US Retail Sector NAICS 44, 45

May 19, 2026 - April Retail Sales Show Consumer Caution

• US retail sales continued rising in April 2026, with core retail sales increasing 0.5% monthly and 4.9% year over year, but inflation and higher fuel costs are increasingly pressuring consumer spending patterns, according to a research report from Marcus & Millichap. Consumers shifted more spending toward necessities such as groceries and restaurants, while discretionary categories including apparel, electronics, and furniture saw declines. The report suggests many households are becoming more price-sensitive as inflation outpaces wage growth and tax refund spending fades quickly. Online purchases reached a record 24.7% share of core retail sales, reflecting consumers’ growing focus on convenience and discounts. For retailers, the environment may favor value-oriented grocers, off-price chains, and quick-service restaurants, while discretionary and traditional brick-and-mortar retailers could face softer traffic and continued pressure to optimize store footprints, expand selectively, and rely more heavily on promotions to maintain sales momentum.
• Retailers are facing growing uncertainty around tariff refunds after the US Supreme Court struck down Trump-era tariffs, creating operational, pricing, and customer-relations challenges across the US retail sector, according to an NPR report. While businesses can now apply for tariff refunds, many retailers may struggle to determine how much tariff cost was ultimately passed on to consumers because expenses were absorbed throughout complex supply chains. Some companies are already outlining responses: Costco said it may pass tariff recovery savings to shoppers through lower prices, while apparel retailer Princess Awesome is considering issuing $10 store credits to customers who contributed to its tariff “tip jar.” For retailers, the development could support selective price reductions and improved margins, but it may also increase legal and reputational risks as consumers seek a share of refunded tariff costs.

• The US retail industry showed signs of contraction in April 2026 even as the broader services economy continued expanding, according to the ISM Services PMI report. Retail Trade was one of only three industries reporting contraction during the month, reflecting softer consumer demand and mounting cost pressures. Retailers continued facing elevated fuel, transportation, and supplier costs, while inflation and economic uncertainty made consumers more selective with discretionary purchases. The report also found that retail businesses reported inventory levels that were “too high” relative to current business needs, signaling slower sales activity and potential overstock concerns in some categories. Competitive pricing pressures also intensified as retailers worked to move inventory and protect market share.
• The US retail sector is facing a more cautious consumer spending environment as confidence measures remain weak despite modest economic stabilization. The Conference Board’s Consumer Confidence Index rose slightly to 92.8 in April 2026 from 92.2 in March, though consumers continued expressing concerns about inflation and future economic conditions. Meanwhile, the University of Michigan’s Consumer Sentiment Index fell to 48.2 in May 2026, remaining near historic lows as households reported ongoing financial anxiety. For retailers, weaker sentiment may lead consumers to prioritize essential purchases, seek greater value, and delay discretionary spending. Retailers could face softer demand in higher-ticket and nonessential categories while relying more heavily on promotions, loyalty programs, inventory discipline, and pricing strategies to maintain traffic and protect margins in a competitive environment.