Retail Sales in US Exceed Expectations, Boosted by Online Shopping

U.S. retail sales posted stronger-than-expected gains in August and September 2025, signaling continued consumer resilience amid economic headwinds. According to the Commerce Department's latest monthly report, retail sales rose 0.6% in August and 0.4% in September, outpacing analyst forecasts and reversing declines seen earlier in the year. The total sales for August reached $732 billion, with September climbing to $714.4 billion, reflecting a notable recovery in consumer activity.

Online Shopping Fuels Growth

A key driver of this surge was the significant increase in online shopping. Nonstore retailers, which include e-commerce platforms, saw sales jump 2% in August and 10.1% compared to the previous year, according to official Census Bureau data. This trend was echoed in industry analyses, with MLQ.ai and MishTalk highlighting that online sales outpaced other retail categories and contributed substantially to the overall growth. The back-to-school season further boosted spending, particularly in clothing and electronics, as consumers sought deals and convenience online.

Consumer Sentiment and Tariff Impact

Despite the positive sales figures, underlying consumer sentiment remains cautious. The AlixPartners 2025 U.S. Retail Holiday Outlook found that while high-income households are driving increased spending, most consumers are prioritizing value and seeking promotions to offset inflation and tariff-related price hikes. Retailers have largely absorbed tariff costs to avoid passing them directly to shoppers, but executives from major chains like Walmart and Macy’s warn that future inventory replenishment may lead to higher prices. The report also notes a widening gap between higher- and lower-income shoppers, with the latter group more likely to reduce spending.

Outlook for the Holiday Season

Looking ahead, industry experts anticipate a challenging holiday season for retailers. AlixPartners projects a modest 3% to 5% growth in holiday sales, a slowdown from previous years, as inflation and economic uncertainty weigh on household budgets. The shift toward online shopping is expected to continue, with 67% of consumers planning to make at least 30% of their purchases online. Retailers are advised to focus on value, personalized promotions, and inventory management to capture cautious consumer demand.

Overall, the latest data underscores the adaptability of U.S. shoppers and the growing dominance of online retail, even as economic pressures persist. Retailers face a complex landscape, balancing price sensitivity, evolving consumer behaviors, and the ongoing impact of tariffs and inflation.