Holiday Retail Trends: What Retailers Need to Know

The holiday season is shaping up to be one of cautious confidence. Shoppers are still spending, but they’re spending differently.

That optimism extends to business owners, too. Toast’s 2025 Retail Industry Outlook survey found that 78% of c-stores, bottle shops, and grocery stores believe they’ll remain open over the next 12 months, and 32% plan to expand or open new locations.

For retailers, success this season isn’t just about selling more — it’s about understanding how and why customers are spending. Here’s what the latest data reveals about holiday retail trends — and how your business can make the most of the season.

Key takeaways

• Spending remains steady overall, but shoppers are prioritizing essentials over indulgences.

• Consumers are cautious yet optimistic, making value and transparency key to winning their trust.

• Gen Z is emerging as a major holiday force, blending online and in-store shopping and favoring authentic brands.

• Practical gifts like groceries, gift cards, and everyday items are taking priority over splurges.

• Retailers that balance affordability with premium experiences will connect best across customer segments.

1. Top-Performing Holidays by Spend

According to projections from the National Retail Federation (NRF), consumers continue to spend heavily on both traditional gift-giving holidays and seasonal shopping events. Here’s how the top holidays stack up by average per-person spending:

• Back-to-College: ~$1,325 per person

• Winter Holidays: ~$980 per person

• Back-to-School: ~$858 per person

• Mother’s Day: ~$259 per person

• Father’s Day: ~$199 per person

• Valentine’s Day: ~$189 per person

• Easter: ~$189 per person

• Halloween: ~$114 per person

While the winter holidays still drive the highest total sales volume, the back-to-school season consistently tops the charts for per-person spending — showing that necessity-based shopping (clothing, supplies, electronics) remains one of the biggest retail drivers.

2. Holiday spending holds steady, but caution grows

This holiday season, shoppers are showing up — but they’re spending more carefully. Deloitte’s latest data shows consumers plan to spend 4% less than last year between Black Friday and Cyber Monday, breaking a three-year streak of post-Thanksgiving growth.

Higher living costs and economic uncertainty are shaping how people shop. The pullback spans both ends of the income spectrum — households earning under $50,000 plan to spend 12% less, while those earning over $200,000 expect an 18% decline.

Still, optimism hasn’t disappeared entirely. Natalie Martini, Deloitte’s vice chair and U.S. retail and consumer products leader, said:

“While we expect shoppers to plan to pull back on spending, we also anticipate strong participation throughout the holiday week.”

The holidays aren’t losing their spirit — but shoppers are watching their wallets. Businesses that emphasize value, transparency, and flexibility will typically resonate most.

3. Consumers shift toward practical purchases

Even though overall spending levels remain steady, what people are buying is changing. According to McKinsey’s ConsumerWise survey, shoppers plan to spend about the same amount as last year — but they’re shifting their dollars toward practical, “needed” goods rather than splurges or luxuries.

“People are planning to spend roughly the same dollar amount as they have in the past — but they’re going to shift their spending toward needed goods as opposed to discretionary goods,” said Emily Reasor, McKinsey Senior Partner. She noted that grocery items and gift cards are becoming top categories, reflecting consumers’ focus on flexibility and everyday value.

This season, essentials are the new indulgence. Retailers that highlight value, utility, and purpose — like meal bundles, useful gifts, or consumables — will better connect with cost-conscious shoppers.

4. Gen Z’s growing role in holiday shopping

Gen Z is quickly becoming a major force in holiday spending — and their habits look different from everyone else’s. According to 2024 data from JP Morgan, this generation is reshaping how and where holiday shopping happens.

Gen Z’s share of clothing store sales grew by 1.5% year-over-year in Q4 2024, outpacing every other age group. They’re spending more confidently and seeking personalized, values-driven experiences that go beyond simple transactions.

Their payment habits are changing too — for the first time, Gen Z’s credit card usage surpassed debit card usage in 2024. This shift points to greater financial confidence and a growing interest in rewards programs and loyalty perks.

Unlike older shoppers, Gen Z doesn’t stick close to home. Less than 45% of their in-store spending happens within 10 miles of where they live, and more than 55% of their holiday purchases are omnichannel — combining in-person and online experiences.

5. Balancing luxury and value

Holiday shopping this year reflects a widening divide between value-driven and premium consumers — and smart businesses are adapting to meet both.

At Costco, executives noted that shoppers have become “very choiceful” about discretionary spending, prompting the retailer to reduce floor space for seasonal décor and toys. Instead, Costco is focusing on everyday essentials and selecting high-ticket items like furniture, saunas, and backyard sheds.

This strategy highlights a broader retail trend. The US Chamber of Commerce reports that both luxury and off-price sectors are outperforming mid-tier retail, showing that the economy is splitting at both ends.

While some consumers are trading down and seeking deals, others are still spending confidently on premium goods and experiences.

Whether you’re a restaurant or retailer, the key is balance. Offer value options that appeal to cautious shoppers, while also creating premium experiences — like exclusive menus, VIP events, or limited-edition products — for those ready to spend more.

The holiday vibe? Pragmatic, with a hint of luxury

While overall holiday spending remains strong, consumer behavior is evolving fast. Shoppers are balancing necessity and indulgence, value and luxury, online and in-person.

For retailers and restaurants, success this season is about understanding what motivates each customer segment. That might mean featuring affordable bundles alongside premium experiences or offering seamless omnichannel shopping options that meet people where they are.

The bottom line? Holiday retail is about intentional spending and meaningful engagement. Businesses that adapt to these changing retail trends — and create experiences worth celebrating — will see the biggest wins when the season wraps.

FAQ

When does the 2025 holiday shopping season start?

The season kicks off earlier each year, with major retailers launching promotions as early as late October and ramping up through Black Friday and Cyber Monday.

How much are consumers expected to spend during the 2025 holidays?

Overall spending is projected to remain steady compared to last year, though shoppers are prioritizing practical purchases like groceries and gift cards over luxury splurges.

What percentage of holiday shoppers will use Buy Now Pay Later in 2025?

While exact figures vary, younger shoppers — especially Gen Z — are increasingly adopting flexible payment options like Buy Now Pay Later, reflecting a shift toward convenience and control.

How is AI changing holiday shopping in 2025?

AI tools are helping retailers personalize promotions, manage inventory, and predict demand, creating more seamless and tailored shopping experiences for consumers.

Why are consumers more cautious this holiday season?

Economic pressures and higher living costs are prompting shoppers to focus on value and transparency. People are still celebrating but are more selective about where and how they spend.

What is Q5 in retail?

Q5 refers to the post-holiday period from late December through January when shoppers continue to buy — often using gift cards or taking advantage of clearance deals — giving retailers one last wave of seasonal sales.