While the K-shaped economy has only recently become an economic buzzword, younger consumers have long been aware of the issue of income inequality. MaryLeigh Bliss, chief content officer at Gen Z and millennial market research firm YPulse, shared her insights on younger shoppers and their spending patterns during the NRF panel. Gen Z refers to people born between 1997 and 2012 (ages 14 to 29), while millennials were born between 1981 and 1996 (ages 30 to 45), according to the Pew Research Center. These past few years have begun to shape Gen Z’s shopping behaviors, said Bliss, and that mentality will stay with them as they grow up. According to YPulse data, when asked about their financial outlook, most Gen Z respondents consistently think a recession is imminent. More than half don’t expect the economy to improve in 2026. “For years, they have been tense and on the brink of financial ruin,” she said. “This generation has truly drawn At Retail’s Big Show, Mark Mathews, NRF’s chief economist and executive director of research, led a press briefing about the consum- er outlook for 2026, joined by retail experts and data specialists. The NRF had good news to share at the start of the year, with 2025 holiday sales up around 4 percent, in line with its annual forecast. However, these positive numbers, which are not adjusted for inflation, don’t necessarily mean everyone is spending more money nor were they indicative of consumers’ year-round behavior or a sign of things to come in 2026. Peter Volberding, senior director at Pyxis, Bain & Company’s alter- native data and analytics arm, shared some insight into the economy and consumer spending during the press panel. He discussed what economists refer to as a K-shaped economy, the letter used to illustrate an uneven economic recovery—one side goes up (the wealthy) and one side goes down (lower-income consumers). When one looks at who was spending money and where in 2025, there’s a clear divide by income level. “The top 50 percent [of earners by income percentile] increased their spending in 2025. The bottom 50 percent, across all categories, decreased [their spending]. It’s really the top 10 percentile that’s driving most of the growth,” Volberding said. This trend is expected to continue in 2026. The NRF is forecasting retail sales for the year will be up 4 percent, with spending bifurcated between higher- and lower-income consumers. While all groups spent more on staple goods in 2025, only the top 30 percent spent more on discretionary items. “You really start to see that even though people are forced to pay for groceries and utilities, when you look at discretionary spending, that’s much more limited,” Volberding said. The top 10 percent of consumers drove 80 percent of all discre- tionary spending in 2025, he said. Volberding also looked at where these different groups were spending their extra money. The top 30 percent or so were driving growth in restaurant and apparel sales, while the top 15 percent were driving sales in travel, leisure, and experiences. “At the very, very top, the 5 percent was [driving] luxury. Watches and jewelry, as well as department stores,” he said. “That’s the most indicative of [a K-shaped] economy.” 1 A rise in spending does not mean all is well. THE STATE OF DIAMONDS JEWELRY DESIGN COLORED STONES MaryLeigh Bliss is the chief content officer at YPulse, a market research firm that focuses on Gen Z and millennial consumers. The National Retail Federation held its annual trade show, Retail’s Big Show, at the Javits Center in New York City in January. 12 STATE OF THE MAJORS 2026 Continued on page 14 2 Financial instability has altered the definition of luxury for Gen Z. RETAIL
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