Dive Brief:
- Gen Z consumers this year plan to cut their holiday spending by nearly a quarter. This is a stark contrast to last year, when their average spend rose 37% from 2023, according to PwC’s holiday outlook.
- Older generations are at least maintaining their plans, more or less. Millennials plan to spend about 1% less on average, while Gen X shoppers plan to spend 2% more and baby boomers plan to spend 5% more.
- Gen Z’s pullback is set to drag overall holiday spending down 5%, the first drop since 2020, per the report. This differs from Deloitte’s expectation for holiday sales to rise up to 3.4%.
Dive Insight:
It’s true that Gen Z consumers, whose average age PwC pegs at 22, increasingly have financial obligations related to adulthood, including student loans and having families. But this is also a generation with a fundamentally different attitude toward consumption, according to Ali Furman, consumer markets industry leader at PwC US.
“What we're seeing is a generation that's growing up, getting a bit smarter about budgeting and more intentional about spending,” Furman said by video conference. “They're known to ride social-driven trends, and I think retailers really need to prioritize some of the novelty and value that they care about, through limited drops, treasure hunts, affordable collaborations on social — to excite them and balance their demand for both uniqueness and price.”
Price, in fact, is “Gen Z’s love language,” according to Furman. This generation doesn’t hesitate to trade down, and in fact seeks out dupes or secondhand items, Furman said.
“It's important to emphasize a shift in generational behaviors,” she said. “It's this value-oriented consumer that we've been talking about for over 24 months is really kind of normalizing. It's smart shopping, stretching your budget, perhaps spending earlier in the holiday season, like we saw with Halloween, that ‘Summerween’ period. That's an important strategy that we think will be employed for the holidays as well by retailers.”
Baby boomers are beefing up their budgets the most — their spending fell 2% last year — and are also the fastest-growing cohort buying online, according to PwC’s research. But majorities in all generations are thinking in terms of value this year, with Google searches for “discount” and “coupon code” growing by 11%. Nearly 80% are seeking less expensive alternatives and 65% are looking for discounts on seasonal merchandise after the holidays.
Indeed, deal-seeking is set to continue into 2026: 84% of consumers plan to cut back in the next six months, citing rising prices, new tariffs and the higher cost of living, per PwC.
“It makes sense that retailers are trying to meet the consumers where they are and provide discounts and sales outside of just the traditional large holidays,” Furman said.
