January’s Retail Numbers Tell a Familiar Story, With One Complication

A Delayed Snapshot

The Commerce Department’s January retail sales report, released March 6, arrived 17 days after its original February 17 schedule because of the 43-day government shutdown that ended last fall. By the time the numbers became public, they were measuring consumer behavior from more than four months ago, in a macro environment that has since shifted in several meaningful ways. Wells Fargo economists led by Tim Quinlan flagged this in emailed commentary on the release date, noting the figures were “even more backward looking than usual” given how long the government has been catching up on delayed data releases. Quinlan added that spending trends in February look weaker than January’s headline suggests.

With that context established, the core results are broadly positive. Retail Dive’s tracked segments, which exclude food, gasoline, and automotive, grew 5.7% year over year to $243.5 billion, per the Commerce Department’s advance estimates. Apparel climbed 4% to $20.2 billion, sporting goods and hobby stores rose 2.8% to $6.9 billion, general merchandise grew 3.2% to $71.9 billion, and electronics increased 1.6% to $7.2 billion.

Digital Channels Extend Their Lead

Nonstore retailers led all tracked segments with 8.6% growth and $127.2 billion in sales on Retail Dive’s unadjusted basis. The Census Bureau’s seasonally adjusted figures place nonstore growth at 10.9% year over year, a difference that reflects methodology, not disagreement between the two measures. Nonstore retailers have outpaced overall retail growth in every month the Census Bureau has reported since early 2024, per its advance monthly retail trade data.

The Census Bureau’s Q3 2025 e-commerce report, the most recent quarterly data available, showed e-commerce reaching 16.4% of total retail sales. Severe winter weather in January pushed more consumers online, with nonstore retailers posting a 1.9% gain from December even as total retail fell 0.2% month over month.

GlobalData Managing Director Neil Saunders put the underlying performance in perspective, noting in emailed commentary that core retail volume growth of 1.6% reflects “a shopper that’s increasingly selective and gravitating toward value.” He added that the consumer is showing up despite January being a traditionally slow month when many households are still absorbing holiday spending. That observation aligns with what several major retailers reported in recent quarters, with consumers concentrating spending in categories and channels where they perceive price-to-value favorability and pulling back elsewhere.

The Home Category’s Prolonged Slide

The furniture and home furnishings category was the only major segment in outright year-over-year decline, falling 3.5% to $10.1 billion on Retail Dive’s tracked Commerce Department data. Bankrate Principal Analyst Ted Rossman called it the “second-largest drop of any major category measured” in emailed commentary on the release, attributing the softness to price-conscious homeowners delaying upgrades amid concerns about tariffs and inflation. The furniture and home furnishings sector declined 0.82% across all of 2025 compared with 2024, per the CNBC/National Retail Federation Retail Monitor, making January’s reading a continuation of a pressure that predates this report by more than a year.

The National Retail Federation, which calculates retail sales using credit and debit card data, found furniture and home furnishing sales up 2.39% year over year in January, a divergence from the Census Bureau figure that reflects the two approaches’ different methodologies. The NRF’s figure is based on transactions, not survey responses, which accounts for much of the gap.

The housing market is the structural driver behind much of this pressure. Existing-home sales fell 8.4% in January to a seasonally adjusted annual rate of 3.91 million units, according to the National Association of Realtors, and full-year 2025 marked the lowest annual home sales total since 1995, per Realtor.com. Furniture demand tracks closely with home transaction volume, since purchases of major items often follow moves. The Smith Leonard Furniture Insights Report, released in early March, found residential furniture orders finished 2025 essentially flat with 2024 levels and noted that any housing market upturn will take time to translate into increased category demand, even as affordability metrics improve.

Some leading indicators point toward stabilization. The average 30-year fixed mortgage rate stood at 6.10% in January, down from 6.96% a year earlier, according to Freddie Mac. Building material and garden equipment stores grew 4.3% year over year in January per Haver Analytics, marking three consecutive months of gains. Bankrate’s Rossman noted in his commentary that those two data points, taken together, could signal a coming increase in home activity, though he stopped short of predicting when that demand would flow into furnishings purchases.

Tariff Uncertainty as an Operating Condition

The tariff environment complicates any near-term read on the home category. Most U.S. furniture imports originate in China and Vietnam, and the sector operated under a patchwork of duties throughout 2025, including tariffs on Chinese goods that reached as high as 145% before the Supreme Court struck down the reciprocal tariffs imposed under the International Emergency Economic Powers Act. Those were replaced with temporary duties generally running 10% to 15%, per CNBC’s February 2026 reporting. Separately, a 25% furniture-specific duty that had been scheduled to rise to 50% in January was pushed back to 2027 at the end of December, also per that reporting. The Bureau of Labor Statistics reported a 4.6% increase in living room, kitchen, and dining room furniture prices in November year over year, well above the 2.7% overall CPI increase in the same period.

At least 10 furniture businesses filed for bankruptcy in the past year, according to a CNBC review of federal filings, with smaller operators facing the most acute pressure given their limited ability to absorb cost volatility. Wayfair, RH, and Williams-Sonoma each reported revenue growth over the same period, with Wayfair up 5.1% in fiscal 2025 with steady gross margins, RH up nearly 10% in the nine months ended November 1 as margins expanded, and Williams-Sonoma up roughly 4% in the 39 weeks ended November 2.

Peter Theran, CEO of the Home Furnishings Association, told CNBC in February that the sector’s central challenge is not any specific duty level but the policy environment’s unpredictability itself, the inability to make alternative plans or investment decisions when the cost structure can shift without warning. Wayfair CEO Niraj Shah described the forward outlook for big and bulky furniture as “as unpredictable as any point in the past four years” during the company’s February earnings call, citing uncertainty over inflation, global trade policy, and interest rates.

Department Stores and the Distribution Shift

Department stores posted the most dramatic year-over-year decline in the January report, down nearly 10% on Retail Dive’s tracked data. Haver Analytics confirmed an 8.3% year-over-year drop and a 6.0% month-over-month decline, the sharpest in a series of three consecutive monthly falls. Saks Global, which includes Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman, filed for bankruptcy in mid-January. Macy’s is executing a multi-year closure plan that will ultimately shutter 150 locations and has identified another 14 stores to close as part of that process.

Retail Dive’s analysis of the department store format, published in January 2026, found that performance is diverging sharply by operator and strategy, with Macy’s go-forward stores showing improving comparable sales while other players struggle with execution and consumer relevance. CPG brands selling through multiple department store accounts are likely seeing that split in their own sell-through data, with performance varying considerably depending on which operator holds the shelf.

What February and March Will Reveal

The month-over-month picture, total retail down 0.2% from December per the Commerce Department, was partly a function of motor vehicle sales softness and winter weather disruption to physical store traffic. Excluding autos and gas stations, retail sales rose 0.3% from December. E-commerce bucked that monthly trend entirely, growing 1.9% from December as weather kept consumers away from physical stores.

The February data will be the more informative read for near-term planning. Quinlan’s March 6 commentary noted that February spending looks weaker, and severe winter weather extended across many parts of the country through that month. Nationwide senior economist Ben Ayers, in commentary issued on the same date, noted that federal tax refunds are running nearly 20% higher than in 2025, which he expects to support consumer spending in the spring. Rising gasoline prices represent a countervailing pressure: the national average climbed roughly 25 cents during the first week of March compared with the February average, per Quinlan’s note, and fuel costs tend to compress discretionary spending quickly when they move sharply.

Conversations On Retail

Conversations On Retail is a gathering place and resource center for retail and CPG executives, built to make it easier to stay current, discover the technologies and solutions shaping the industry, and connect with the people driving it forward.

We publish news, views, and reviews from staff editors, contributing experts, and trusted partners. Some articles are developed internally, while others are submitted by industry contributors or adapted from interviews and recorded conversations with industry leaders.