The National Retail Federation (NRF) has spoken, and the headline is loud: U.S. retail sales are projected to hit a staggering $5.42 trillion in 2025. But let’s not get swept away by the numbers— far from being a tour de force, this forecast reflects a struggle for survival amid growing uncertainty. Behind the glossy projection lies a fragile consumer base, wavering confidence, and an industry grappling with seismic shifts in behavior, technology, and economics.
2025 retail trends: Momentum meets uncertainty
Economic indicators paint a mixed picture for 2025. On one hand, low unemployment rates and real wage gains have bolstered consumer spending power, driving momentum in the retail sector. On the other hand, significant policy uncertainty continues to weigh on consumer and business confidence. Yet, retailers remain steadfast in their mission to serve customers, regardless of external pressures.
“Overall, the economy has shown continued momentum so far in 2025 —bolstered by low unemployment and real wage gains— however, significant policy uncertainty is weighing on consumer and business confidence,” NRF President and CEO Matthew Shay, explained.
The projected growth rate of 2.7% to 3.7% over 2024 aligns with the pre-pandemic average annual sales growth of 3.6%, signaling a return to stability after years of disruption. For context, retail sales in 2024 grew by 3.6% to $5.29 trillion.
Online leads the charge
The real star of retail’s growth story continues to be non-store and online sales channels. These are expected to grow between 7% and 9% year-over-year in 2025, reaching between $1.57 trillion and $1.6 trillion—a significant leap from the $1.47 trillion recorded in 2024. This trend reflects the ongoing shift in consumer behavior toward digital shopping experiences, a movement accelerated by the pandemic but now firmly embedded in everyday life.
Retailers who have embraced omnichannel strategies are reaping the benefits of this shift, as consumers increasingly demand seamless integration between physical stores and digital platforms. The convenience of online shopping coupled with innovations like same-day delivery and personalized recommendations has made e-commerce indispensable to modern retail.
Consumer behavior and sentiment in 2025
The NRF’s forecast highlights more than just numbers. It signals a broader transformation within retail as brands adapt to an evolving consumer landscape. Today’s shoppers are prioritizing essentials over discretionary spending. This trend is consistent across income levels, with younger generations, particularly Gen Z, navigating greater financial strain while still demonstrating a strong commitment to eco-friendly practices. Millennials and Gen Z are leading the charge on sustainability, with 58% willing to pay more for sustainable products—a signal that values-driven consumption is no longer niche.
This nuanced behavior is mirrored in declining U.S. consumer sentiment. The University of Michigan’s Index, dropped to 64.7 in February and was revised down further to 57 in March 2025—the lowest level since November 2022. It marks the third consecutive monthly decline, reflecting growing concern about personal finances, business conditions, inflation, and unemployment. Most strikingly, two-thirds of consumers now expect unemployment to rise within the next year—the highest proportion recorded since 2009. Despite stable wage growth and employment figures, economic policy uncertainty continues to cloud the outlook, reinforcing the reality that the retail forecast is not just about topline growth, but about navigating a deeply complex consumer psyche.
The takeaway
While economic uncertainty remains a challenge, the NRF’s forecast demonstrates that retail is evolving at lightning speed to meet new realities head-on. From leveraging digital channels to embracing niche branding strategies, retailers are proving their ability to adapt and innovate even under pressure.
In short, retail in 2025 is focusing on navigating volatility through agility, creativity, and a sharp understanding of what today’s consumers truly value. The $5.42 trillion headline might make Wall Street cheer, but it’s the fine print—adaptive strategies, digital dominance, and cultural relevance—that will shape what comes next.
