The outlook on holiday 2025 at retail is dimming.

Low midsingle-digit gains are anticipated due to rising prices from tariffs and inflation, declining consumer confidence, economic uncertainties and potential stockouts. Holiday sales will continue to grow, but at a lower rate than last year.

In addition, holiday shopping for some consumers began as early as July amid concerns over rising prices and shortages on retail shelves. There should also be a pick-up in purchasing this month as another round of blockbuster pre-holiday sales — Amazon’s “Prime” sale is slated for Oct. 7 — are unleashed. Consequently, holiday results which are typically totaled based on November and December selling, or the fourth quarter which runs from November through January, will be depleted.

“What I hear from retailers is they’re expecting more and more challenge as the year goes on, but what we’re hearing from consumers is that they’re still planning to spend,” said Katherine Black, a partner at global management consulting firm Kearney, where she leads food, drug and mass market retail unit. “They’re just going to spend more on sales and earlier in the season, and, of course, more online than they ever have before.

“If you were to compare week-on-week, I would expect that to be a much more gloomy forecast particularly for the December weeks,” Black said. “But in total, for the holiday season, I don’t think we’re expecting huge increases nor are we going to see a huge drop-off. A lot of it’s going to be driven on price.”

Black also anticipates seeing fewer stock keeping units in some categories as the holiday season progresses. “By December, we might expect to see some empty shelves, more than we normally do,” she said.

“We expect consumers to spend less and to selectively trade down in critical holiday categories,” the Boston Consulting Group wrote in a report based on its June 2025 survey. “Sixty-five percent of U.S. consumers said they believed tariffs would lead to higher prices. In response, consumers plan to take action: approximately 75 percent of those surveyed said that if prices continue to rise, they will amend their behavior to buy lower-priced goods, to buy less frequently, or to do both. Furthermore, they indicated that they plan to trade down in nonessential categories, specifically on discretionary items like sports equipment and home improvement, if prices continue to rise and instead will purchase beauty products and toys.”

The Conference Board, a think tank for businesses, reported that its Consumer Confidence Index registered a reading of 94.2 for September, off 3.6 points from the August reading and below the Dow Jones estimate for 96. “Consumers’ assessment of business conditions was much less positive than in recent months, while their appraisal of current job availability fell for the ninth straight month to reach a new multiyear low,” said Stephanie Guichard, the organization’s senior economist for global indicators, in a statement.

According to a statement from Coresight Research, “With (calendar) Q4 now underway, the stakes couldn’t be higher for the U.S. economy as holiday spending collides with shaky consumer sentiment. Inflationary pressures, higher borrowing costs, and continued price sensitivity … raising questions about how resilient the consumer really is heading into the most critical quarter of the year.”

John Harmon, director of technology research for Coresight Research, said: “We’re looking for a pretty normal season, like sales up 3 to 3.5 percent but with several caveats. These tariffs are going to hit any day now — prices are going up definitely in 2026.”

But already this year, in anticipation of price hikes in the future, Harmon said: “Everybody is looking for value. Consumers have been and will be shopping early, and a lot of holiday spending will be driven by high income people.

“There’s a whole list of retailers and brands,” he said, that have taken down their revenue guidance based on tariffs, including Under Armour, which reported tariffs will reduce operating income by $100 million.

Other industry sources characterize consumers as more value and deal-oriented than ever, focused on essentials and experiences, and less on discretionary items, yet resilient in their spending behavior. Consumers are also increasing their use of buy-now, pay-later programs, and the retailers employing AI more to personalize shopping offers and generate gift ideas.

According to Deloitte, retail sales for the holiday season should increase between 2.9 percent and 3.4 percent in 2025, a decline from the 4.2 percent growth seen in holiday 2024. But inflation in the U.S. is tracking at about 2.9 percent, suggesting the retail business comes out near flat. Consumers will be spending more for the same amount of units they purchase.

Overall, Deloitte’s retail and consumer products practice projects holiday sales will total $1.61 trillion to $1.62 trillion in the November to January timeframe. E-commerce, however, is expected to grow between 7 percent and 9 percent year-over-year to between $305 billion and $310.7 billion.

Vivek Pandya, lead insights analyst for Adobe, said, “We definitely expect some gains online.” Retail sales thus far this year reflect “resilience” on the part of consumers, so that ends up being a good indicator for the holiday season, he said.

“We’re coming into the first really major year where consumers will be able to do a lot of ideation with these generative AI platforms,” Pandya said. “They’ll lean on them to get a better sense of prices and deals, who’s offering free shipping or not, and to get their Christmas lists together. This is going to be a nice tailwind. They’re looking at the social conversation. They’re looking at what’s being said on things like Reddit about different products. We see that play in a major way for the first time this holiday season. It’s going to be a much more comfortable experience for the consumer and much more awareness and utilization around generative AI platforms.” It’s helping consumers be “strategic” in their purchasing, he said, which suggests spending less.

“We anticipate disposable personal income, a key driver of retail sales, to grow between 3.1 percent to 5.4 percent this holiday season,” Akrur Barua, an economist at Deloitte Insights, said in a statement. “Steady growth in income can help offset some economic uncertainty, including any labor market weakness and the burden of high credit card and student debt on consumer spending. While elevated inflation will likely weigh on the volume of retail sales growth, it will nevertheless be a tailwind for the dollar value spent on retail purchases in the holiday season.”

CivicScience, a polling and market research firm, reported that Gen-Zers are 60 percent more likely to have already started their holiday shopping, with 53 percent reporting they’ve already done so. This represents a 33 percent jump from this time last year, and a 51 percent increase from the general population “as Gen Z adapts to the economic pressures that are reshaping how they shop,” the firm said.

But CivicScience also reported that 52 percent of Gen-Zers expects to increase their spending this year, compared to the 29 percent of the general population who said the same, though some of that would be due to rising prices. Still, 47 percent plan to buy more gifts overall, over twice the rate of the general population. Buy-now, pay-later services will be popular for these purchases as Gen Z is 88 percent more likely than the average adult to use these options compared with last year, CivicScience reported.

In a Kearney poll of 750 U.S. consumers on Sept. 23, adults with children said they plan to spend more this holiday season. “So if you think about retailers that have a strong offering in toys and electronics, and those early October sales, getting shoppers in early on a deal, I think they’re positioned really well,” said Black.

Macy’s Inc. reported solid results for the second quarter of this year, lifted by investments in top Macy’s doors and solid performances at Bloomingdale’s and Bluemercury. While that suggests the potential for continued momentum into the holiday season, Tony Spring, Macy’s Inc. chairman and CEO, still sounded cautious on his outlook for fall and holiday, indicating a “wait-and-see” attitude that reflected uncertainties on how shopping plays out amid fluid macroeconomics and changes in tariffs.

And Doug McMillon, CEO of Walmart Inc. said during his second-quarter conference call, “We’re expecting to have a good holiday season at Walmart.” Walmart last month raised its forecast for sales gains this year to 3.75 percent to 4.75 percent, up from the previous forecast of sales gains ranging from 3 percent to 4 percent.

Aside from Walmart, Dollar General, Amazon, Ulta Beauty, Sephora, Best Buy, and off-pricers such as TJMaxx and Ross Stores, are expected to be among the standout retailers this holiday season.