Michael Zakkour, 5 New Digital founder, joins 'Squawk Box' to discuss the consumer and holiday retail sales data.

Consumers remained resilient during a shortened holiday season, with only 27 days between Thanksgiving and Christmas. Value retailers such as Walmart and dollar stores saw strong performance as shoppers, constrained by time and budgets, prioritized essentials and discounted goods.

Electronics and casual apparel were top-selling categories, while luxury retailers struggled due to inflation and fewer aspirational buyers. The economic divide persisted, with the top 20% of earners accounting for most consumer spending. Looking ahead, experts anticipate continued strength for budget retailers and a possible comeback for ultra-high-end luxury brands in 2026.

Consumers resilient despite shortened holiday season

Michael is a core. Did I say that correctly. My guy. Thank you. Five new digital founder and author of the new retail. All right. Can we talk about this calendar thing. Did it matter at all this year. And it did matter. It was it jumped out at me immediately in the summer. You know what I'm planning my holiday rituals and what I'm doing for my own shopping and working my clients and said oh my God we're only going to have. I think it was 27 days between. Right. Thanksgiving and Christmas. So it was short. But consumers proved to be incredibly resilient even in a shortened season. You know people and ask you hey how to go. Who's the winners. Who's the losers. You know the value. Retailers have done very well. Wal-Mart dollar stores. And I think that's because people had less money to spend and they want to spend in fewer places and they had a shorter amount of time to do it. What were the things that jumped to the front of the pack here in terms of what we were buying and and how they were dealing with this idea of limited budgets. Yeah. Electronics were the clear winner. So we think gaming consoles new phones new laptops. And that created a mini boom for the retailers and the brands and the technology companies who are inserting their stuff into those devices. So if you see chat GBT downloads are through the roof because I got a new phone. So I think electronics also apparel casual apparel a lot of pajamas a lot of cargo pants and a lot of graphic tees cargo pants. It's almost like we've got one now. This is pandemic 2.0 where everybody is like living in the comfort. I'm not supposed to say this but there was a lot of talk about Victoria's Secrets doing really well. Didn't they have a report out last week. You say that. Well you know it's sort of. Yeah I did. I didn't see how they see that. OK. No. But you know if we look at the retail stocks who are doing well right now it's reflective of the season. So yeah. Dollar stores are up. Wal-Mart's up. The TGX stores are up. It's all that discount. I had a couple of guests on worldwide exchange this morning who were talking about this idea that the K shape economy continues in 2026 that the affluent customers are still. Confident in the economy and spending like the economy is booming and budget minded people are not. What do you see. So our research internally showed that over the course of 2025 about 80 percent of consumer spending was spent by the top 20 percent of earners. So that is a reality. It's the way the season's gone. And again I think that's why you know the discount retailers did really well. Is 2026 going to be then a year for luxury retailers. It could be a year for a comeback for luxury retailers. Luxury had a little bit of a rough 2025 again because of inflation globally. You know I think a lot of aspirational luxury buyers have dropped out of the market. You know it's harder to justify. I saved up for a thirty five hundred dollar purse that this season is sixty five hundred dollars and you didn't improve the value. You didn't tell me I'm getting something more than I did last year. So on the luxury end we're seeing the ultra high high luxury companies are mad. The big stuff they're doing really well. But the aspirational bottom is pretty much like what Tiffany LVMH that kind of level. They're at the highest level even within those companies. It's the highest price products right. The ultra. So the five hundred thousand dollar watch the quarter million dollar pair of earrings. Those are moving really well that you know lowish to mid level luxury. It's really hurting right now. So it should be a comeback. I'm not sure that we get the best read on the K shaped economy through Christmas. My theory is that people they do as much as they possibly can to extend themselves and to buy things for their loved ones. It's after the Christmas season that we might see this come more into into focus. The idea that there are these two really different things going on right now in terms of stagnant incomes and some concerns about jobs and then the affluent who are reaping the gains I think of a stock market that's doing very well. So give us your outlook for 2026. Yeah. I mean listen there's going to be a little bit of a holiday hangover like you put there. People are going to wake up in the morning and say oh my God look at my credit card bill and my buy now pay later bills. Overall though I think 2026 we're going to see a fairly strong retail economy. Consumers are continuing to spend. They're obviously shifting to essentials and shifting away from you know the things that they don't need. They're really focusing on home right. What are we going to get for clothes food. The reality is going to be that inflation is still going to be up when we wake up tomorrow morning and budgets are still going to be constrained. And that's why I'm still putting my debts putting my bets on the budget and dollar retailers. When I look at the macro situation with the consumer I see a sort of bifurcation here on the one hand. Employment is relatively low. The balance sheets are in good shape. On the other hand and by the way in addition to that you have these refunds coming through next year that could be very helpful. And then sort of counting that as a lousy sentiment numbers which ones without. Yeah. I mean for me this season to your point Steve it's kind of been a little Dickensian but you know in the way of it was the best of times it was the worst of times. Right. So we're all feeling really good about spending in the holiday. But then we're going to wake up in January and February.

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