Bain expects holiday sales to cross the $1 trillion mark, a 4.5% lift from last year. Most of that increase is slated to come from in-store purchases at about 70%, even as online shopping keeps taking a larger slice. But Bain also cautions that higher prices are doing a lot of the heavy lifting, which means actual units sold are growing more slowly. That squeeze is most visible in categories like food and beverages, furniture, and health and personal care, where unit volumes are falling.
Tax refunds are running hotter this year, up $43 billion or 17% versus last year. Even with that extra cash, Bank of America estimates roughly half the boost has already been absorbed by more expensive gas, tightening budgets. The inflation backdrop is mixed but improving at the margin.
According to the latest reading of the personal consumption expenditures index, the Federal Reserve's preferred gauge, annual inflation came in at 3.4%, softer than the 3.7% economists had expected. Meanwhile, the Conference Board said Tuesday that consumer confidence dropped in September to its weakest level since 2014, with respondents citing inflation and the jobs picture as key concerns.
Consultants see shoppers getting more calculated. Deloitte projects this year's holiday retail total at $1.7 trillion and notes consumers are gravitating to deals and markdowns. "As they look to get more out of their dollars, we continue to see value-seeking behaviors across income levels, including switching among brands and retailers and using promotions to manage spending," said Natalie Martini, Deloitte's vice chair who heads the firm's U.S. retail and consumer products practice. "These behaviors are expected to shape how consumers approach holiday shopping this season."
AlixPartners finds people are putting fewer items in the cart but heading out more often, especially for groceries. They are also moving from premium labels to private brands and choosing fewer, higher-quality purchases.
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Adobe expects value-first shopping to drive growth and share this season, and projects buy now, pay later spending to reach a record $21.3 billion. The company also sees AI becoming part of the browse-to-buy path: AI-driven traffic to retail sites jumped 127% year over year in August and is projected to rise 130% across the holiday period, including a 141% surge on Thanksgiving.
According to PwC, 29% say they intend to use AI at some point during their holiday shopping this year, up from 22% a year ago. Among those using it, 75% are researching products and 55% are comparing prices. Curiosity is high, but checkout is still mostly traditional. As PwC puts it, "For now, AI is the modern equivalent of a knowledgeable friend at the mall, not the cash register."
Dollar totals may look sturdy thanks to bigger refunds and higher prices, yet the average cart is leaner and more price conscious. Expect more trading down to store brands, heavier use of promotions, and tools like AI and buy now, pay later to stretch budgets. If you are watching retail this season, the story behind the headline number is where the real tells are.
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