Holiday Sales Rise, But Consumer Confidence Lags Amid Inflation
As the 2026 holiday season approaches, retailers face a challenge: enticing shoppers amid high prices and lukewarm consumer sentiment. While few will skip the festivities entirely, many are budget-conscious as rising costs for essentials like gas and groceries strain their finances.
Holiday retail sales in the United States are projected to rise year-over-year according to various forecasts. However, this growth is likely driven more by inflation than a surge in holiday cheer. Higher-income households may have more disposable income due to a strong stock market, while lower-income households struggle with everyday expenses.
Holiday Sales Forecasts: A Mixed Bag
The National Retail Federation (NRF) predicts a 4.2% increase in holiday retail sales, reaching $1.013 trillion. Mastercard is more optimistic, forecasting a 5.5% rise in U.S. retail sales between November 1st and December 24th, the strongest growth since 2022. Bain & Co. falls in between, anticipating a 4.5% increase to $1.016 trillion. Adobe focuses on e-commerce, projecting a 6.7% rise in online holiday sales to $275.1 billion. Mastercard and Bain are even more bullish on online sales, expecting 11% and 9% growth respectively.
These forecasts highlight a potential shift in consumer behavior. While overall spending may rise, a significant portion of this growth could be attributed to higher prices rather than increased consumer confidence.
AI: The New Holiday Shopping Assistant
This holiday season, AI is poised to play a significant role in shaping shopping experiences. Agentic commerce, where AI handles research and shopping with minimal human input, is gaining traction. Mastercard reports that “AI power users” – those with paid AI subscriptions – tend to shop across a wider range of merchants, including smaller retailers, and often start their holiday shopping earlier.
Surveys indicate that 77% of consumers who use AI for online shopping feel more confident in their purchases, and 69% are less likely to return items. While only 5% of YouGov respondents are comfortable letting AI make purchases autonomously, it’s clear that AI is becoming a valuable tool for research and comparison shopping.
Economic Factors and Consumer Behavior
Economic uncertainty looms over this holiday season. Bain highlights that 56% of shoppers believe the economy will impact their holiday plans, the highest since 2011. Additionally, 64% expect higher prices due to tariffs.
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Despite these concerns, American consumers continue to spend. YouGov found that many Americans are cautious about their spending, with 40% of shoppers saying they expect to spend about the same as last year, 17% expecting to spend less, and 15% expecting to spend more.
Retailers are responding to consumer needs. Some plan to pass tariff refunds to shoppers, which could boost traffic. However, economic uncertainty remains a significant headwind.
Shopping Trends and Strategies
Early shopping is on the rise. Amazon’s Prime Day in October has shifted spending patterns, with Adobe estimating online spending in October.
Retailers are starting promotions earlier due to the compressed holiday season.
Bain’s survey reveals that shoppers plan to split their shopping between in-store and online. Mastercard forecasts growth in in-store sales.
Beyond discounts, retailers are focusing on exclusive assortments to stand out. Bain emphasizes that unique offerings can differentiate retailers in a competitive market.
