January 5, 2026
ArturVerkhovetskiy/Depositphotos.com
Will Retail Bifurcation Persist (or Intensify) in 2026?
According to recent Placer.ai data measuring U.S. consumer foot traffic over this most recent holiday season, one word stood tall in the analysis presented: bifurcation.
A deepening and persistent divide appeared within several key data points presented by Placer.ai’s head of content, Shira Petrack, including between product categories shopped, different physical retail settings, and types of merchants. However, overall growth in terms of traffic was observed both in the retail space (up a healthy 2.8% from Nov. 1 through Dec. 24, 2025, versus the year prior) and the dining and restaurant segment (up a more modest, but still notable, 1.6%).
“Bifurcation has been a defining trend of consumer behavior in 2025 and continued to shape shopping patterns during the holiday season. Thrift stores and off-price retailers led the apparel category with traffic up 11.7% and 6.6% (November 1st to December 24th, 2025), respectively, compared to last year’s holiday period,” Petrack wrote.
“Luxury chains and department stores also posted modest gains (+1.8%), while traditional apparel chains saw slight declines (-1.8%) and mid-tier department stores experienced more pronounced traffic drops (-6.2%),” she added.
Retail Bifurcation Shows Itself to Favor Wholesale Clubs, Thrift and Dollar Stores, Open-air Shopping Centers While Mass Merchants and Mid-Market Department Stores Suffer
Other interesting findings brought forth by the report:
- Open-air shopping centers outperformed indoor malls as well as outlet malls: Underscoring the experiential nature and festive atmosphere conjured up by many open-air shopping centers, Petrack noted that visits to these venues were up 1.7% over the holiday season. This comes in contrast to the slighter gains exhibited by traditional mall traffic (up just 0.8%), and the actual losses — perhaps surprisingly, given the current U.S. consumer’s stated fixation on value — of traffic to outlet malls (down 0.8%).
- Concerning the superstore category more specifically: Wholesale clubs led the pack in terms of traffic growth (improving by 7.5% YoY), with dollar stores and discount stores not that far behind (up 6.9% versus 2024’s figures). Mass merchants, however, exhibited much more tepid foot traffic growth of just under 1% (0.9%, to be precise), a perhaps-ominous figure for retailers within that segment.
- Pet stores and services, home improvement, and recreational and sporting goods beat traditional holiday winners such as home furnishings and electronics: Traffic to the latter two categories fell by 0.8% (for home furnishings) and a more notable 1.5% (for electronics stores), while pet stores and services saw a significant uptick in traffic (up 5.5%), as did home improvement retailers (3.4%) and sporting goods retailers (1.1%). The shift was attributed to growth in interest around self-gifting, as well as practical gifting over more “outward-facing” holiday gifting.
“The outperformance of thrift, off-price, wholesale clubs, and self-gifting categories underscores a consumer mindset that is both pragmatic and selective, balancing budget consciousness with targeted willingness to spend,” Petrack suggested.
“Looking ahead to 2026, these patterns suggest that retailers should move beyond one-dimensional value messaging and instead sharpen their core propositions. Formats that clearly articulate why they are ‘worth the trip’ — through pricing power, assortment differentiation, or alignment with everyday consumer priorities — will be best positioned to win share. As bifurcation persists, success will increasingly depend on understanding which consumer needs a brand serves best and doubling down on those strengths, rather than attempting to compete broadly across a squeezed and highly segmented retail landscape,” she concluded.
BrainTrust
Mohamed Amer, PhD
CEO & Strategic Board Advisor, Strategy Doctor
Frank Margolis
Executive Director, Growth Marketing & Business Development, Toshiba Global Commerce Solutions
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Recent Discussions
Discussion Questions
Do you believe that the bifurcation in U.S. consumer interest, and retail traffic outcomes, will persist or intensify in 2026? Why or why not, in your opinion?
Will current traffic trends pertaining to winners and losers in the retail space continue this year? Can you name any notable exceptions to what the data might suggest?
Poll
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This is a continuation of the foot traffic trends we’ve seen, only amplified due to the extra holiday traffic. In that regard, we will continue to see a decrease in traffic to challenged retail formats, while bargain hunters will surge to places that cater to their stretched wallets.
That’s a great point about the volume of bargain hunters, but I also think we need to look at the profit side of the bifurcation. While discount stores get the most ‘feet through the door,’ the luxury segment is still thriving on high margins from a smaller, wealthier group.
Bifurcation will persist and will probably intensify. Why? Because there is nowhere near enough growth – especially in volume terms – for all retailers to see sales expand, and it’s mostly those in the middle that are feeling the squeeze. However, this competitive dynamic is not abnormal – it’s what comes of a mature retail sector. Moreover, it doesn’t automatically mean that no middle-market player can win: there are plenty that are seeing success because they understand how to add value for the consumer. So, in some ways, the real bifurcation is between those with strong propositions and those without.
This exactly. Having a strong proposition with a compelling story, a good merchandising plan, an experience that delivers (executing well on your low prices or high quality or value) for customers is more important than ever. Either you have it, and do it well, or don’t.
The trend of consumers trading down to discount offerings has been going on well before the holiday season. With persistent Inflation, unemployment concerns, and continued negative consumer sentiment, there’s nothing to suggest that this trend will change anytime soon. Recent geopolitical events may also have an exacerbating effect. While the traffic trends may be indicative, a critical missing part of the analysis is in-store conversion rates. Even if store traffic declines, retailers can mitigate the downside by focusing on improving in-store conversion rates and driving average ticket. To sum up: still challenging environment, and little sign of change.
You nailed it, Mark: declining traffic isn’t fatal if you convert browsers into buyers.
That is a great point regarding the ‘missing’ conversion data; high traffic is meaningless if people are just window shopping to escape the cold. However, even with better conversion, mid-tier retailers still face an identity crisis that conversion rates alone can’t fix.
I agree Mohit. Improving conversion rates is not a silver bullet, but it is something that retailers can focus on and influence.
Certainly the perception of bifurcation will persist, as middle class mainstays like macy*s and JCP continue to circle the drain. But the reality? Where do we place on this spectrum something like WalMart increasingly selling to high incomes, or Amazon ….does Amazon even have a targeted income group ?
Yes — I believe the bifurcation we’ve seen in U.S. consumer interest and retail traffic is likely to persist or even intensify in 2026 unless structural policy headwinds — especially the current tariff regime — are significantly reset. Recent Placer.ai data clearly show a split in foot-traffic performance across formats: thrift stores, off-price and wholesale clubs are growing strongly, while mid-tier department and mass-market segments lag behind. Value-oriented formats continue to benefit from pragmatic consumer spending behavior, while more transactional or undifferentiated retailers struggle to hold share. This pattern reflects a broader “two-tier” market — with price/value and premium/luxury segments outperforming the squeezed middle — that has been present throughout 2025 and appears poised to carry forward into the new year.
A big reason this divide could persist or widen is ongoing economic uncertainty tied to tariffs and cost inflation, which ultimately affect both pricing and discretionary spend. Elevated tariff costs are directly passed through to consumer prices, putting added pressure on already value-conscious shoppers and further polarizing demand toward deep-value formats. Unless the Supreme Court ultimately strikes down or significantly modifies the President’s tariff policy — rather than replacing it with an even more onerous structure — these cost pressures will likely compound, reinforcing bifurcated shopping patterns rather than easing them. Put simply, tariff-inflated price points on millions of consumer goods are a real structural headwind that contributes to this split in retail outcomes.
Current traffic trends among winners and losers — strong growth at value-oriented formats and more muted performance for traditional mid-tier players — seem likely to continue unless there is a meaningful shift in either consumer income dynamics or policy. One notable exception is that certain experience-oriented and service-driven segments (like pet services, dining, or specialized home improvement) can buck the trend by offering unique value propositions that transcend pure price competition. But absent a major macroeconomic reset, the bifurcation between “value-seekers” and more affluent or experience-driven shoppers looks set to remain a defining theme for 2026.
Bifurcation will intensify because economic pressure is exposing what should have been obvious: retailers in the middle haven’t earned their existence. This isn’t about income tiers; Walmart selling to affluent customers and Amazon’s format-agnostic dominance prove that. The real divide is between clear and muddled value propositions. Value formats and luxury win because customers know exactly what they’re getting. The middle muddles through on inertia. Most mid-tier players are treating a strategic crisis as a cyclical downturn, waiting for “better conditions” instead of fixing fundamental proposition problems. That’s the path to irrelevance.
Bifurcation will continue to be a natural outcome of the retailing middle not adequately serving the masses well. But it won’t mean trending only toward extreme ends. There is still great opportunity for 1) customers who seek upscale and quality, yet at a good value and 2) customers who seek low prices, yet want access to products often only sold at mid to upper tier retailers. As noted here by others, a compelling proposition is even more important, which can be executed across all retail – whether niche, upscale, low prices, value, or serving the masses.
Retail bifurcation is likely to continue in 2026 because it reflects how customers are making choices today. Many are being careful with spending, which means they are clear about where they save and where they spend. Retailers that offer clear value or meet everyday needs keep getting visits, while those without a strong reason to shop there see traffic soften.
From my experience, this puts pressure on retailers to be honest about who they serve. Trying to cover too many bases usually leads to weak results. Retailers doing better are focused on specific customer needs and execute that well. In 2026, clarity and consistency will matter more than trying to appeal to everyone.
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This is a continuation of the foot traffic trends we’ve seen, only amplified due to the extra holiday traffic. In that regard, we will continue to see a decrease in traffic to challenged retail formats, while bargain hunters will surge to places that cater to their stretched wallets.
That’s a great point about the volume of bargain hunters, but I also think we need to look at the profit side of the bifurcation. While discount stores get the most ‘feet through the door,’ the luxury segment is still thriving on high margins from a smaller, wealthier group.
Bifurcation will persist and will probably intensify. Why? Because there is nowhere near enough growth – especially in volume terms – for all retailers to see sales expand, and it’s mostly those in the middle that are feeling the squeeze. However, this competitive dynamic is not abnormal – it’s what comes of a mature retail sector. Moreover, it doesn’t automatically mean that no middle-market player can win: there are plenty that are seeing success because they understand how to add value for the consumer. So, in some ways, the real bifurcation is between those with strong propositions and those without.
This exactly. Having a strong proposition with a compelling story, a good merchandising plan, an experience that delivers (executing well on your low prices or high quality or value) for customers is more important than ever. Either you have it, and do it well, or don’t.
The trend of consumers trading down to discount offerings has been going on well before the holiday season. With persistent Inflation, unemployment concerns, and continued negative consumer sentiment, there’s nothing to suggest that this trend will change anytime soon. Recent geopolitical events may also have an exacerbating effect. While the traffic trends may be indicative, a critical missing part of the analysis is in-store conversion rates. Even if store traffic declines, retailers can mitigate the downside by focusing on improving in-store conversion rates and driving average ticket. To sum up: still challenging environment, and little sign of change.
You nailed it, Mark: declining traffic isn’t fatal if you convert browsers into buyers.
That is a great point regarding the ‘missing’ conversion data; high traffic is meaningless if people are just window shopping to escape the cold. However, even with better conversion, mid-tier retailers still face an identity crisis that conversion rates alone can’t fix.
I agree Mohit. Improving conversion rates is not a silver bullet, but it is something that retailers can focus on and influence.
Certainly the perception of bifurcation will persist, as middle class mainstays like macy*s and JCP continue to circle the drain. But the reality? Where do we place on this spectrum something like WalMart increasingly selling to high incomes, or Amazon ….does Amazon even have a targeted income group ?
Yes — I believe the bifurcation we’ve seen in U.S. consumer interest and retail traffic is likely to persist or even intensify in 2026 unless structural policy headwinds — especially the current tariff regime — are significantly reset. Recent Placer.ai data clearly show a split in foot-traffic performance across formats: thrift stores, off-price and wholesale clubs are growing strongly, while mid-tier department and mass-market segments lag behind. Value-oriented formats continue to benefit from pragmatic consumer spending behavior, while more transactional or undifferentiated retailers struggle to hold share. This pattern reflects a broader “two-tier” market — with price/value and premium/luxury segments outperforming the squeezed middle — that has been present throughout 2025 and appears poised to carry forward into the new year.
A big reason this divide could persist or widen is ongoing economic uncertainty tied to tariffs and cost inflation, which ultimately affect both pricing and discretionary spend. Elevated tariff costs are directly passed through to consumer prices, putting added pressure on already value-conscious shoppers and further polarizing demand toward deep-value formats. Unless the Supreme Court ultimately strikes down or significantly modifies the President’s tariff policy — rather than replacing it with an even more onerous structure — these cost pressures will likely compound, reinforcing bifurcated shopping patterns rather than easing them. Put simply, tariff-inflated price points on millions of consumer goods are a real structural headwind that contributes to this split in retail outcomes.
Current traffic trends among winners and losers — strong growth at value-oriented formats and more muted performance for traditional mid-tier players — seem likely to continue unless there is a meaningful shift in either consumer income dynamics or policy. One notable exception is that certain experience-oriented and service-driven segments (like pet services, dining, or specialized home improvement) can buck the trend by offering unique value propositions that transcend pure price competition. But absent a major macroeconomic reset, the bifurcation between “value-seekers” and more affluent or experience-driven shoppers looks set to remain a defining theme for 2026.
Bifurcation will intensify because economic pressure is exposing what should have been obvious: retailers in the middle haven’t earned their existence. This isn’t about income tiers; Walmart selling to affluent customers and Amazon’s format-agnostic dominance prove that. The real divide is between clear and muddled value propositions. Value formats and luxury win because customers know exactly what they’re getting. The middle muddles through on inertia. Most mid-tier players are treating a strategic crisis as a cyclical downturn, waiting for “better conditions” instead of fixing fundamental proposition problems. That’s the path to irrelevance.
Bifurcation will continue to be a natural outcome of the retailing middle not adequately serving the masses well. But it won’t mean trending only toward extreme ends. There is still great opportunity for 1) customers who seek upscale and quality, yet at a good value and 2) customers who seek low prices, yet want access to products often only sold at mid to upper tier retailers. As noted here by others, a compelling proposition is even more important, which can be executed across all retail – whether niche, upscale, low prices, value, or serving the masses.
Retail bifurcation is likely to continue in 2026 because it reflects how customers are making choices today. Many are being careful with spending, which means they are clear about where they save and where they spend. Retailers that offer clear value or meet everyday needs keep getting visits, while those without a strong reason to shop there see traffic soften.
From my experience, this puts pressure on retailers to be honest about who they serve. Trying to cover too many bases usually leads to weak results. Retailers doing better are focused on specific customer needs and execute that well. In 2026, clarity and consistency will matter more than trying to appeal to everyone.