’Tis the season: 2025 holiday trends

KALAMAZOO, Mich.—It’s not your imagination—the holiday shopping season is starting earlier than ever before, and with it comes a mixed bag of insights into the economy, supply chains, consumer behavior and family finances. 

Some trends to watch are comparison shopping and AI tools that make gift research easier, as well as AI-enabled advertising that puts the ideal holiday season top of mind.

Once again, cost prevails as the topic that retailers and consumers are focused on, as stores pass higher costs onto consumers, who are trying to stick to a budget. While some relief on tariffs will make this shopping season better than initially expected, sticker shock and rising debt will be home for the holidays in many U.S. households.
 

Holiday shopping and supply chains: What to expect

Dr. Marcel Zondag, associate professor of marketing and director of the WMU supply chain management program

According to Zondag, consumers can expect a largely stable holiday season. The National Retail Federation now predicts that U.S. holiday sales will surpass $1 trillion for the first time, increasing by about 3.7% to 4.2% over last year, representing solid growth. Online spending is also projected to hit a record, with $253.4 billion forecast for Nov. 1 through Dec. 31.

There are two dynamics that matter most for shoppers this season.

Tariffs: Threats turn into bargaining outcomes

“Media headlines warned, in a very Grinch-like manner, that 100% tariffs on Chinese imports could end holiday shopping as we know it,” says Zondag. “That didn’t happen. Washington and Beijing reached a de-escalation deal in early November that reduced U.S. tariffs on Chinese goods by 10 percentage points and postponed additional increases until 2026. Practically, retailers are not facing the worst-case cost shock that was forecasted weeks ago. Prices will still be affected by ongoing trade tensions, but the immediate holiday threat from tariff escalation has lessened—a pattern we’ve seen many times this year as threats often turn into bargaining outcomes.”

An earlier and longer holiday shopping season with more rewarding deals 

Retailers again shifted promotions to September and October to secure demand and manage uncertainty. 

“Expect ongoing discounting, aggressive price matching and a strong focus on value across all categories,” Zondag notes. “Early-season purchasing has become the norm for consumers, rather than a rare exception. In other words, if this trend continues, we will one day indeed have Christmas in July.”
 

Holiday cheer collides with economic chill: Is stagflation hiding under the tree?

Dr. Matt Ross, associate professor of finance

Rising prices, slowing growth and record consumer debt are reshaping how Americans shop this season—expect leaner budgets and tougher choices.

As the holidays approach, economic clouds loom over the festive spirit. Stagflation—a mix of rising prices and slowing growth—remains a real concern. 

“Despite the Federal Reserve holding interest rates high, inflationary pressure refuses to ease,” says Ross. “Global factors, like the ongoing war in Ukraine, continue to push commodity prices upward, while tariffs on imported goods add fuel to the fire. American consumers are bearing the brunt, paying more for everyday items and holiday gifts alike.”

Ross notes that the strain is showing. “Credit card balances have hit record highs, and delinquency rates are at their worst in a decade. While unemployment has ticked upwards only a little, labor force participation among men remains near historic lows. For many American families, this means stretching budgets further or turning to debt just to maintain holiday traditions. Consumer sentiment is near its lowest point in 50 years—a stark reminder that economic stress is hitting home.”

According to Ross, retailers are trying to adapt but are often forced to pass higher costs along to consumers, a trend that has stuck since pandemic disruptions. And even with promotions, many households will prioritize essentials and gift lists will shrink.

“This holiday season isn’t just about shopping—it’s a snapshot of the broader economy,” he says. “Tariffs, inflation and labor challenges are reshaping consumer behavior, making cautious spending the norm. For individuals, that means tough choices: trade down, buy less or take on more debt. The festive glow may feel dimmer, but it reflects a reality that could linger well beyond the holidays.”
 

The AI-enhanced, value-conscious season

Dr. Eric Harvey, assistant professor of marketing

“This holiday season represents a fascinating intersection of technological advancement and economic pragmatism,” says Harvey. “Consumers are approaching their shopping with what I'd call ‘optimistic caution.’ They want to celebrate and give meaningful gifts, but they're being much more strategic about how they spend.” 

Harvey observes AI fundamentally changing the discovery and purchase journey, marking a significant shift from last year. “Retailers who've integrated AI-powered recommendation engines, chatbots and personalized shopping experiences are capturing significant market share,” he says. “My students and I have been discussing how consumers—particularly Gen Z and younger millennials—are now comfortable asking AI tools for gift recommendations, price comparisons and even style advice. This moves AI from novelty to genuine utility, and smart retailers are leveraging it not just for customer-facing tools but also for inventory optimization and dynamic pricing strategies.”

Harvey’s take: online shopping will again lead the way, but there are interesting hybrid shopping behaviors emerging. 

"Webrooming, researching online before buying in-store, has gained real traction as consumers seek the immediacy of in-store pickup combined with the confidence of thorough online research. Perhaps most notably, today's consumers are proving remarkably savvy at finding value. They're starting earlier, comparison shopping and gravitating toward brands that offer transparent pricing and genuine value propositions. The ‘dupe culture’ popularized on social media has made consumers less brand-loyal and more quality-conscious at accessible price points. Retailers who succeed this season will blend technological convenience with authentic value, offering seamless omnichannel experiences while respecting that their customers are informed, comparison-savvy, and looking to make their dollars stretch further without compromising on the joy of gift giving.”
 

Brands give the gift of the ideal holiday experience with AI tools

Greg Gerfen, executive-in-residence, advertising and promotion

Could warm holiday vibes be crafted by AI?  The short answer is yes.

“The biggest trend I am seeing in holiday advertising is the blending of traditions and nostalgia with cutting-edge AI technology,” says Gerfen. “Brands are experimenting with how to make AI more human. Many consumers strive and long for ‘idealized holidays’ even though this ideal may not exist in reality.  Through the use of AI production tools, marketers are creating scenery and stories that depict an idealized version of the holidays—the perfect decorations, warmly-lit rooms with fireplaces, outdoor light displays on pristine, snow-covered landscapes, family gatherings where everyone gets along and enjoys each other's company without phones or other tech.”

Look for this trend as you are served up holiday ads this year!

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