products with the cultural shift toward meaningful, personal, and mission-driven gifting.
- Loyalty-Based Marketing: Using bundles and cross-brand partnerships to extract more value from existing customers rather than overspending on new ones.
- Smart Personalization: Moving away from the "mass-market" approach in favor of targeted incentives that respect the consumer’s intelligence and specific needs.
While the "brutal" economic realities cited by leaders like Ari Bloom remain a threat, the strategies outlined by companies like Ritual and the insights from Mastercard suggest a industry that is learning to do more with less. By focusing on the customer experience and long-term loyalty rather than immediate, low-margin revenue, brands are positioning themselves to survive the economic soft spots and emerge with a more resilient business model. The 2026 holiday season will likely be defined not by who offered the biggest discount, but by who best understood their customer in a time of uncertainty.
