What influenced the retail holiday season in 2025

Key Trends from the 2025 Holiday Retail Season

The 2025 holiday shopping season began with optimistic projections for retail sales, suggesting healthy growth even if the actual number of items sold remained steady. Consumers, having faced months of inflation and concerns over tariffs, approached the holidays with caution and a keen eye for prices. Despite tightening their budgets compared to previous years, many shoppers still made purchases, often relying on buy now, pay later options—a trend that may have lasting effects into the new year.

Retailers also faced challenges as they entered the season. In September, Challenger, Gray & Christmas predicted that seasonal hiring would reach its lowest level since 2009, a forecast that proved accurate as few companies disclosed hiring plans and layoffs persisted. The industry continued to adjust to the evolving landscape shaped by tariffs.

Nevertheless, there were positive developments. Online shopping thrived, fueled by AI-enhanced experiences, and Black Friday remained a major event, with many consumers choosing to shop online rather than in-store.

As we move into a new year, let’s review the most significant trends that shaped the 2025 holiday retail landscape.

Value Remained Paramount

Despite months of warnings about the impact of tariffs, inflation, and consumer uncertainty, retailers generally performed well in the final quarter of the year. According to Guggenheim analysts, the holiday season brought positive results: tariffs were manageable, stock prices recovered, and many retailers operated near peak gross margins.

Throughout the year, shoppers prioritized value, seeking discounts and promotions both at specialty stores and mainstream retailers. This focus on affordability was especially pronounced during the holidays and is expected to continue into the following year.

Heather Long, Chief Economist at Navy Federal Credit Union, noted that middle-class families are feeling financial pressure. With inflation rising and unemployment increasing, these households are sticking to essentials and occasional small indulgences. While larger tax refunds in 2026 may offer some relief, the winter is expected to be challenging.

Consumer Enthusiasm for Special Occasions

Although shoppers were hesitant to spend on non-essential items, they were willing to make purchases for special events. UBS analysts observed that this pattern, seen throughout the year, continued into the holiday season: consumers shopped around key dates, hunted for bargains, and reduced spending between major events.

UBS also found that consumers were timing their purchases strategically, buying items like Halloween costumes early and decorations closer to the holiday. Spending on lower-priority or disposable items, such as gift wrap and greeting cards, declined as shoppers opted for more affordable alternatives.

Aggressive holiday marketing and promotions may lead to a surge in returns after the season. Marty Bauer, an e-commerce expert at Omnisend, explained that sales events like Black Friday and Cyber Monday encourage impulse buying, with many shoppers purchasing multiple options and later returning items they bought primarily for the discount.

Early Start to Holiday Promotions

Retailers once again launched holiday sales soon after summer ended. Amazon kicked off its Prime Big Deals Day in early October, quickly followed by Walmart, Target, and Kohl’s. This year, economic uncertainty heightened the demand for deals, as inflation, tariffs, and a government shutdown pushed consumer sentiment to a three-year low in November.

According to an ICSC survey, nearly 75% of shoppers planned to be more selective with their holiday purchases, and almost two-thirds intended to spend more time searching for bargains. To attract these value-focused consumers, Walmart hosted two Black Friday events and a Cyber Monday sale, while Amazon ran a nearly two-week-long Black Friday promotion featuring millions of deals.

Halloween Sets the Stage

Halloween has become a significant precursor to the holiday season. In 2025, spending for Halloween was projected to reach a record $13.1 billion, a 13% increase from the previous year, according to the National Retail Federation. Despite concerns about rising prices due to tariffs, Halloween continued to appeal to consumers of all ages.

More than three-quarters of adults celebrated Halloween, treating it as a preview of the winter holidays. The event’s emotional draw and in-store experiences, especially among Gen Z, helped set the tone for holiday merchandising.

Tariffs Influence Retail Strategies

Tariffs had a noticeable impact on both consumers and retailers in 2025. Shoppers prepared for higher prices, while brands struggled to predict costs from suppliers. This led consumers to seek out deals and, in some cases, switch to lower-priced alternatives.

Some retailers, particularly those in the off-price sector, managed to protect their profit margins despite tariffs. Executives at Ulta Beauty reported that brands remained cautious about passing on tariff-related price increases, though more brand-driven price hikes were observed in the third quarter compared to earlier in the year.

Nostalgia and Exclusive Experiences Drive Engagement

To connect with shoppers in a challenging economic climate, retailers leaned into nostalgia, unique in-store experiences, and exclusive perks. Target revived its popular “Hot Santa” character and introduced new holiday mascots, while Walmart featured actor Walton Goggins as the Grinch in its seasonal campaign.

Special events and pop-ups were also popular. T.J. Maxx launched a “Maxxinista Express” holiday tour, and QVC hosted a two-day pop-up in New York City inspired by Mrs. Claus’ home. On Black Friday, Target and Lowe’s rewarded early shoppers with limited-edition giveaways.

Artificial Intelligence Gains Traction

The 2025 holiday season highlighted the growing role of artificial intelligence in retail. According to Adobe Analytics, AI-driven traffic to U.S. retail websites on Black Friday surged by 805% compared to the previous year. Salesforce reported that $3 billion in U.S. online sales were influenced by AI and digital agents during the key shopping day.

Retailers and tech companies introduced a variety of AI-powered features throughout the year, with some launching just in time for the holidays. Google rolled out new shopping tools through its Gemini platform, offering product recommendations, price comparisons, and even a feature that calls local stores to check product availability.

OpenAI enabled ChatGPT users to conduct in-depth product research, making the tool widely accessible during the holiday season. On the retail side, Target introduced an AI-powered gift finder to help shoppers select presents based on recipient details like age and interests.