Amid economic challenges, holiday spending is expected to decline in 2025, with notable generational shifts and a focus on value-driven purchases.
The 2025 holiday season presents a complex landscape for both consumers and retailers. According to PwC’s Holiday Outlook survey, spending is anticipated to decline by 5% compared to 2024, marking the first significant drop since 2020. This shift is driven by economic factors, including rising prices, tariffs, and the overall cost of living. However, the changes in spending are not uniform across demographics, with generational differences playing a crucial role.
Travel Plans and Motivations
Travel plans remain stable, with 44% of U.S. consumers expecting to travel during the holidays. The primary motivation is visiting family and friends, though cost concerns are a significant factor for those who choose not to travel. Gen Z shows the most considerable reduction in travel plans, with only 55% intending to travel compared to 61% last year.
Generational Spending Trends
Gen Z, comprising individuals aged 17 to 28, is expected to reduce holiday spending by 23%, the most significant decrease among all age groups. This reduction is attributed to the challenging job market and financial instability. In contrast, millennials, Gen X, and baby boomers are likely to maintain or slightly increase their holiday budgets. Baby boomers, in particular, plan to increase their spending by 5% compared to the previous year.
Consumer Behavior and Economic Influences
The survey reveals that 84% of consumers plan to reduce their spending over the next six months, particularly in areas such as dining out, clothing, and large purchases. Despite a projected 5% decrease in average holiday spending, consumers remain committed to preserving holiday traditions. Gift spending, however, is expected to decline by 11%, while travel and entertainment expenditures are expected to remain stable.
Value and Sustainability in Purchases
The focus on value is evident across all generations, with 78% of consumers seeking less expensive alternatives and anticipating deeper post-holiday discounts. Gen Z is notably inclined towards sustainability, with 63% opting for resale and upcycled products. This generation is also more likely to consider health and wellness factors in their purchasing decisions.
Regional and Demographic Variations
Spending patterns also vary by region and family status. Households with children are expected to spend significantly more than those without, averaging $2,349 compared to $1,089. Additionally, consumers in the Northeast and West are projected to outspend the national average, indicating regional differences in economic resilience and consumer confidence.
Technological Integration in Shopping
Technology plays a crucial role in holiday shopping, with Gen Z using social media as frequently as search engines to discover gift ideas. The use of AI for finding gift ideas and travel recommendations is also on the rise, particularly among millennials. However, traditional customer service channels remain important, with phone support being the preferred method for resolving issues across all generations.
Payment and Fulfillment Preferences
Payment methods are evolving, with the use of credit cards increasing significantly. Cash, gift cards, and digital payment options, such as PayPal, are also gaining popularity. Fulfillment preferences are diversifying, with a notable increase in buy-online-pick-up-in-store options and same-day delivery, especially among younger consumers.
Key Shopping Periods
The holiday shopping calendar is compressed this year, with Thanksgiving, Black Friday, and Cyber Monday occurring later than usual. This timing is expected to concentrate spending, with 39% of total holiday gift spending projected to occur during the five days from Thanksgiving to Cyber Monday.
Focus on Food and Traditions
Despite economic pressures, consumers are prioritizing food, family, and traditions. Seventy-two percent plan to gather over a home-cooked meal, emphasizing the importance of maintaining cultural and familial rituals. Food is also emerging as a popular gift category, offering affordability and a sense of personal care.
Conclusion
The 2025 holiday season reflects a shift towards cautious spending, driven by economic uncertainty and generational differences. While consumers plan to cut back, they remain committed to celebrating and maintaining traditions. Retailers must adapt by understanding the nuanced needs of different consumer segments and offering value-driven options. Brands that can effectively respond to these shifts are likely to succeed in building long-term customer loyalty beyond the holiday season.
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