'Tis the season for new forces, shifting mindsets

Holiday 2025 begins under pressure. Growth is slowing, wallets are tightening, and supply chains remain fragile. Yet within uncertainty lie opportunities: AI as retail’s sharpest elf, Q5 as a hidden growth engine, and agile logistics. Winners will be defined not by stockpiles, but on adaptability and resilience that deliver value and confidence to consumers.

HOLIDAY 2025 RETAIL TRENDS

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A frostier
forecast

Value shines as wallets tighten

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Q5: retail’s hidden growth engine

Beyond December 25

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AI: the smartest elf in Santa’s workshop

Holiday magic meets machine intelligence

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Supply chain
stress test

Wrapped and ready but still fragile

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Shoppers are showing up this season with hope in their hearts and budgets on their minds.

The 2025 holiday shopping season arrives with optimism tempered by a slowing consumer engine and cooling momentum. Deloitte forecasts holiday sales growth of just 2.9% to 3.4%, the slowest pace in years and well below last year’s 4.2%. PwC reports households are tightening budgets at the steepest rate since the pandemic, signaling a decisive pull back in discretionary spending. The University of Michigan surveys show consumer confidence at its lowest since the early 1950s.

While the recent Federal Reserve rate cut hasn't immediately expanded wallets, over time, it may deliver a confidence boost for a holiday-fueled Q4 spark. Lasting momentum into 2026 depends on real wage growth, labor market stability, and continued disinflation.

Economic uncertainty has been a persistent backdrop, but tariffs, trade disputes, and global volatility are emerging as the critical headwinds pressuring consumers and retailers that could finally dampen spending.

The result will be uneven demand. Value and off-price chains are positioned to benefit from cautious consumers chasing deals. Luxury will remain resilient at the very top tier, but aspirational buyers will pull back. Traffic at malls and shopping centers will hinge on confidence, promotions, and even weather in December’s final shopping push.

Shoppers are stretching budgets, prioritizing needs over wants, and leaning on loyalty rewards and AI-driven shopping to hunt deals earlier and smarter. Reliance on credit cards and buy now, pay later underscores household stress. Travel spending looks steady, but discretionary and gift spending is constrained.

Since 2019, November and December have represented nearly 20% of annual retail revenue, so the stakes are high. Holiday 2025 won’t be defined by runaway growth. Success will come from delivering value, flexibility, and reassurance to consumers navigating a cautious season.

RETAIL AND FOOD SERVICES YOY QUARTERLY SALES CHANGE (Q4 1992-Q4 2025)

Source: US Census Bureau

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A woman shopping in a retail store with a gift card and shopping bags

The holiday season now lasts half the year—and January might just be retail’s secret weapon.

For decades, holiday success hinged on the narrow window between Black Friday and Christmas. That era is over. By 2025, the holiday cycle has stretched into a six-month cycle, beginning with summer deals like Amazon Prime Day in July and extending through mid-January promotions. Consumers now shop earlier, longer, and smarter by spreading budgets, chasing deals, and avoiding stockouts or delivery risks. Black Friday and Cyber Monday still matter, but they no longer define the season.

Within this expanded calendar, a once-overlooked window has emerged as a powerful growth driver: Q5, the “fifth quarter." Spanning December 26 through mid-January, Q5 captures high-intent spending through gift card redemptions, returns that trigger incremental purchases, and resolution-driven demand in categories like fitness, wellness, beauty, and travel.

Contrary to fears of a post-holiday traffic slump, data from Placer.ai showed visits increasing 5.5% for indoor malls and by 2.9% and 2.7% for open-air shopping centers and outlet malls, respectively, compared to January 2024. The sustained engagement into January will increasingly rival pre-holiday traffic and sales. Consumers on vacation or extended time off continue to browse and buy, making Q5 one of retail’s most undervalued opportunities.

For retailers, Q5 demands a mindset shift. Instead of cutting ad spend and bracing for a Q1 contraction, leaders are leveraging lower media costs, captive demand, and efficient inventory clearance all while converting seasonal shoppers into loyal customers. Forward-looking brands are activating this period with semi-annual sales, resolution-themed campaigns, and January-only promotions. Shopping centers are reframing January from a cooldown period to activation with “New Year, New You” events spotlighting wellness and beauty.

December 25 is no longer the finish line — it's the starting line for Q5. Retailers who embrace it will capture incremental growth, deepen loyalty, and build resilience. Those who don’t will concede market share to competitors who understand that in modern retail, the season doesn't end — it evolves.

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AI is stepping into the spotlight this holiday, helping shoppers and retailers make smarter moves.

The headline act of Holiday 2025 isn’t Santa, it’s artificial intelligence (AI). Once a novelty, AI is now the precision engine of modern retail, reshaping everything from discovery to delivery. It won’t wrap gifts (yet), but it is fundamentally rewriting the retail holiday playbook for consumers and retailers.

The scale of adoption is undeniable. According to Adobe, between November 1 and December 31, 2024, traffic from generative AI sources increased by 1,300% year over year. During Amazon Prime Day in July 2025, U.S. traffic to retailer websites from generative AI platforms such as ChatGPT and Perplexity surged 4,700% year over year, proving shoppers are starting with AI advisors, not search engines or storefronts. Nearly 40% of consumers plan to use AI for gift recommendations this season, rising to 50% among Gen Z, and 22% plan to use AI for travel or event planning (Salesforce).

For consumers, AI cuts down on holiday stress and personalizes the shopper journey powering gifting ideas, budgeting, deal comparisons, and travel planning. For retailers, it shifts the game from prediction to precision, capturing and converting demand the moment it appears across any channel. AI now drives real-time promotions, dynamic pricing, inventory optimization, fraud prevention, and 24/7 engagement, converting demand signals into sales at unprecedented speed.

Industry leaders including Amazon, Walmart, and Google are embedding AI at the core of strategy. The challenge is no longer whether to adopt AI, but how fast it can scale across channels.

AI doesn’t replace human intuition; it amplifies it. Algorithms provide scale and speed, while human judgment supplies trust and nuance, which are especially vital during the holidays, when nostalgia and meaning drive purchases.

AI has moved from seasonal experiment to structural advantage. The winners of Holiday 2025 will be those who balance algorithmic precision with human connection, delivering both personalization and the emotional resonance that defines holiday magic.

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Retailers are ready for the rush, but staying flexible will be key to keeping holiday promises.

Every holiday season tests supply chain resilience, and 2025 will be no different. Retailers have front-loaded inventory, invested in technology, and sharpened contingency plans, leaving networks sturdier than in recent years. Yet fragility remains as tariffs, shifting trade policy, parcel delivery capacity limits, and structural changes in logistics all threaten disruption.

This summer, record container volumes moved through ports like Los Angeles, Houston, and New York/New Jersey, with July marking the busiest month in the Port of LA’s 117-year history as companies rushed to beat tariffs. Import volumes have since slowed and NRF and Hackett Associates forecasts monthly declines through December, reflecting a world where early preparation is essential but long-term sourcing unpredictable.

On the ground, AI-driven forecasting and real-time tracking are positioning inventory closer to consumers and cutting delivery times. Retailers are diversifying suppliers, near-shoring production, expanding warehouse and 3PL capacity, and deploying omnichannel fulfillment models like BOPIS (buy online, pickup in store), curbside pickup, and ship from store to meet demand with greater agility. Financial strategies such as tariff hedging and extended payment terms are helping preserve margins in a value-driven consumer environment.

Still, vulnerabilities are clear. Tariff uncertainty, parcel carrier constraints, consumer–demand volatility, and shocks from weather could derail even the best-laid plans. Meanwhile, closures within the FedEx and UPS network coupled with the shutdown of several last mile logistics providers could impact delivery times.

There are bright spots: Class I railroads are restructuring to boost cross-country intermodal service, and Amazon continues to expand its last-mile edge with same-day grocery delivery. Compared with pandemic-era chaos, Holiday 2025 supply chains are stronger and smarter, but not immune. Success will not hinge on who stockpiled the most, but on who converts preparation into agility, delivering value and confidence when it matters most.