Retailers are feeling pretty good about the holiday 2025 season, even though shoppers are likely to shorten their gift lists as they fret over tariffs, the economy and geopolitical turmoil.
Retailers, partially lifted by inflation, expect on average low-single-digit sales gains for the holiday season, slightly under last year’s 4.2 percent sales growth. Here’s why: Number one, Americans’ spending behaviors belie how they feel about the world and their personal finances. Consumers continue to show shopping resilience while purchasing selectively and cautiously for deals. The back-to-school season has been good and widely seen as a barometer for the holiday period. Tariffs shouldn’t jack up merchandise prices too much, at least not for the rest of this year, as major retailers absorb much of the higher costs of importing.
In addition, retailers are focusing more on value, price, private labels and investments in AI and digital tools to enhance service and personalization. Furthermore, the stock market is holding up, interest rates are seen coming down, and the end of the de minimis exemption for goods valued under $800 — which allowed retailers, including Chinese mass merchants, to sell their wares directly to U.S. consumers without incurring extra costs — should make U.S. retailers more competitive.
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More significantly, retailers have been extending their holiday marketing, many launching campaigns around Halloween, some even promoting “Christmas in July,” after importing holiday goods earlier this year. Macy’s ran a “Black Friday in July” sales event for five days starting July 23. It also marketed a “Christmas in July” sale on July 25 for the first time, offering holiday and general merchandise, according to a news release. For some consumers, “Christmas in July” is not just about saving money, it’s also about saving time and avoiding the holiday rush for popular items.
Like last year, there are 27 days between Thanksgiving and Christmas in 2025.
Sources told WWD they expect mass merchants, discounters, off-pricers, warehouse clubs, electronics stores and selected apparel specialty retailers to do well during holiday 2025.
Walmart has an upbeat outlook on the season, based on steady back-to-school shopping. The company raised its forecast for sales gains this year to 3.75 percent to 4.75 percent, up from the previous forecast of gains ranging from 3 percent to 4 percent.
“Back-to-school is usually something of an indicator of how the holidays will go, and we feel good about how it went for us in terms of units and dollars sold and inventory sell through at both Walmart and Sam’s Club,” Doug McMillon, president and chief executive officer, said during a second-quarter conference call with investors and industry analysts. “Our top back-to-school items had a lower price than last year, and we offered a basket of everything students need for their first day of school for under $65.
“We had our Walmart U.S. store managers together last week for our holiday planning meeting, where they got to see many of our new items, and pricing for the upcoming season. We liked what we saw and heard, and we like our position for the back half of the year. We’re expecting to have a good holiday season at Walmart,” he added.
“It should be a good, solid holiday season,” said Stephen D. Lebovitz, president and CEO of CBL Properties. His outlook, he said, is “definitely more positive now than if you would have asked me the same question in April or May.”
He said U.S. President Donald Trump’s recent pause on China tariffs for 90 days, and locking in some trade deals in Europe “gives the retailers more clarity on what they are paying for goods, more confidence in ordering inventory and being stocked correctly for the holidays. Also, the economy has continued to perform well. The stock market is up. Consumer confidence has hit some low points, but the degree to which we see consumers shopping would suggest otherwise.”
Asked when he thinks retailers will kick off their holiday campaigning, Lebovitz said, “I don’t think it can start any earlier than it has in recent past seasons. Once we finish Halloween, holiday starts ramping up. It’s hard to imagine it accelerating anymore.”
The National Retail Federation predicts holiday sales gains of between 2.5 percent and 3.5 percent over the 2024 holiday season; Deloitte forecasts 3.1 percent growth.
Somewhat less optimistic is Marshall Cohen, chief retail adviser at Circana, who sees retailers posting flat to 2.5 percent growth for holiday 2025. He said that’s based on current trends; consumer behavior from last year; how the calendar falls; the propensity for travel and other expenses cutting into retail spending, and some elevated prices.
“Retailers will absolutely push for an early start [to the holiday season] and consumers will respond because they are thinking about price increases and supplies running out. You will see an early start form a promotional standpoint. Then there will be a post-Black Friday lull and a surge in shopping in the last week, but that lull after Black Friday is getting deeper,” he said.
Asked if the back-to-school season is a barometer for how the holiday season plays out, Cohen said, “It is sometimes an indication of good things, it tells you the willingness of the consumer to engage, look for a deal, buy higher price or new product, and where and how the consumer is shopping. Back-to-school is definitely a strong indicator of things to come but not necessarily foolproof.”
“We have always felt that the back-to-school season is a good but imperfect predictor of subsequent holiday sales,” said Craig Johnson, president of Customer Growth Partners, the consulting and research firm. He said he’s “cautiously optimistic” about the holiday season, partly because shoppers have shown resourcefulness and resilience ever since the COVID-19 bounceback by retailers in late 2020.
“There are four key macro ingredients to a successful holiday landscape,” Johnson explained. “There has to be solid disposable personal income growth, which year-to-date is up 4.5 percent which is solid and consistent with overall holiday sales of between 4 and 6 percent, in nominal numbers.” Factoring in inflation, 4.5 percent comes out to 1.6 percent to 1.7 percent real sales growth, he added.
“The second macro factor is that consumers have money in hand to spend — the dry powder. We believe the personal savings rate is a nice solid 4.7 percent and that compares to last year’s 3.8 percent.
“The third factor is you have to have newness, in both format and fashion. We are seeing a lot of new openings by stronger players,” Johnson said, also pointing to the teen market with such players as Abercrombie & Fitch partnering with the NFL. “Retailers doing joint marketing do bring some newess,” he said.
“The fourth macro factor is there has to be a catalyst that can trigger growth. We think the rebound in the housing market, which just bottomed out, will gain momentum while interest rates slide down further. Once the interest rate hits 5 percent, housing will take off,” spurring sales of home improvement merchandise, consumer electronics and major appliances, he said.
On the fashion side, Johnson expects athleisure and footwear to shine this holiday season, including such brands as Free People, Alo and Vuori, which deliver newness.
“Strong and consistent transaction growth, not footfall necessarily, is the hallmark of all superior retailers. Look for them to be the winners this holiday season. So it’s Home Depot, Lowe’s, Costco, TJX Cos., Walmart. They all know how to drive growth, and the bigger you are, the more likely you are able to motor through whatever tariff tides come your way. They will work out deals to protect their customers. A lot of them will take cost pressures off the consumer and move it up the value chain,” Johnson said.
