Retailers Brace for Holiday Season: Steady Growth Expected Amidst Cautious Consumer Spending

October 27, 2025

Retailers are gearing up for the upcoming holiday shopping season with cautious optimism, anticipating steady sales growth driven by a resilient job market and wage increases. While overall spending is projected to rise, consumers are expected to be more discerning, prioritising value and seeking deals.

Key Takeaways

  • Steady Growth Projected: The National Retail Federation (NRF) forecasts holiday spending to increase between 2.5% and 3.5% over 2023, potentially reaching between $979.5 billion and $989 billion.
  • Online Sales Surge: E-commerce is expected to be a significant driver, with non-store sales predicted to grow between 8% and 9%.
  • Consumer Caution: Despite economic health, shoppers are mindful of prices and economic uncertainty, leading to more deliberate purchasing decisions.
  • Value-Seeking Behaviour: Consumers are actively seeking deals and promotions, with a noticeable trend towards private-label brands and lower-price options.
  • Early Shopping Trends: Retailers are launching holiday campaigns earlier to capture consumer attention and spending.

Navigating Consumer Sentiments

Retail executives are observing a "choiceful" and "resilient" consumer. While lower-income shoppers are feeling budget strains, overall consumer spending is expected to be supported by a strong job market and wage growth. Retailers are adapting by offering earlier promotions and focusing on value, which includes both competitive pricing and quality.

Shifting Shopping Habits

Consumers are becoming increasingly savvy, meticulously monitoring prices and aggregating their spending around key promotional events. This has led some retailers to adjust their promotional strategies, potentially shortening discount periods or focusing on specific categories. There’s also a noted shift towards private-label brands, which offer better value for consumers and potentially higher margins for retailers.

Digital Influence and Generational Shifts

Online shopping continues its upward trajectory, with non-store sales expected to see robust growth. Younger generations, particularly Gen Z, are leveraging social media, influencers, and AI for product discovery and deal hunting. This highlights the importance for retailers to have a strong digital presence and offer seamless online experiences.

Retailer Outlook and Inventory

Despite concerns about tariffs and economic headwinds, retailers anticipate normal inventory levels for the holiday season, with no widespread merchandise shortages expected. The focus remains on providing value and meeting consumers where they are, whether online or in-store, to ensure a successful holiday trading period.

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