From Cautious Spenders to Loyal Customers: 3 Keys to Retail Success in 2026

Whilst consumer confidence remains negative, January saw a slight increase for the second month in a row, indicating a slight improvement in sentiment as we head into 2026. This slight improvement, however, is more indicative of economic resilience rather than a shift to optimism for consumers.   

Reviewing trends amongst the varying age groups, Gen Z have the highest confidence, demonstrating a dichotomy with the older age groups who continue to have negative sentiment towards the current economic environment.   

Faced with a continued rise in food prices, increased utility bills and high mortgage rates, consumers are continuing to be cautious. Consumers who are looking to reduce spending on luxury items, delay big-ticket purchases and hunt for bargains will dominate the retail landscape in 2026.   

Low consumer confidence ultimately leads to slower growth within the retail sector; how can you buck these trends for success in 2026? 

1. Growth will be driven by key categories 

The impact of the so-called ‘lipstick effect’ is still going strong.  Consumers are focused on health, wellbeing and beauty, with growth most significant amongst gen Z. Even during times of reduced spending on luxury and non-essential items, consumers are willing to spend money on cosmetics and skincare. Beauty retailers can capitalise on these trends by aligning their messaging to ‘essential luxury’, creating FOMO and focusing on creatives that promote the self-care narrative. 

And if you’re not in the beauty vertical?  Many of the principles remain the same, consumers are looking for small, inexpensive ways to treat themselves, so building the customer experience with enhanced packaging, loyalty programmes and visual branding will enhance your standing with cautious spenders. 

2. Capitalise on consumer priorities 

Promotions, discounts and loyalty schemes will be key to success in 2026. Consumers are price-conscious and retailers need to react to this where they can.  Ensuring your price points are competitive and that you are highlighting this in your creative messaging is vital in order to attract new customers and retain existing ones. Make use of loyalty pricing and sales annotations within your shopping ads to boost CTR and ROI. 

Sustainability continues to be a deciding factor in consumer decisions, with the expectation that pre-loved retail will continue to grow throughout 2026. The rise of the circular economy is predicted to be a major economic driver over the next decade; this not only benefits the environment but can be a major factor in reducing retailer’s costs and creating new revenue streams. Consumers are generally willing to pay a premium for sustainable choices, so make sure your messaging makes clear any key initiatives (e.g. recyclable packaging, repair/replace schemes) and your sustainability credentials.  

Consumers are increasingly making use of chatbots and AI across their shopping journey, either to source new products and brands or to find the best deal.  Retailers need to ensure they are ready for this shift, looking across their touch points to enhance the consumer experience.  

Make sure you are visible within AI Overviews by enhancing your product information within your feed and product detail pages. Not sure on how to do this?  Join our webinar on 24th February to find out more. 

3. Maximise your exposure 

Where growth is sluggish, you need to ensure you are focusing in the right place. Interrogate your customer data, identifying the characteristics of your high-value customer segments. Review the customer experience, ensuring a smooth path to purchase amongst your high-value segments, as well as attracting new customers and broadening your customer base. Look to use loyalty schemes and special offers for returning customers to drive up lifetime value. 

Where possible, link up your omni-channel experience, ensuring a smooth transition between in-store and online. The use of in-store technology is rising, allowing users an online-experience in store, particularly around increasing the stock available for consideration, ease of ordering and increasing the information available for in-store products. Consumers want a seamless journey, whether that is in physical stores or online – ensuring consistent information by integrating digital touchpoints within stores will help attract new customers and drive conversions. 

Finally, in a time of low consumer confidence, it is key that retailers look to minimise their costs and streamline their processes. Using Productcaster CSS, you can reduce your shopping spend on Google by up to 20%, when compared to using Google Shopping. We have a suite of tools that increase your product visibility across the SERP, save you hours in manual feed manipulations and drive incremental improvements to ROI across your entire product catalogue.  

Get in touch today to book at demo and see how Productcaster can help make 2026 a success.