Consumer Slowdown Reshapes Holiday Shopping Trends

The Consumer Slowdown Spreads

Warning signs are flashing across the consumer economy, reports CNBC. While US GDP may still show growth, retail sales and consumer sentiment are starting to fray. Recent earnings reports from consumer-facing companies point to cautious spending, particularly among high-income and younger shoppers.

Holiday sales are now projected to grow in the high-3% range, according to D.A. Davidson. That’s down from last year’s 4.3% increase. The slower growth signals rising macroeconomic pressures, including tariffs, job market uncertainty, and persistently high prices.

High-Income Shoppers Tighten Their Wallets

Luxury isn’t immune to discount fever. Once thought to be recession-proof, high-income consumers are now embracing bargain hunting — favoring value meals and discount retailers:

• McDonald’s and Applebee’s report rising traffic from higher-income customers drawn by value offerings.
  
• Walmart and Dollar Tree both highlighted growth among shoppers earning over $100K.
  
• Thrift chain Savers Value Village is seeing increased foot traffic from affluent and younger buyers.
  

In fact, 24% of households earning six figures plan to spend less this holiday, according to a recent Alvarez & Marsal survey.

Gen Z And Millennials Pull Back

Younger consumers, once a driving force behind fast-casual and lifestyle brands, are scaling back across the board. The return of student loan payments and a colder job market have shifted spending behavior:

• Chipotle, Cava, and Sweetgreen all reported a drop in frequency from their core 25–35-year-old customer base.
  
• At Warby Parker, Gen Z is opting for cheaper eyewear over premium styles.
  
• The unemployment rate for 25–34-year-olds rose to 4.4%, outpacing older cohorts, as hiring freezes and entry-level layoffs intensify.

Bright Spots: Brands That Still Win

Some retailers are bucking the trend thanks to brand strength, nostalgia, and cultural relevance:

• Tapestry (Coach, Kate Spade) saw handbag sales surge among Gen Z, supported by accessible luxury pricing.
  
• Ralph Lauren raised its full-year outlook, riding viral social trends like the “Ralph Lauren Christmas” on TikTok.
  
• On, the Swiss athletic brand, saw 25% sales growth while competitors like Nike cooled.
  
• Dutch Bros., with its highly customizable drinks, is thriving among younger consumers with same-store sales up 7.4%.
  

Even Chili’s saw foot traffic improve, especially among households earning under $60K, thanks to improved dining experiences and competitive pricing.

Looking Ahead: Holiday Wild Cards

Major retailers like Walmart, Target, and Home Depot are set to report earnings soon. Analysts will be watching for clarity on how mixed consumer sentiment is translating into holiday sales.

The National Retail Federation still forecasts 3.7% to 4.2% holiday sales growth, topping $1T for the first time. However, that optimism depends on a strong Black Friday and sustained consumer demand.

Consumers may be cutting back elsewhere, but many are still prioritizing gifts — even if they’re buying fewer, cheaper items.

Bottom Line

Consumers are more value-conscious than ever, from high earners looking for deals to Gen Z skipping their favorite burrito bowls. While retail overall may see modest growth, the winners will be those offering strong brand value, cultural relevance, or deep discounts.

This holiday season isn’t about indulgence — it’s about intentional spending, and only the savviest retailers are poised to benefit.