eCommerce Emerges as Bright Spot Amid Overall Retail Sales Dip

Consumer spending cooled slightly in January, although strong growth in digital retail channels suggests that the broader trajectory of household consumption remains intact.

Advance estimates released Friday (March 6) by the U.S. Census Bureau showed that retail and food services sales totaled $733.5 billion in January, representing a 0.2% decline from December. Even with the pullback, spending remained 3.2% higher than a year earlier, indicating that the underlying direction of consumer demand continues to move upward.

Within those figures, the most consistent strength came from digital commerce. Nonstore retailers, a category that includes eCommerce merchants, recorded a 10.9% increase compared with January 2025 and rose 1.9% from December, underscoring the continued expansion of online retail channels even as overall monthly sales edged lower.

The January decline came after the peak holiday shopping season and may reflect a post-holiday adjustment rather than a shift in consumer behavior.

Retail trade sales fell 0.2% month over month but remained 3% higher than the same month last year. Over a broader period, the data showed continued expansion, as retail and food services sales for the three months from November through January increased 2.9% compared with the same period a year earlier.

The latest data indicates that consumers are still spending, although their purchasing patterns vary across retail categories and channels.

Mixed Results Across Retail Categories

Category-level data showed that consumer demand remains uneven across retail.

Food services and drinking places also showed steady activity. Sales increased 3.9% compared with January 2025, although they slipped 0.2% from December, suggesting a modest cooling in dining and hospitality spending following the holiday period.

Several categories tied to everyday household purchases continued to show stable demand. Food and beverage stores posted a 1.4% increase compared with last year and rose 0.2% month over month.

Motor vehicle and parts dealers declined 0.9% month over month and were nearly unchanged compared with last year, rising just 0.1%. Electronics and appliance retailers fell 0.6% from December but remained 2% higher than in January 2025.

Traditional department stores continued to face the most pressure. Sales in that segment dropped 6% compared with December and were 8.3% lower than a year earlier, underscoring the persistent challenges confronting legacy brick-and-mortar formats within general merchandise retail.

The picture is emerging of a retail sector in which consumers remain active but increasingly direct spending toward digital channels and essential goods.

Payment Choices Reflect New Spending Habits

Shifts in spending patterns are occurring alongside changes in how consumers pay for purchases.

Research from the PYMNTS Intelligence report “Pay Later Moves Into the Monthly Budget” indicated that installment financing and buy now, pay later (BNPL) services are becoming routine elements of household financial management rather than occasional checkout options. The trend has been pronounced through the holiday and post-holiday shopping seasons.

The report showed that 31% of consumers used credit card installment plans in the previous three months, while 14% used BNPL products during the same period.

Adoption is particularly strong among young consumers, as 45% of millennials and 42% of bridge millennials reported using credit card installment plans, and roughly one-quarter of each group used BNPL services.

These payment tools increasingly function as mechanisms for managing cash flow rather than financing isolated purchases. Consumers use them to distribute payments over time, smoothing the impact of routine expenses as well as discretionary spending. The evolution of commerce increasingly reflects the continued expansion of online retail and the growing integration of flexible payment options into everyday spending decisions.