Full Breakdown
U.S. Holiday Retail Sales Forecast: A Mixed Outlook Amid Economic Pressures
9/19/2025, 12:11:33 PM
Anticipated Sales Growth and Consumer Behavior
The U.S. holiday retail sales for 2025 are projected to increase by 3.6% from November 1 to December 24, according to a report from the Mastercard Economics Institute. This growth is a decrease from the 4.1% increase observed during the same period in 2024. The report highlights that consumers are increasingly seeking discounts and promotions due to inflation and economic uncertainty, making pricing a critical factor in their purchasing decisions. Online sales are expected to rise by 7.9%, while in-store sales are projected to grow by 2.3%.
Bain & Company forecasts a more optimistic growth of 4% year-over-year, estimating that holiday sales will exceed $975 billion. However, this forecast is below the 10-year average growth rate of 5.2%. Bain's analysis indicates a shift towards brick-and-mortar shopping, with in-store sales expected to increase by 2.75%. The report emphasizes that while e-commerce remains vital, its growth has slowed compared to previous years.
Economic Context and Consumer Sentiment
The economic backdrop for this holiday season includes rising inflation, which has reached 3.1%, and a weakening job market, with only 22,000 jobs added in August 2025. Despite these pressures, consumer spending has shown resilience, with retail sales rising 0.6% in August compared to July. This increase was driven by back-to-school shopping and a 10.1% rise in nonstore retail sales, underscoring the ongoing strength of e-commerce.
However, a survey by AlixPartners reveals that 80% of consumers plan to spend the same or less this holiday season, with 35% expecting to cut back on spending. High-income households are anticipated to drive spending gains, with over 30% of respondents in this demographic planning to increase their holiday expenditures.
Retailer Strategies and Consumer Expectations
Retailers are advised to adapt to evolving consumer behaviors by focusing on value and promotional strategies. Bain's report suggests that leading retailers should capitalize on major shopping events like Black Friday and Cyber Monday, as 10% more consumers plan to shop during these events this year. Additionally, 55% of shoppers indicate that high prices will significantly influence their holiday budgets.
Retailers are also encouraged to implement personalized advertising and maintain a human touch in customer interactions, even as they leverage technology. The emphasis on promotions and value is particularly crucial as consumers navigate financial pressures while also benefiting from rising wages and stock market gains.
Conflicting Reports and Gaps
While Mastercard and Bain provide differing growth forecasts, both highlight the cautious sentiment among consumers. The U.S. Census Bureau's report indicates a 5.0% increase in retail sales year-over-year for August, which contrasts with the more subdued expectations for the holiday season. This discrepancy underscores the complexities retailers face as they prepare for a challenging yet potentially rewarding holiday shopping period.
Verbatim Quotes
- “This holiday season will be a mixed one for U.S. retailers,” — Aaron Cheris, Partner, Bain & Company
- “Retailers will need to adapt to these evolving behaviors by focusing on value, optimizing inventory management and leveraging integrated channel strategies to meet consumers wherever they choose to shop.” — Sonia Lapinsky, Partner, AlixPartners
- “This year will certainly be one where pricing matters more, in a world where tariffs have kicked in.” — Michelle Meyer, Chief Economist, Mastercard Economics Institute
As the holiday season approaches, U.S. retailers must navigate a landscape marked by cautious consumer sentiment and economic pressures while striving to meet the evolving demands of their customers.
