AlixPartners has released its 2025 U.S. Retail Holiday Outlook, forecasting an “underwhelming” 3 percent to 5 percent growth rate in Holiday retail sales this year. The forecast is seen as a “notable decrease” from last year’s 4 percent growth and 2023’s 6 percent rate. Additionally, the global consulting firm said, “At the low end, this is essentially flat with inflation taken into consideration and only up 2 percent at the high-end.”

“The outlook, based on a comprehensive survey of U.S. consumers, found a consumer who is more cautious as inflationary pressures take a toll on household spending,” AlixPartners said in its report release. The firm stated that its research also revealed a bifurcation between households with higher and lower incomes.

In AlixPartners’ 2025 Holiday study, high-income consumers (those making more than $100,000 per year) were identified as the primary drivers of increased spending this holiday season. Over 30 percent of high-income consumers reported plans to spend more this year, while less than 20 percent of other income groups intend to increase their budgets.

The firm noted that the gap between low- and high-income earners was also evident in prior AlixPartners research, which showed that 31 percent of higher-income consumers expected to increase their overall spending this year, especially on travel and leisure, compared to 16 percent of lower-income households.

The data also found that roughly 80 percent of respondents, who participated in the poll, said they plan to spend the same amount or less this year than last, with 35 percent anticipating a reduction in spending—a 35 percent increase from last year.

“The expected decline in spending follows an uptick in retail sales earlier this year as consumers went on a spending spree ahead of anticipated higher prices due to tariffs. Over the past year, shoppers faced ongoing inflation but had shown resilience and continued to spend — until now,” the report noted.

“This year, overall, retailers face a consumer who is more cautious and frugal,” said Bryan Eshelman, partner & managing director in the Retail Practice at AlixPartners. “They will be on the prowl for deals, and retailers will need to be creative, online and in-store, with how they lure in shoppers. Markdowns need to be carefully executed. And regardless of income, shoppers are prioritizing value and want the best bang for their buck.”

The study also found that nearly 40 percent of the respondents polled stated they intend to buy 50 percent or more of their holiday purchases on sale. In addition, the findings found significant generational differences in consumer sentiment. For example, Gen X consumers were reportedly significantly more promotion-driven (48 percent) compared to Gen Z consumers (30 percent).

“Like last year, shoppers sought promotions to relieve the pressure of higher prices and the rising cost of living,” Eshelman continued. “However, younger generations are less likely to respond to traditional promo activities and are now looking for everyday values. Younger generations are even leading when it comes to the switch from traditional grocery stores to club stores.”

Eshelman said older generations are accustomed to high/low pricing strategies and are trained to wait for sales. However, this approach does not work for younger generations, such as Millennials and Gen Z. To better engage consumers, retailers and brands will need to use promotional strategies that incorporate personalization and other effective tactics.

Other key findings in AlixPartners 2025 U.S. Retail Holiday Outlook:

  • Shoppers across all income brackets will be looking to reduce spending in almost every category, with holiday food and beverages enjoyed at home being the sole category with anticipated increases, primarily driven by high-income households.
  • The top strategies for reducing spending include shopping for more affordable brands, such as private label, buying fewer gifts, and purchasing a significant number of gifts on sale or during promotions.
  • Households are planning to start their holiday shopping even later this year, with only 35 percent of respondents stating they will begin before Halloween, a 3 percentage point decrease from last year.
  • The post-pandemic shift back to in-store shopping is decelerating, with online shopping expected to increase slightly this year. Of those consumers polled, 67 percent intend to make 30 percent or more of their purchases online.
  • In-stock rates are crucial for in-store shoppers. If an item is out of stock, only one-third of consumers polled said they will complete the purchase on the retailer’s website, with most opting to visit another retailer’s store or website instead.
  • When asked about the economy, 50 percent of respondents believe it is worse now than a year ago, and 45 percent expect it to worsen in the coming year.
  • One-third of polled consumers reported that their personal financial health has worsened compared to a year ago, with only 27 percent reporting an improvement.

“The 2025 Holiday retail season is shaping up to be a challenging one, with consumers remaining highly cautious and price-sensitive,” said Sonia Lapinsky, partner and managing director and leader of Fashion Retail at AlixPartners. “Retailers will need to adapt to these evolving behaviors by focusing on value, optimizing inventory management and leveraging integrated channel strategies to meet consumers wherever they choose to shop. Understanding the nuances of consumer sentiment and tailoring offerings, especially for high-income households who are still willing to spend, will be crucial for success.”

Methodology: The AlixPartners 2025 U.S. Holiday Shopping Survey included a national representation of 1,000 U.S. consumers, ages 15 and above, across all regions, demographics, and income levels, aiming to gain insight into consumer economic sentiment, shopping habits and the impact of economic factors on holiday purchasing behaviors.

Image courtesy Nordstrom’s