Despite years of predictions that online shopping would dominate the holidays, new data suggests physical retail remains firmly in control. According to preliminary findings from Visa, U.S. holiday retail spending rose 4.2% year over year, and nearly three-quarters of that spending still happened inside physical stores.
The headline number is striking: 73% of holiday payment volume occurred in-store, compared with 27% online. For retailers navigating a post-pandemic, AI-influenced landscape, the message is clear—brick-and-mortar isn’t fading away. It’s evolving.
What the Data Covers—and What It Doesn’t
The report, released by Visa Consulting & Analytics, tracked retail activity over the first seven weeks of the holiday season starting Nov. 1. It draws from a subset of Visa’s U.S. payments network data and survey-based estimates for non-card payment methods such as cash and checks.
Importantly, the data excludes auto dealers, gas stations, and restaurants, and it is not adjusted for inflation. That makes the 4.2% growth figure a measure of nominal spending momentum rather than real purchasing power—but still a meaningful signal of consumer engagement.
Online Sales Grow Faster, but Not Bigger
E-commerce continues to gain ground, with online retail spending up 7.8% year over year. Early-season promotions and convenience were the primary drivers, reinforcing a familiar pattern: digital channels excel at speed and price discovery, while stores remain central to overall volume.
From a retail technology perspective, this split underscores why omnichannel execution is no longer optional. Online growth is outpacing in-store growth, but stores still anchor the business.
Category Performance Reveals Where Consumers Are Spending
Electronics emerged as the top-performing category, with sales rising 5.8%. Demand for high-performance devices—particularly those positioned around AI capabilities—helped fuel the increase. This aligns with broader industry trends, where consumers are prioritizing upgrades that promise tangible productivity or entertainment gains.
Clothing and accessories followed closely, posting 5.3% year-over-year growth, a sign that discretionary spending hasn’t disappeared despite inflation pressures. General merchandise stores saw a 3.7% lift, benefiting from consumers’ preference for one-stop shopping.
Not every category shared the upside. Furniture and home furnishings edged up just 0.8%, while building materials and garden equipment declined 1.0%, suggesting households are more selective about big-ticket or project-based purchases.
AI’s Quiet Influence on Holiday Shopping
Visa’s chief economist Wayne Best pointed to artificial intelligence as a subtle but significant force this season. In his view, AI is reshaping how shoppers discover products, compare prices, and engage with promotions—creating more informed and intentional consumers.
In practical terms, this means shoppers are spending more time researching and less time browsing blindly. For retailers, it raises the bar on pricing transparency, product data quality, and personalized offers across both digital and physical channels.
A Global, Not Just American, Trend
The holiday spending momentum wasn’t confined to the United States. Visa’s data shows seasonal growth across multiple international markets, including Australia (up 5.0%), Canada (up 4.4%), South Africa (up 7.9%), and the U.K. (up 3.6%).
This broader lift suggests that the balance between in-store strength and online acceleration is playing out globally, not just in one market.
What This Means for Retail Strategy in 2026
Three takeaways stand out:
1.Physical stores remain the backbone of retail revenue, even as digital channels grow faster.
2.Technology-driven categories outperform, especially where AI narratives align with real consumer benefits.
3.Smarter consumers demand better retail systems, pushing merchants to integrate AI, data, and seamless omnichannel experiences.
For retailers and retail tech providers alike, the lesson is not to choose between digital and physical—but to make them work together more intelligently.
This article references data and reporting from[ChainStoreAge]