Holiday retail sales are expected to grow again this year, even as a majority of U.S. consumers say they intend to spend less, according to a wave of forecasts and surveys released over the past two months. The apparent contradiction is explained largely by higher prices, which inflate sales totals without meaning shoppers are buying more. Adobe expects U.S. online holiday sales to reach $275.1 billion in November and December, up 6.7% from last year. AlixPartners projects overall holiday retail sales growth between 4% and 7%.
Underneath those headline figures, the picture is more cautious. AlixPartners expects consumers to purchase fewer units and trade down to cheaper alternatives where possible. PwC expects gift spending to decline 2%, even as shoppers try to protect holiday traditions. The firm projects average gift spending of $708, down modestly from last year, while expected travel spending falls much more sharply, dropping 24% from $553 to $419 per consumer. Millennials expect to cut travel spending 37%, and Gen Z expects a 29% reduction.
Consumer surveys are considerably gloomier than the sales forecasts. Sprout Social found 56% of consumers plan to reduce holiday spending because of economic conditions, and 69% are concerned about tariff-related price increases. PwC found that eight in 10 consumers plan to use a budgeting strategy, and 79% say deals and discounts affect when they shop. Millennials expect to cut gift spending 10%, while Gen Z expects a 9% cut. Omnisend found 78% of consumers feel the weight of price increases, prompting many to set firm spending limits. AlixPartners reports that 57% of consumers feel the economy is worse than a year ago, with 37% intending to cut back by buying fewer units overall.
Not all surveys point in the same direction. Accenture found average planned holiday spending rising nearly 12%, to $737, but among consumers who expect to spend the same or more, 53% cited higher prices as a reason. The Penny Hoarder found an average anticipated spend of $818, with 34% of consumers expecting to spend more than last year, 30% expecting to spend less, and the rest expecting little change. Inflation appears on both sides: 42% of those spending more say they are paying more just to maintain last year’s holiday, while 42% of those spending less say inflation is forcing them to cut their budgets. In addition, 43% of those surveyed said they used emergency funds to cover holiday spending.
Consumers are adapting their behavior in several ways. They are buying fewer items, switching products or brands, searching harder for discounts, and spreading purchases over a longer period. Adobe expects buy-now-pay-later financing to generate $21.3 billion in online holiday spending, up 6.6% year over year. Omnisend found 38% of U.S. consumers expect to spend less than last year, with many shifting money toward necessities. Adobe predicts shoppers will use peak-discount events to buy everyday essentials rather than just gifts. During Cyber Week, sales compared to September levels are projected to jump 210% for clothing basics, 150% for personal hygiene products, 113% for baby items, 93% for pet products, and 49% for household cleaning supplies.
Consumers are not pulling back equally across their budgets. Gifts appear to be relatively protected, while travel is not. Even within the gift budget, priorities differ. Shoppers are much more willing to cut gifts for adults and themselves than gifts for children. According to The Penny Hoarder, 46% of parents consider presents for their kids to be essential, no matter the price tag.
Shoppers still plan to spend heavily around Black Friday and Cyber Monday. Adobe expects Cyber Week to generate $47.5 billion online, up 7.4% from last year, with Cyber Monday alone expected to top $15 billion. But many are not waiting until Thanksgiving week to decide what they want. Nearly half of consumers plan to begin researching holiday purchases near the end of October, according to research cited by eMarketer. About 30% say they compare more retailers than they did two or three years ago, while 27% spend more time researching products before buying. Adobe expects $95.8 billion in online spending during October, up 8%, helped by the October Prime Day event and competing retailer promotions.
Artificial intelligence is becoming part of that research process, though its measured role varies widely depending on how researchers ask the question. PwC found 29% of consumers plan to use AI while holiday shopping, up from 22% last year. Among those shoppers, 75% use it for product research, 55% for price comparisons, and 25% for staying within a budget. Adobe expects traffic from AI-powered chat and browser services to retail websites to jump 130% from last year’s holiday season. Sprout Social found a smaller role when it asked where consumers go for gift ideas: 15% named AI chatbots, compared with 46% for social media and 46% for physical stores.