Context:

Holiday spending is projected to decline by 5% in 2025, with Gen Z leading the reduction by cutting their budgets by 23%, as per a PwC survey. The survey, conducted with 4,000 U.S. consumers, highlights that 84% plan to reduce their spending over the next six months, with Gen Z facing increased financial pressures compared to the previous year. Millennials are expected to spend the most, averaging $2,190, whereas Gen Z plans to spend $1,357. Retailers face challenges in appealing to Gen Z, who prioritize value and cost transparency, and are known for their rapid adoption and abandonment of shopping trends. Consumers are predicted to start shopping earlier, completing 80% of their purchases by Cyber Monday, with gift cards, toys, apparel, and food being top gift choices.

Dive Deeper:

• PwC's 2025 holiday outlook survey reveals that U.S. consumers plan to spend 5% less this holiday season, with Gen Z planning a significant 23% reduction in their holiday budgets compared to other generations. This trend marks the first expected decline in holiday spending since 2020.

• The survey attributes Gen Z's frugality to financial pressures, with 25% reporting a worse financial situation than the previous year, a stark contrast to their 37% spending increase in 2024. Gen Z is becoming more financially conscious as they take on responsibilities like mortgages and budgeting.

• Millennials are anticipated to spend the most this holiday season, with an average expenditure of $2,190, followed by Gen X at $1,483, highlighting generational differences in spending habits. Gen Z's planned spending averages $1,357, while baby boomers plan to spend $1,180.

• Retailers are challenged to meet Gen Z's expectations, who are highly focused on value and cost transparency, and who quickly adopt and abandon trends. Gen Z values in-person shopping experiences but their store visits don't necessarily translate into purchases, prompting retailers to enhance the shopping experience.

• Consumers are expected to complete 80% of their holiday shopping by Cyber Monday, with gift cards, toys, apparel, and food topping their purchase lists. Food is noted as a resilient gift category due to its affordability and personal touch, avoiding clutter unlike electronics or apparel.

• Gift cards are increasingly popular as they allow consumers to manage rising costs while still conveying generosity, even if their purchasing power has decreased. A $100 gift card remains a favored gift option despite inflation.

• The survey notes a near parity between online and in-store shopping, with 51% planning to shop online and 53% in person. Technology plays a role in holiday shopping decisions, with some consumers using AI for gift ideas, reflecting a blend of traditional and modern shopping methods.