A look at the 2026 holiday season

The tone for 2025’s holiday season was set early as forecasts for consumer spending predicted sales would grow healthily, even if underlying volumes didn’t. 

Shoppers, already pushed close to their breaking point by months of inflation and tariff anxiety, entered the holiday season feeling cautious and price sensitive. They did still spend — despite a budget pullback from previous years — but many leaned on buy now, pay later financing to do so, which could have long-term implications in the new year.

Retailers weren’t going into the season at their best, either. Outplacement firm Challenger, Gray & Christmas warned in September that seasonal hiring could hit its lowest point since 2009 — and indeed, few retailers gave details on their hiring efforts throughout the quarter. Instead, job cuts continued to hammer the industry as retailers scrambled to adjust to a tariff-altered buying environment.

Still, there were bright spots. E-commerce, given renewed life thanks to AI-driven shopping experiences, was popular once again in 2025. And shoppers showed up for the season’s annual Black Friday rush, although many did so online instead of in stores.

As we kick off a new year, here’s a look back at some of the biggest trends that impacted the holiday season in 2025.

Value won

Despite warning signs for months that tariffs, inflation and consumer wariness were looming over the season, it now looks like retailers fared pretty well in Q4 and, therefore, the year. 

“Holiday brought the cheer, tariffs have (so far) been manageable, stocks are rebounding, and, most importantly and likely going unnoticed, the majority of our coverage actually operates at, or close to, their Gross Margin peaks,” Guggenheim analysts led by Simeon Siegel said in a Dec. 9 client note.

Value — found at discount or off-price stores or via promotions elsewhere — has been the name of the game for consumers most of the year. That’s been true at the holidays, too, and will continue into 2026, analysts say.

“The Costco Economy is a sign that middle class families feel squeezed,” Navy Federal Credit Union Chief Economist Heather Long said by email. “Inflation is ticking back up, and unemployment is rising. The middle class is still spending, but they are focused on the basics and little splurges. Larger tax refunds in 2026 will help in the spring, but it’s going to be a tough winter.” 

How consumer fervor helped

Although consumers have been hesitant to open their wallets for discretionary items, many will do so — apparently gladly — for special occasions. In that way, Q4 holiday shopping was much like the rest of the year, according to UBS analysts, speaking at a Dec. 8 virtual press conference.

“It's mostly been a continuation of what we've seen throughout much of the last several quarters, which is the consumers coming out, shopping around key events, seeking out deals, and in between those key periods, retreating a bit,” UBS analyst Michael Lasser said.

Shoppers also seem to be segmenting purchases, UBS found. They bought Halloween costumes early and decor later, and in Q4, similarly bought core items early and decor closer to the holiday.  

In fact, consumers pulled back on spending on decor and other lower-priority and/or disposable items like gift wrap and greeting cards, “where trading down is becoming more common,” according to a report from Colliers.

The intensity of holiday marketing and promotions could ultimately drive a record number of returns once the season is over. Marty Bauer, an e-commerce expert at customer-messaging platform Omnisend, said sales events like Black Friday and Cyber Monday drive impulse buying.

“When everything feels urgent (‘Only 2 left!’) shoppers are more willing to take chances, buying multiple sizes, colors, even brands they’re unsure about,” Bauer said by email. “Many of those orders end up going back once people realize the purchase was driven by the discount, not real need.”

An early kickoff to a season of deals

Retailers once again kicked off the holiday season early with sales events just weeks after summer officially ended.

Like years past, Amazon launched its Prime Big Deals Day event in early October, with others quickly following suit including Walmart, Target and Kohl’s.

While consumers always seek out deals at the holidays, economic uncertainty intensified this season. Inflation, tariffs and a government shutdown during the early holiday season sent consumer sentiment down, falling to the lowest point in three years in November.

Nearly three-quarters of consumers said they would be more selective in their holiday purchases, while almost two-thirds of shoppers said they’d spend more time looking for deals in 2025, according to an ICSC survey from October.

To entice consumers, Walmart hosted two Black Friday events, as well as a Cyber Monday event. And Amazon kicked off a nearly two-week-long Black Friday sale, featuring “millions” of deals.

Halloween: The holiday before the holidays

One big lead up to the season is a holiday within itself: Halloween. 

Its increased financial prowess can’t be ignored. In 2025, spending was expected to hit a record $13.1 billion, according to the National Retail Federation, up about 13% year over year. 

“Even with concerns about price increases due to tariffs, Halloween continues to resonate with consumers of all ages,” Katherine Cullen, NRF vice president of industry and consumer insights, said in a September statement. 

Over three-quarters of adults celebrate and treat Halloween like an encapsulated version of the winter season, according to PwC. It also sets the stage for holiday merchandising as the emotional appeal and in-store experiences resonate with shoppers, particularly with Gen Z.

The tariff reaction from retailers and consumers

Tariffs swayed both the consumer and companies in 2025. While shoppers braced for higher prices, levies altered buying as brands ran into problems forecasting the cost of goods from suppliers. 

The result was a consumer base that was actively looking for deals and for companies to provide value, in some cases willing to trade down to get a better price point. 

Some retailers, on the other hand, have been able to mitigate tariffs’ impact. Off-price retailers in particular have been able to protect margins so far. Executives at Ulta Beauty recently stated that brands are continuing to be cautious about passing on tariff-related price changes to customers. However, the company saw more brand-driven price increases in Q3 compared to the previous quarter. 

Retailers bet on nostalgia and freebies

In the face of a tough economic environment, retailers this holiday season leaned into the nostalgia of well-loved holiday characters, fresh experiential concepts and exclusive in-store perks. 

Target brought back its “Hot Santa” fictional store team member named Kris K. in 2025, along with new cartoon-like holiday characters such as the Get-Ready Yeti and The Gifting Mice. Meanwhile, Walmart enlisted the help of actor Walton Goggins to portray the Grinch, the iconic Dr. Seuss character, for its “WhoKnewVille” holiday campaign.

Some retailers hosted holiday pop-ups and special experiences for customers. T.J. Maxx debuted a “Maxxinista Express” experience featuring a multicity holiday tour on a double-decker bus for superfans. Additionally, QVC held a two-day holiday pop-up in the Flatiron District of New York City designed as a reimagined version of Mrs. Claus’ house.

For Black Friday, Lowe’s and Target offered exclusive in-person giveaways to some of the first shoppers that day. Target offered a free limited-edition tote bag filled with giveaways to the first 100 guests in line while Lowe’s gave away a bucket with products to the first 50 customers.

Artificial intelligence grew to modest heights

This holiday season proved that AI is a growing presence in the retail world.

AI traffic to U.S. retail websites on Black Friday increased 805% compared to 2024, per Adobe Analytics data. Additional data from Salesforce found that $3 billion in U.S. online sales were driven by AI and agents during the important shopping day.

Retailers and tech companies rolled out a slew of AI-related features throughout 2025, but some even debuted tools just in time for holiday shopping. 

Google — which operates AI platform Gemini — introduced a suite of AI-powered shopping features ahead of the holidays. The launch allows U.S. Gemini app users to receive shoppable product recommendations, pricing and comparison tables. It also debuted a “Let Google Call” feature that will call local stores to verify product availability and more on behalf of users. 

Meanwhile, OpenAI debuted shopping research capabilities for ChatGPT users in November. The tool is meant for more in-depth product research and the company said it made “nearly unlimited usage available to all plans through the holidays.” 

On the retailer front, Target launched a conversational AI-powered gift finder ahead of Black Friday, which gives consumers gift recommendations based on details such as the age and special interests of recipients. 

Focused on merchandise newness, nearly 70% of Target’s Halloween collection in 2026 is new and about 60% of it is only available at the mass retailer. 

Sixty-percent of decor products are under $10 while half of all Halloween costumes and accessories are priced under $25, per a company announcement.

“Our guests are looking for more than simple Halloween decorations or costumes,” Target’s Chief Merchandising Officer Cara Sylvester said in a statement. “They want the latest trends, meaningful ways to celebrate with family and friends, and products that reflect the fandoms they’re excited about. This year’s assortment does just that, with elevated decor, fan-favorite characters, seasonal treats and creative family activities that make it easy to create memorable Halloween moments without compromising on style or value.”

Target’s private label Threshold brand will have Halloween-themed glass pumpkins, rattan decor, haunted village pieces and more. Additionally, Target’s costume selection will include options from K-Pop Demon Hunters, an expanded Pokémon selection, Toy Story, Super Mario and more.

Earlier in 2026, the retailer announced that Threshold — its private label house and decor brand — would relaunch this summer and debut new shop-in-shops at 200 stores as part of Target’s broader turnaround effort.

Sylvester took on the chief merchant role in February as part of a broader C-suite shuffle under CEO Michael Fiddelke. The move marked a change in Target’s leadership approach, transitioning to a single chief merchandising officer structure.

In May, a new slate of senior vice presidents within the merchandising team were announced that report to Sylvester.

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By Wunderkind

For years, the Black Friday growth formula was relatively straightforward: increase media spend, drive more shoppers to owned channels, promote aggressively and convert as much demand as possible before Cyber Week ends.

In 2026, that equation is becoming harder to justify.

Customer acquisition is more expensive than ever, and competition for attention is intensifying, with every retailer seeking to push their message louder and further. Savvy shoppers are researching earlier, comparing more retailers and moving between devices and channels before deciding where to buy. That makes every visitor a more valuable and more expensive opportunity.

The implication for retailers heading into BFCM is significant: winning peak season may depend less on how much traffic you can buy and more on how effectively you can recognize, engage and convert the traffic you already have.

The most expensive BFCM visitor is the one you can’t recognize

Think about what happens after a retailer pays to acquire a shopper. They arrive, browse several products, compare prices and perhaps return later from another device. Then they leave without signing in, subscribing or purchasing.

To the shopper, that's part of a single buying journey. To the retailer, much of that intent can disappear.

This is particularly costly during BFCM because shoppers rarely visit one retailer and immediately purchase. They're comparing products, evaluating value and waiting for the right moment to act.

The retailers that can recognize more of those visitors have more opportunities to continue the conversation through owned channels. Those that can't find themselves paying again to reach the same shopper through advertising.

That's why addressable audience growth should be a BFCM revenue strategy, not simply a CRM metric.

The race starts before black friday

There was a time when consumers would at least finish their turkey and pumpkin pie before searching for discounts. Those days are gone.

Research and comparison increasingly happen weeks before Black Friday. That gives retailers a valuable window to capture demand before competition reaches its peak.

October and early November should therefore be treated as audience-building season. Email and SMS capture, early-access programs, product alerts, loyalty benefits and VIP experiences can turn early interest into an audience a retailer can engage when purchase intent strengthens.

The objective isn't simply to accumulate subscribers. It's to create more opportunities to influence shoppers through channels the brand owns, rather than continually paying to reacquire their attention.

By the time Black Friday arrives, the strongest starting position will be the audience you've already built.

More messages aren't the answer either

Owned channels aren't automatically efficient. Cyber Week produces an avalanche of noise: email, SMS, advertising and social activity. Simply shifting from “buy more traffic” to “send more messages” recreates the same problem somewhere else. Relevance becomes the differentiator.

A shopper who repeatedly views a product doesn't necessarily need another generic promotion. Someone abandoning a high-value cart may require a different intervention from a first-time browser. A customer already responding to email shouldn't automatically receive the same treatment across every other channel.

This is where identity, behavioral signals and real-time decisioning become commercially important. The goal is to understand enough about customer intent to determine the next best action, whether that's a triggered email, an SMS, a relevant onsite experience or no additional message at all.

Combining identity and behavioral intelligence with existing marketing technology allows retailers to activate more relevant, timely experiences across owned channels.

The principle is simple: better recognition creates more opportunities; better decisioning determines which opportunities are worth acting on.

Measure BFCM beyond the weekend

Unfortunately, the job of a marketer never sleeps. There’s no popping champagne corks once we roll into Tuesday. Peak season can deliver huge volumes of first-time buyers and new subscribers. Treating the transaction as the finish line leaves much of that investment unrealized.

Post-purchase journeys, personalized recommendations, loyalty programs and relevant follow-up can turn peak-season acquisition into repeat revenue and higher customer lifetime value.

That makes BFCM less of a four-day sales event and more of an extended revenue cycle, one that begins with audience growth before November and continues with retention long after Cyber Week, into the holidays, 2027 and beyond.

The retailers that pull ahead this BFCM won't be those spending the most to enter the race; they'll be the ones extracting more value from every customer they've already paid to reach

In the first half of 2026, U.S. toy dollar sales jumped 17% from a year prior, the highest year-over-year growth in the past six years, according to a new Circana report. 

Unit sales increased 12% from a year prior and the average sales price of toys rose 4%, a trend driven in part by increasing demand for collectibles, trading cards, licensed products and fandom-driven play. Adult-only households accounted for 55% of toy sales and increased 16% through June, per the report.

Toy sales for adults over the age of 18 grew 25% in the first half of 2026, making the cohort the largest contributor to the industry’s rise. 

“At a demographic level, the toy industry’s growth continues to be fueled increasingly by older consumers,” according to Circana. 

Meanwhile, toy purchases for children aged 12 to 17 swelled 33% year over year. Combined, teens and adults generated almost 60% of the industry’s dollar gains in the first half of 2026. 

“We’re seeing toys increasingly function as hobbies, fandom ecosystems, and social experiences rather than traditional children's products,” Kristen McLean, vice president of client insights for Circana’s entertainment knowledge group, said in a press release. “That's expanding the consumer base and creating new opportunities for manufacturers and retailers that understand how to engage collectors, enthusiasts, gifters, and self-purchasers.”

While adults are fueling toy sales overall, the trend is currently driven by women. In another recent report by Circana, the research firm found that women drove more than half of the industry’s growth between January and April. 

Toy giants Mattel and Hasbro have each benefited from booming toy sales. In July, Hasbro’s second-quarter net revenue grew more than 16% year over year to $1.1 billion. Mattel in August reported a 10% increase in Q2 net sales to $1.1 billion. The company reported a net loss of $18 million, compared to a net income of $53 million in the year-ago quarter.

Consumers are not only beginning their holiday shopping early in 2026, but they’re relying on AI to make their purchasing decisions. 

While 58% of shoppers are asking AI tools about a particular product, 51% are using them to compare products, brands and features. Nearly half (45%) are using AI to receive product recommendations and another 43% to find deals, coupons and the best price, according to marketing firm Attentive. 

Two-thirds (67%) of shoppers have used AI tools like Gemini, Perplexity and ChatGPT to manage their purchases in the last three months. For Gen Z consumers, that share rises to 80%, the survey found.

Almost three-quarters (71%) of shoppers plan to start their holiday shopping journey before Black Friday this year, a survey of 600 U.S. consumers by Attentive found. Almost half (46%) are shopping prior to November. Most consumers (84%) anticipate that Black Friday and Cyber Monday sales will start before Black Friday, mostly arriving in November, according to the report. 

In addition to markdowns, shoppers want other incentives before buying their holiday items. Beyond discounts, 68% of survey respondents cited free shipping as the top factor that will encourage them to make a purchase, followed by a gift with purchase (42%), a price match guarantee (39%) and additional loyalty points and perks (35%), the report found. 

“Consumers are discovering products, comparing options, and deciding which brands they trust long before the holiday rush,” Jema Birkmeyer, vice president of strategic sales at Attentive, said in a statement. “The retailers that win this holiday season will be the ones using AI to understand and deliver on individual customer preferences, serve timely, personalized experiences across every channel, and strengthen relationships well before promotions begin.”

As tariffs constrained consumers’ budgets, off-price stores and retailers offering value fared well during the 2025 holiday season. During Black Friday, retailers offered 28% online discounts on average in the U.S., flat between 2024 and 2025, according to a Salesforce analysis.

Despite economic uncertainty stemming from the U.S. war with Iran, consumers’ attitudes are improving. A consumer sentiment index from the University of Michigan rose 10% in June. Furthermore, consumers’ expectations for inflation in a year’s time declined to 4.6%, down from 4.8% in May but higher than the 3.4% they anticipated prior to the conflict.

Walmart’s back-to-school assortment will feature its lowest prices since 2019 on 14 of the most popular school supplies. Pricing on select school products will start at 25 cents, the mass retailer said.

The company also has over 1,300 more rollbacks compared to 2025 and its back-to-school lunch basket maintains an average cost of under $2 per lunch. Walmart also debuted a new grocery-focused college basket for under $35 and a digital college wishlist experience. 

The focus is similar to Walmart's back-to-school announcement in 2025, which also included lunch kits at about $2 a day for 10 days, select 25-cent pricing and lower prices on the 14 most popular supplies.

Walmart’s news follows similar announcements from other retailers.

Target in June revealed more than 50% of its back-to-school assortment would be new, including limited-edition merchandise collaborations, and teased 50% off an annual Target Circle 360 membership.

Staples and Dollar General earlier in July touted back-to-school pricing on par with 2025, with both companies highlighting dozens of products priced at $1 and under. Additionally, Kohl’s highlighted its assortment includes thousands of products priced under $25.

The pricing focus across the industry comes as back-to-school spending is expected to stay flat in 2026, according to a survey from Deloitte released in July. Parents are expected to spend $557 per child, marking a $13 year-over-year decrease or a 6% drop when adjusted for inflation.

Nearly 60% of consumers expect the economy to get worse in the coming months and most shoppers for back-to-school expect to spend at mass merchants, the survey found.

During Amazon’s Prime Day dates — June 23 through June 26 — online U.S. retail spend grew about 9.3% year over year to $26.4 billion, according to data from Adobe shared with Retail Dive. 

Discounts across online retail in the region were mostly on par with deals in 2025, with electronics discounts peaking at 24% off the listed price versus 23% off last year. Apparel discounts remained the same at 24% off, appliances stayed 16% off and toys discounts rose slightly from 19% to 20% off.

Buy now, pay later orders jumped 9.5% compared to 2025, accounting for 6.6% of online orders or $2.1 billion during the period.

Online spend surrounding Amazon's Prime Day sales event is also inching closer to Black Friday levels.

In comparison to the $26.4 billion in online spend during this recent Prime Day, consumers spent about $32.45 billion across Thanksgiving, Black Friday and Cyber Monday in 2025, per Adobe.

This year’s spend during the Prime Day sales event was slightly higher than Adobe’s projection of $26.3 billion in U.S. e-commerce sales.

E-commerce giant Amazon moved up its Prime Day sales event to June, compared to its July dates in 2025. Several other retailers — such as Walmart and Target — followed suit with their own competing events.

Online sales from June 23 through June 26 were driven by electronics, appliances, tools and home improvement, as well as home and garden merchandise.

Consumers used the sales period to buy more expensive products. Adobe’s data found the share of the most expensive products grew 19% compared to average levels year to date. The share of the most expensive goods in electronics jumped by 51%, and shoppers were trading up in categories such as toys, appliances and furniture. 

Promotional levels across 68 retailers and brands showed that about 40% were more promotional surrounding the event than in July of 2025, according to Telsey Advisory Group’s research team. 

“Amazon Prime Day 2026 shifted two weeks earlier into 2Q26 from 3Q25, and it blended with multiple retail promotions around Memorial Day, FIFA World Cup, Father’s Day, and Independence Day (America 250)—helping create a midyear spike in consumer spending,” Telsey Advisory Group analysts said in an emailed note Friday. “Amazon should continue to gain market share by leveraging its sticky Prime member base, small business relationships, and technological edge.”

Retailers are likely well-stocked for the coming holidays as the 2026 peak shipping season is coming to an end, National Retail Federation Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement.

The Global Port Tracker report released by NRF and Hackett Associates found a 13.2% year-over-year increase in 20-foot containers or their equivalent at major U.S. ports in June. That’s lower than the industry group’s previous projection of nearly 19% growth in June.

Additionally, July imports are now expected to be down 7.6% year over year, though the Global Port Tracker previously predicted July imports would “hit a new all-time record,” per a press release in July.

Ports have not yet reported August numbers, but the industry group projects 20-foot equivalent units at major U.S. ports in August will decrease 4.2% year over year.

“We had an early peak season this year as retailers brought in merchandise ahead of tariff changes in late July and responded to other uncertainties in the supply chain like the ongoing disruption brought by the conflict in Iran,” Gold noted. “One round of tariffs has been replaced with another, but retailers will be well stocked for the coming holiday season. Retailers know how to adapt to shifting situations and are well prepared to meet consumers’ demand for affordability and choice.”

Temporary 10% Section 122 global tariffs from February expired on July 23, and a new round of Section 301 tariffs took effect the next day, per NRF.

Tariff policies in the U.S. over the past year have altered some of the buying timelines for retailers. A Deloitte study in 2025 found that respondents said they placed over half of holiday orders by the end of May, which was about two months earlier compared to Deloitte’s 2024 survey.