As the 2025 holiday season arrives, retailers across the board are bracing for a more strained shopping period. Slowing US economic growth, persistent inflation, and fresh import tariffs are combining to dampen consumer appetite and squeeze profit margins. Overall retail sales are expected to grow just 2.9% to 3.4% this holiday, down from a 4.2% increase last year, signaling a tightening environment. Shoppers are focusing more than ever on value and stretching every dollar.

Though brick-and-mortar is under pressure, e-commerce continues to be a bright spot. Both Deloitte and Adobe forecast US online holiday spending to reach record highs, with Adobe estimating $253.4 billion spent online—a 5.3% increase. Mobile orders, price comparison tools, and “Buy Now, Pay Later” options are rising trends, helping consumers maximize budgets. AI-driven recommendations and targeted promotions are now core parts of the holiday shopping experience.

Import tariffs, especially on Chinese goods and major product categories like electronics and apparel, are forcing many retailers to raise prices. As a result, smart inventory planning, reduced seasonal hiring, and an emphasis on digital-first promotions such as BOPIS (buy online, pick up in store) and exclusive online deals are emerging as this year’s key strategies.

For consumers, while rising prices are an obstacle, the good news is heightened retail competition is fueling early and aggressive promotions. Many are planning to shop earlier and make use of flexible payment and deal-finding tools not as widely available in the past.

Industry analysts note that retailers who can deliver compelling deals, personalized offers, and seamless digital experiences still have room to outperform. While expectations are lower for this season, creative approaches and smart tech may help merchants and shoppers weather the storm together.