How Retailers Can Navigate the 2025 Holiday Shopping Season
As the 2025 holiday shopping season approaches, retailers face a landscape marked by modest expectations, shifting consumer behavior, and mixed economic signals. Bain & Company forecasts a below-average 4.0 percent growth in US retail sales, suggesting a season of tempered optimism rather than exuberant expansion. While shoppers are expected to spend, their spending will be selective, influenced by prices, promotions, and personalized experiences that deliver genuine value.
Sales Growth: Stable but Subdued
The good news is that sales are still expected to rise, but the bad news is that the increase will be modest compared to the historical five-year average of 5.2 percent. Both in-store and nonstore (e-commerce and mail-order) channels will contribute to growth, but neither will surge dramatically. For retailers, this means that while the sleighs may fill, they won’t overflow. Success will depend less on total market expansion and more on capturing a greater share within a steady market.
Sector Performance: Winners and Watchers
The 2025 season will not treat all store types equally. Bain’s forecast divides the field into sectors experiencing varying degrees of growth:
- Negative high single digits: Department stores are expected to contract further as consumer traffic and loyalty continue to drift toward more specialized or digital competitors.
- Negative low single digits: Electronics and appliance stores will also face challenges, reflecting saturation in durable goods purchases.
- Roughly flat: Building materials and home improvement stores will likely maintain stable sales, suggesting that consumers are investing selectively in their homes rather than embarking on major projects.
- Low single digits: Sporting goods, hobbies, books, and music retailers can expect small upticks driven by niche gifting categories.
- High single digits: Online-only retailers are set to lead growth, capturing consumers’ appetite for convenience and selection. Clothing and accessories retailers also appear positioned for healthy performance as shoppers return to social activities and holiday gatherings.
In-Store Shopping: A Modest Revival
While e-commerce remains strong, in-store shopping is regaining ground. Bain’s analysis shows that 36 percent of consumers plan to do most or all of their holiday shopping in stores, up from 24 percent in 2024. Meanwhile, the share of consumers planning to shop mostly online is declining from 34 percent to 28 percent. This marks a shift toward hybrid shopping, where consumers want both tactile experiences and digital convenience. For retailers, the implication is clear: stores must deliver more than inventory—they must provide experiences worth visiting.
Economic Backdrop: Cautious Confidence
Economic indicators are sending mixed messages. On one hand, labor participation and consumer caution are keeping growth in check. On the other hand, climbing wages, strong markets, and a possible interest rate cut offer reason for optimism. Retailers will need to navigate shoppers’ financial strain by promoting affordability without sacrificing profitability. The balance between price and perceived value will determine the season’s winners.
Playbook: Four Ways Retailers Can Win Shoppers
To thrive in this mixed environment, Bain recommends four key strategies that align with changing consumer expectations:
- Go big on sales events: Ten percent more consumers plan to shop on Black Friday or Cyber Monday than last year. This underscores the continued importance of headline events that drive urgency.
- Lead with sharp pricing and value perception: Fifty-five percent of holiday buyers say high prices will influence their purchase decisions, so transparent value messaging is essential.
- Prioritize human experiences: Retailers should empower staff and invest in front-line service, even as technology takes center stage. Human interactions remain a critical differentiator.
- Deliver timely, personalized ads: Sponsored ads that align with individual shopper intent and timing can boost engagement and loyalty.
The 2025 holiday season will reward precision rather than exuberance. Retailers that balance data-driven personalization, competitive pricing, and meaningful in-store experiences will stand out in a cautious consumer market. Bain & Company’s 2025 Holiday Shopping Outlook infographic offers a clear visual breakdown of these trends, illustrating where growth is occurring, how shoppers are behaving, and which levers retailers should pull to make the most of a modest but opportunity-rich season.d
