Consumers to prioritize quality over quantity for upcoming holiday shopping season
Tight budgets mean shoppers will splurge on large experiential gifts instead of buying multiple small gifts, predicts the director of the Texas A&M Center for Retailing Innovation.
Strategy is the name of the game for the 2025 holiday shopping season, as consumers will be spreading out their shopping and looking for the best deals possible on practical gifts.
Budgets may be tighter this year due to inflation contributing to higher costs. Thomas McMillan, professor of practice in marketing and director of the Center for Retailing Innovation at Texas A&M University’s Mays Business School, said while consumer spending is projected to keep rising, notable shifts in consumer behavior is also anticipate. To avoid large credit card bills in January, shoppers will likely stretch their spending throughout the season, strategize how to get the best deals possible using technology and focus on engaging products.
“If I had to sum up this holiday season, people are going to be buying fewer things this year, but they’re going to be choosing gifts that they feel are meaningful to the people that they care about and love, whether that’s a durable product or a memorable experience,” McMillan, said. “The holiday shopping season is going to be earlier and longer, but more thoughtful.”
The holiday shopping season also kicked off earlier than ever this year. McMillan said that by Thanksgiving, households will likely be halfway through their holiday shopping.
“Families were carving pumpkins with one hand and scrolling through Black November, or Early Black Friday, deals on the other hand,” he said. “Shoppers are going to want to feel smart about the choices that they make from now until the holidays. They’re spreading out purchases so they can avoid huge bills in January, and we are starting to see credit utilization climb up a little bit in consumers, particularly in lower income households.”
Some hot-topic gifts this year include technology, apparel, cookware, home improvement tools and self-care items. Gift cards will remain popular as last-minute gifts, and high-income shoppers are expected to continue to drive spending based on convenience. On the other hand, McMillan said families are more likely to skip piles of small stocking stuffers and splurge on one big gift based on their loved ones’ interests.
“The biggest winner of this year are gifts that last, whether it’s the tech you use every day, the cookware that becomes part of the family meals or the experience that turns into a favorite story,” he said. “You’ll also see more experience-related gifts this year like concert tickets, travel vouchers and cooking classes, to name a few examples. These are continuing to come back because people crave shared moments together.”
Many large department stores will continue to utilize omnichannel strategies for holiday shopping, allowing consumers to make purchases using mobile apps, social media and physical stores. This approach also allows consumers to compare competing prices without having to travel, McMillan said.
“Large retailers were able to lock in their pricing earlier than usual. You might see fewer deep discounts this year, which I think is why you’re going to see more of that strategy game going on with consumers,” he said. “If a dad wants a grill, for example, you’ll see the family debating the best deal and looking at every option they find, and when they find the best option, they’ll pull the trigger.”
Although consumers are looking for the cheapest options available, small businesses may not have the ability to discount their items and still make ends meet. McMillan said small businesses can still gain an advantage this holiday season by emphasizing connection or convenience.
“This is the toughest stretch I’ve seen for small businesses throughout my entire career. They’re not buying enough to really have good negotiation power with their suppliers,” he said. “At the end of the day, small businesses can provide better service than a large brand and often have one-on-one relationships with customers. When a local toy shop remembers your kid’s name or a boutique wraps your gifts for you, those experiences become part of the gift and that’s something consumers are looking for.”
Current projections show that holiday spending, which includes November and December sales, will increase between 2.5% and 4.2% compared to the 2024 shopping season, which had an increase of about 4.3% from the prior year. Although the increase in holiday spending may be less pronounced this year, McMillan said this holiday season is still expected to be a strong one.
“It’s all about smart spending, and shoppers this year have a value mindset,” he said. “This season isn’t just about what’s on sale. It’s about what sticks, and the retailers that help shoppers find something meaningful, not just marked down, are going to be the ones that win the holidays.”
