Holiday retail sales 2025: U.S. shoppers expected to pull back 5%, with Gen Z predicted to spend 23% less

Experts forecast slower growth in holiday retail sales this year as consumers grapple with inflation and economic uncertainty.

Deloitte estimates that holiday retail sales will grow between 2.9% and 3.4% in 2025 for a total of $1.61 trillion to $1.62 trillion. During the last holiday shopping season, retail sales grew 4.2% and totaled $1.57 trillion.

Bain said it forecasts healthy but below-average 4.0% growth in US retail holiday sales. The 10-year average is 5.2%, according to the firm, which said economic indicators are mixed. Strong market and wage growth is offset by declining consumer confidence and a spike in credit delinquencies.

A PwC survey showed that U.S. consumers plan to spend 5% less on seasonal spending compared to 2024, the biggest drop in five years.

“More broadly, 84% expect to cut back over the next six months, citing rising prices, new tariffs and the higher cost of living,” PwC said.

Holiday e-commerce sales on track for growth

While growth in overall holiday retail sales are expected to slow, e-commerce remains a bright spot for retailers.

Deloitte’s forecast shows e-commerce growing 7% to 9%, totaling $305 billion to $310.7 billion this holiday season compared to last year.

“Our forecast anticipates that e-commerce sales will stay strong as consumers keep leveraging online deals to stretch their spending power,” said Natalie Martini, vice chair, Deloitte, and U.S. retail and consumer products leader.

“Retailers who remain focused on delivering value throughout the season have a prime opportunity to drive growth during what continues to be a critical time for their businesses,” she added.

PwC’s survey, which was conducted earlier this year, showed nearly equal parity between online marketplaces and brick-and-mortar stores for holiday purchases. Fifty-one percent of consumers place to do their holiday shopping online from sites like Amazon while 53% plan to shop in person. This will be the first year with that channel parity, PwC said.

EMARKETER predicts that mobile commerce will be a bigger part of digital holiday sales in 2025, accounting for 56.5% of total U.S. holiday retail e-commerce sales and 11.5% of total holiday sales.

Generational divide in holiday spending plans

While consumers are reducing their spending this holiday season ($1,552 per person, down 5% from last year), Gen Z is cutting back the most, according to PwC. Faced with a tough job market and limited savings, Gen Z expect to spend 23% less this holiday season.

“That means retailers could be fighting harder for a smaller pool of Gen Z’s discretionary dollars this season,” PwC said in its report.

Millennials expect to spend about the same amount as last year, while baby boomers plan to spend 5% more.

Sustainability is influencing Gen Z’s holiday shopping, PwC noted, with 63% preferring to buy resale/upcycled products and one in three cutting back on purchases to reduce their environmental impact.

Gen Zers, however, aren’t skimping on themselves; they’re setting aside 39% of their holiday budgets on self-gifting. Millennials and boomers (62% and 67%) are planning the bulk of their spending on others.

2025 holiday purchases focus on value

All generations are focused on value in their purchases this holiday season. PwC’s survey showed that 78% of consumers will be looking for less expensive alternatives. Fifty-three percent said prices increases will likely impact their holiday spending decisions.

“People are going to keep shopping, but with continuing concerns about tariffs and elevated prices (especially on electronics, apparel, toys, food, and household staples), value-conscious choices are likely to define the season,” PwC said.

Gift cards are a top choice for budget-conscious shoppers. Notably, while they’re spending less on gifts, they plan to spend a bit more (1%) on travel and entertainment.

Retailers can win over thrifty holiday shoppers by doubling down on sale events for Black Friday and Cyber Monday, Bain said. They also should lead with key value item (KVI) pricing and stress value over price, the firm advised.

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Don’t sacrifice the customer experience

Even as they try to win cost-conscious consumers this holiday season with deals and discounts, retailers shouldn’t focus on value at the expense of customer experience, experts said.

Bain stressed the importance of delivering “warm, human experiences” even as retailers incorporate AI for customer service and sales. Promotions also must be timely and personalized.

EMARKETER, which forecasts US holiday retail sales will grow 1.2% year-over-year, advised retailers to deliver both value and aspiration: “Lead with utility and reward with emotion.”

Despite their economic concerns, many consumers still want to enjoy the holidays with some retail purchases.

“For many people, the holiday season is the time for a bit of “retail therapy” — using purchases to lift spirits and preserve traditions,” PwC said. “This behavior signals a pattern: Spending may shift but the intent to maintain a sense of normalcy holds firm.”