Depending on which forecast you believe, 2025 holiday retail sales will either slightly outperform the previous two years, or it will be a contractionary year in which consumers spend less than hoped for — much less.
Forrester Research,an independent research and advisory firm, and PricewaterhouseCoopers, a global network of professional services firms that provides audit, assurance, tax and consulting services to businesses, recently released their holiday sales forecasts.
Perhaps due to the different timing of their surveys, they came away with much different results.
In October, Forrester said retailers and brands can expect some growth even in a year marked by tariff-driven uncertainty. It projects total U.S. holiday retail sales to grow 4.4%year over year, reaching $1.05 trillion in 2025, which is slightly higher than in the previous two years.
A subsection of that overall growth, online holiday retail sales, is forecast to grow to $270 billion, or 6.7% year over year. This marks the third consecutive year of single-digit online growth after several years of double-digit increases.
According to Forrester, the online figure would be lower due to the effect of tariff increases on small sellers and the elimination of the de minimis import exemption, which will likely affect cross-border ecommerce sales.
The exemption, which dates to the Tariff Act of 1930, has let sellers avoid paying import tariffs and taxes on items of small value. In July, President Donald Trump signed an executive order to suspend the exemption — the de minimis threshold had been set at $800 since 2016 — but the likely result is to raise the prices of foreign goods.
Meanwhile, PricewaterhouseCoopers’ holiday outlook is much more pessimistic, perhaps because its survey was taken in mid-year.
While it concedes there is time for a plot twist, PricewaterhouseCoopers said economic factors such as rising prices, new tariffs and an overall higher cost of living will lead to smarter, more cautious spending.
The firm also cited the need for retailers to convince financially challenged younger shoppers to spend more through discounts and other merchandising policies.
The resulting caution will lead to a 5% drop in average holiday spend, the first notable drop since 2020, according to PricewaterhouseCoopers.
One caveat is that these findings reflect sentiment captured in June, when there was strong uncertainty about economic conditions, and reported in early September.
Unless those feelings have changed, discounts will matter more this season, but PricewaterhouseCoopers said in addition to great deals, shoppers also are looking for a sense of normalcy, value and brands that “get them.”
For retailers, building brand loyalty in this environment means understanding how life stage, values and emotions will drive spending, the firm said.
To sum up what a mixed bag this holiday season is expected to be, here are some other tidbits from the analysis of Forrester and PriceWaterhouseCoopers.
Thumbs up
• According to Forrester Research,U.S. in-store saleswill grow 3.6%year over year, reaching $780 billion. Forrester said in-store growth will be slightly stronger than in the previous two years, and that will be driven by value-conscious, lower- and middle-income consumers seeking more deals offline.
Thumbs down
• For the more downbeat PricewaterhouseCoopers, retailers will be fighting for a smaller pot of Gen Z’s discretionary dollars. Consumers ages 17 to 28 are dealing with a tougher job market, often without much savings, which helps explain why their holiday spending is expected to drop by 23%.
• Looking beyond the holidays, PricewaterhouseCoopers expects 84% of American consumers to cut back over the next six months. It cites the same economic factors, including higher tariffs, that inform its downcast holiday sales outlook.
