Retail journalist Daphne Howland reports, “This year, the holidays are coming at a nerve-wracking time for retailers and consumers alike. Inflation, particularly prices of gas and groceries, is squeezing budgets, and many U.S. households are scrambling to figure out how they will outfit their families for school, set their tables for various festivities and choose gifts for the people they care about.”[1] Even more than last year, U.S. consumers will face difficult choices about what they can afford to put under the Christmas tree come December. Consumer insights journalist Dashia Milden observes, “Holiday shopping is expected to look much different this year with tighter budgets and higher prices.”[2] She reports that a recent CNET survey found, “Nearly one-third (32%) of US adults plan to start holiday shopping before November, and 27% plan to shop during sales. [And] US adults plan to spend less on holiday shopping compared to last year.”

Retail Sales Prospects

In contrast to the CNET survey findings, the Mastercard Economics Institute (MEI) “expects the strongest holiday season in four years, with spending growth of 5.5% year over year.”[3] Grace Devlin, Director of Global Communications at Mastercard, reports, “MEI expects U.S. retail sales, excluding automobiles and gas, to increase 5.5% year over year between November 1 and December 24, based on SpendingPulse insights, which represent in-store and online spending across all forms of payment. That would mark the strongest holiday growth since 2022.” She adds, “Solid spending is expected to show up across channels. Online sales are expected to grow 11% year over year. But the in-store figure is the more surprising one: MEI forecasts 3.6% growth, which would be the strongest showing for physical retail in four years, a sign that stores are holding their ground even as digital continues to scale.” Here’s the bad news. Devlin reports, “MEI estimates about half the growth in spending will be due to higher prices — a pattern across recent holiday seasons, though this year it's elevated energy costs and AI-driven demand behind it.”

Like analysts from the MEI, analysts from Bain & Company expect holiday spending to rise this year. According to a Bain & Company press release, “U.S. retail sales during November and December are forecast to grow 4.5% year over year and top $1 trillion for the first time.”[4] And like MEI analysts, they predict, “Inflation will account for over half of the nominal rise in sales.” Aaron Cheris, a partner at Bain & Company, explains, “While US retailers have reason to rejoice this holiday season as the industry reaches the trillion-dollar milestone for the first time, there are underlying factors that will temper bottom lines.”

Keeping up a recent trend, online shopping is expected to rise more than in-store shopping. Bain analysts expect in-store retail sales to grow 2.5%, while online sales are expected to rise 9% year over year. Adobe analysts are a bit less sanguine about how much online sales will rise. They predict online sales will grow 6.7% year-over-year.[5] They predict U.S. online sales will surpass $275 billion this holiday season.

Devlin predicts this holiday season will be a test case for how agentic commerce will impact sales. She explains, “AI is becoming more deeply embedded in everyday life, while the rise of agentic commerce is introducing new ways for consumers to discover products, compare options, and find value. This holiday season offers a window into how those developments intersect with consumer behavior.” Bain analysts agree noting, “Nearly a fourth (24%) of consumers plan to start their holiday shopping journey using AI platforms like Google Gemini, ChatGPT, and Claude, an increase from 17% last year.”

Underwear Under the Tree

Despite the optimistic predictions about holiday sales. Howland reports, “Going into the season this year, 45% of consumers surveyed by cash-rewards app Ibotta describe their household finances as insecure, and over 70% say saving money will be a priority this year.”[6] Kelly Askew, global retail industry lead at Accenture, told Howland, “Consumers are just having to be a little bit more thoughtful and intentional about where they’re spending, why they’re spending, and how they’re spending.” Retail journalist Anna Hensel notes that rising gas prices could decrease in-store shopping and increase online shopping. She explains, “If gas prices continue to rise, it could lead some consumers to cut back on their holiday gifting budgets. Some may also buy more products online or consolidate in-person shopping trips to save money on gas.”[7]

Because consumers expect prices to continue to rise, many of them have already begun their holiday shopping. Analysts at theTradeDesk observe, “Americans are planning earlier and engaging across a broader mix of channels.”[8] They also note, “Half of Americans say they purchase from both their go-to brands and new-to-them brands during the holidays, creating an opportunity for brands to win new customers while reinforcing existing relationships.” They conclude, “Holiday shopping is happening over a longer period and across more channels, giving brands more ways to reach shoppers throughout the journey. While the majority of sales are still generated in store, e‑commerce is growing significantly faster, signaling where future momentum lies. Brands that activate early, deliver value-driven messaging, and maintain a consistent presence across the open internet can help capture demand and drive stronger performance in the 2026 holiday season.”

Thanks to inflation, journalist Constantine von Hoffman laments, “Shoppers will spend more and buy less this holiday season.”[9] He observes, “[Consumers are] buying fewer items, switching products or brands, looking harder for discounts, and spreading purchases over a longer period.” For some, that may mean new underwear rather than a new dress this holiday season. Freelance writer Lara Ewen explains, “[Adobe analysts predict] online sales of personal hygiene products will grow 150% compared to average September 2026 sales levels, with clothing basics expected to be up by 210%. In addition, baby product sales will grow 113%, pet products will be up 93% and household cleaning sales will increase 49%.”[10]

Concluding Thoughts

Even though consumers are becoming thriftier, there is good news for the kids. Van Hoffman notes, “Consumers are much more willing to cut gifts for adults and themselves than gifts for children. According to The Penny Hoarder, 46% of parents consider presents for their kids to be essential, no matter the price tag.” Many retailers rely on seasonal sales to carry them through the year. Journalist Marianne Wilson reports that certain days between now and the day after Christmas are expected to see more shoppers than other days. She writes, “Based on Sensormatic Solutions' U.S. traffic data, the company predicts that the season’s busiest shopping days will be: 1) November 27 (Black Friday); 2) December 19 (Super Saturday); 3) December 12 (Second Saturday in December); 4) December 26 (Boxing Day); 5) December 23 (Wednesday before Christmas); 6) December 20. (Super Sunday); 7) November 28 (Saturday after Black Friday); 8) December 22 (Tuesday before Christmas); 9) December 5 (First Saturday in December); and 10) December 21 (Monday before Christmas).

Analysts from Optimove remind us, “Holiday shopping remains deeply rooted in relationships and tradition. Family is a clear priority, shaping both purchase decisions and budget allocation.”[12] They also report that a survey of consumers found, “Quality of products and services is indicated as the main driver for holiday purchase decisions. When shopping for products, quality was selected by 81% of consumers, followed by price at 70% and brand reputation at 46%. Promotions rank much lower at 23%.”

Footnotes

[1] Daphne Howland, “Note from the Editor,” Retail Dive Holiday Edition, 29 September 2026.

[2] Dashia Milden, “US Adults Have Tighter Holiday Shopping Budgets Amid Rising Tech Costs, CNET Finds,” CNET, 29 September 2026.

[3] Grace Devlin, “From AI-powered planning to the Christmas Eve rush: What to expect this holiday season,” Mastercard Economic Insights, 23 September 2026.

[4] Tatiana Walk-Morris, “Holiday spending forecast to top $1 trillion,” Retail Dive, 8 September 2026.

[5] Kevin Fu, “Adobe: U.S. Holiday Shopping Season to Hit Record $275.1 Billion Online, Rising 6.7% YoY,” Adobe News, 28 September 2026.

[6] Daphne Howland, “Retailers, consumers both on edge as the holidays approach,” Retail Dive, 29 September 2026.

[7] Anna Hensel, “Gas price spikes could put a last-minute squeeze on holiday supply chains,” Modern Retail, 21 September 2026.

[8] Staff, “2 in 5 holiday shoppers start searching before Black Friday,” theTradeDesk, 24 September 2026.

[9] Constantine von Hoffman, “Shoppers will spend more and buy less this holiday season,” MarTech, 29 September 2026.

[10] Lara Ewen, “Consumers aren’t just buying gifts this holiday season. They’re stocking up on essentials.” Retail Dive, 28 September 2026.

[11] Marianne Wilson, “The 10 busiest shopping days of 2026 holiday season will be...” Chain Store Age, 22 September 2026.

[12] Staff, “Holiday Shopping Report 2026,” Optimove.