AlixPartners sees ‘underwhelming’ holiday growth, shoppers focused on sales
Holiday shoppers across income brackets will be focused on deals this year, with consumers becoming more cautious as inflationary pressures take a toll on household spending.
That’s one of the findings of global consultancy firm AlixPartners’ “2025 U.S. Retail Holiday Outlook,“ which forecasts an "underwhelming" 3% to 5% growth rate in holiday retail sales this year. This is a notable decrease from last year's 4% growth and 2023’s 6% rate.
Additionally, at the low end the 2024 forecast is essentially flat with inflation taken into consideration and only up 2% at the high-end, the firm noted.
Other holiday forecasts, including those by Deloitte and PwC, have also predicted a slowdown in sales.
In other findings, 80% of the surveyed consumers said they plan to spend the same or less this year than last, with 35% planning to cut back on spending. The top strategies for reducing spending include shopping for more affordable brands (including private label), buying fewer gifts overall and purchasing a significant number of gifts on sale or promotion. Nearly 40% of the polled consumers said they intend to buy 50% or more of their holiday purchases on sale.
“This year, overall, retailers face a consumer who is more cautious and frugal,” said Bryan Eshelman, partner & managing director in the retail practice at AlixPartners. “They will be on the prowl for deals, and retailers will need to be creative, online and in-store, with how they lure in shoppers. Markdowns need to be carefully executed. And regardless of income, shoppers are prioritizing value and want the best bang for their buck.”
In other findings, high-income consumers (those making more than $100,000 per year) will be the primary drivers of increased spending this holiday season. Over 30% said they plan to spend more this year, while less than 20% of other income groups intend to increase their budgets.
The gap between low- and high-income earners was also seen in prior AlixPartners research that showed 31% of higher-income shoppers expecting to increase their spending this year (especially on travel and leisure) versus 16% of lower-income households.
Other key findings are below.
- In-stock rates are crucial for in-store shoppers. If an item is out of stock, just one-third of consumers said they will complete the purchase on the retailer's website, with most opting to go to another retailer's store or website.
- Shoppers across all income brackets will be looking to reduce spending in almost every category, with holiday food and beverage enjoyed at home being the sole category with anticipated increases, which is being primarily driven by high-income households.
- Households are planning to start their holiday shopping even later this year, with only 35% saying they will begin before Halloween (which is down 3 percentage points from last year).
- In-stock rates are crucial for in-store shoppers. If an item is out of stock, just one-third of consumers said they will complete the purchase on the retailer's website, with most opting to go to another retailer's store or website.
- When asked about the economy, 50% of respondents believe the economy is worse now than a year ago, and 45% expect it to worsen in the coming year.
- One-third of shoppers report their personal financial health is worse than a year ago, with only 27% reporting an improvement.
“The 2025 holiday retail season is shaping up to be a challenging one, with consumers remaining highly cautious and price-sensitive," said Sonia Lapinsky, partner and managing director and leader of fashion retail at AlixPartners. “Retailers will need to adapt to these evolving behaviors by focusing on value, optimizing inventory management and leveraging integrated channel strategies to meet consumers wherever they choose to shop. Understanding the nuances of consumer sentiment and tailoring offerings, especially for high-income households who are still willing to spend, will be crucial for success."
