Retailers Brace For An Uncertain Holiday Season As Consumers Pull Back

Forbes

From tariffs to inflation to the K-shaped economy. Here’s a preview of what’s expected in retail’s biggest months of 2025.  Read the full story on Forbes: https://www.forbes.com/sites/daniellechemtob/2025/11/24/retailers-brace-for-an-uncertain-holiday-season-as-consumers-pull-back/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, retailers brace for an uncertain holiday season as consumers pull back.

00:08Today is Black Friday and the holiday season is in full swing, but retailers and customers

00:13aren't exactly feeling cheerful.

00:16With consumer confidence near record lows, a weakening job market, plus tariffs and persistent

00:21inflation, experts warn that customers are pulling back during the busiest season of

00:25the year for retailers.

00:28The U.S. consumer is on shaky footing.

00:31Consumer sentiment fell to 51 in November, a slight improvement after a preliminary reading

00:36during the government shutdown brought it close to the all-time low set in June 2022, according

00:41to the University of Michigan's widely tracked survey.

00:45Americans are concerned about the labor market, which has already shed more than one million

00:49jobs this year, as well as rising inflation.

00:54Complicating this year's shopping season are President Donald Trump's tariffs of between

00:5710% and 50% on most U.S. imports, as their fate rests in the hands of a skeptical Supreme

01:04Court, which reportedly could issue a ruling by the end of the year.

01:08Nonetheless, companies are already hiking prices, and consumers should expect to pay more for

01:13some of the biggest holiday categories, including apparel, electronics, and home decor.

01:19Had the levies been in place last holiday season, shoppers would have paid an extra $132 per person,

01:26translating to a $28.6 billion burden, according to analysis from LendingTree.

01:32And the impacts aren't being felt evenly, either.

01:36Experts are warning of a divided, so-called, quote, K-shaped U.S. economy, in which wealthier

01:41households are fueling spending, while low-income households are cutting back.

01:47The government shutdown, despite ending earlier this month, inflicted pain on federal workers,

01:51workers, and tens of millions of people who saw delayed food stamps.

01:55Tom Arnold, a professor of finance at the University of Richmond's Robbins School of Business, says,

02:01quote,

02:02Lower-income consumers are the ones who are going to be looking for bargains, if they're

02:05going to participate at all.

02:08Flying in the face of these headwinds, there are still indications that 2025 could be a record-breaking

02:13holiday season, though retailers' expectations are mixed.

02:18The National Retail Federation projects holiday spending to surpass $1 trillion this year for

02:24the first time ever, an increase of 3.7% to 4.2% over last year, though Arnold notes the

02:30top-line figure isn't adjusted for inflation.

02:34The group's projections note that consumers expect to spend a total of $890, a slight dip

02:39from last year's $902.

02:43But Black Friday isn't necessarily the main event anymore, as stores have rolled out discounts

02:47well before what was once the biggest retail day of the year.

02:52Shoppers have been stretching those smaller budgets out over time, with almost half looking

02:55for deals earlier.

02:58A survey from Deloitte shows an even larger drop of 10% in how much shoppers anticipate

03:02shelling out.

03:04Lupine Skelly, lead retail researcher at Deloitte, says consumers are tightening their belts the

03:09most on non-gift items like seasonal decor and apparel.

03:14She says, quote, for retailers, that's an opportunity, though.

03:17You've got this consumer that's looking for value.

03:19They want to feel like their purchase is meaningful and worth it.

03:24Retailers are already preparing for the worst by hiring a record low number of seasonal employees.

03:29This according to what career services firm Challenger Gray & Christmas found.

03:34Target reported weaker-than-expected profit in its earnings last week and plans to slash prices

03:39on thousands of essential items in an attempt to revive sluggish sales.

03:44Still, as consumers focus on value, Walmart remained positive, beating Wall Street's estimates

03:49in its third quarter as online sales surged 27%.

03:54America's largest retailer also hiked its expectations for the year, as Walmart's chief

03:59financial officer said the brand was seeing, quote, more pronounced traffic among high-income

04:04shoppers.

04:06Many of the typical gift-giving categories are also being hit the hardest by tariffs, including

04:10the already struggling toy industry.

04:13Some 80% of toys imported to the U.S. come from China, the Toy Association trade group

04:18has said.

04:19Earlier this year, President Trump suggested that children in the U.S. may, quote, have

04:24two dolls instead of 30 dolls.

04:26And sure enough, both Barbie maker Mattel and competitor Hasbro have since announced tariff-related

04:32price hikes.

04:34For full coverage, check out Danielle Chemtobe's piece on Forbes.com.

04:40This is Kieran Meadows from Forbes.

04:43Thanks for tuning in.

04:44Thanks for tuning in.

04:45Thanks for tuning in.

04:48Engine Koala

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