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Retailers adapt to high season defined by tariffs
Changing shopping habits are shaping this year’s holiday season
Consumers are approaching the upcoming holiday season with caution and adjusting their budgets accordingly. The latest McKinsey & Company Consumer Sentiment Survey finds consumers plan to spend more on practical items and essential goods such as baby supplies, fresh produce and gasoline and less on discretionary items like home room, electronics, furniture and jewellery. Rising prices due to lingering inflation remain the primary concern.
Overall, consumers are planning to start their holiday shopping earlier in the year. Millennials are leading the charge, with 37% planning to start before October. Only 11% of consumers surveyed plan to kick off their holiday shopping on Black Friday. 22% of Baby Boomers say they are not planning to participate in holiday shopping at all, this is eight points higher than the cross-generational average.
More eye-catching data on this year’s changing holiday shopping:
- Consumers expect their spending to decline by about 5% from 2024. The largest drop comes from Gen Z, which is planning to spend 23% less. Consumers are looking not only for deals but for brands that offer long-term value.
- Gift cards continue to be popular, with 47% of consumers planning to buy gift cards for their family members, with 25% purchasing them for kids and 52% for their friends.
- This growing preference for gift cards may be due to rising delivery costs. In mid-2025, USPS rates increased 6.3% for Priority Mail and 7.1% for Ground Advantage.
- Retailers will need to adapt inventory levels and delivering strategies to ensure that they can accommodate shifting consumer behaviours. Logistics providers like C.H. Robinson can help plan efficiently, ensure supply levels and save costs.
Holiday peak is “more like a bump”
While in “normal” years, the holiday freight peak is a sharp surge, many retailers report that this year, they are observing something that looks more like a bump that ripples through the season. Mid-sized chains are moving toward “on-demand” purchase orders, stocking smaller quantities when needed, which results in a more reactive inventory push rather than a proactive, large-scale buildup.
With Item-level Solutions, retailers can order and move smaller amounts of products, move them where they are needed with greater precision and keep transportation and warehousing costs in check.
Holiday season returns predictions
The 2025 holiday retail sales are expected to approach $160 billion, an increase of 12% over 2024. Much of the increase is attributed to consumers’ growing comfort with returning items bought online.
ReturnPro’s 2025 Holiday Returns Report, which surveys 500 senior retail executives, highlights what else retailers can expect this shopping season:
- Over half of retailers expect constrained inventory levels to be a moderate-to-severe problem this holiday season.
- Three-quarters of retailers expect an increase in fraudulent activity, including shoplifting, returning worn and used goods and counterfeit money transactions.
- Most retailers feel they have the right technology in place to manage rising return rates. Only 6% expect returns to be a severe problem.
Retailers can work with a logistics provider such as C.H. Robinson to help manage seasonal returned goods efficiently.
Latest tariff updates
- On 8 September, 2025, an updated list of exemptions to the reciprocal tariffs went into effect. Shippers are advised to determine if their products were added or subtracted to this new list.
- The Supreme Court has agreed to hear the U.S. administration’s appeal to a recent ruling that the government hasn't got the authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), which was used to establish the reciprocal tariffs on imports for most countries outside of China, Mexico and Canada. Enforcement is delayed until 14 October 2025. If the tariffs are ultimately deemed invalid, there is uncertainty around if and how they will be reimbursed. Supreme Court briefings will likely conclude in late October, with hearings expected early November and a decision expected in late November to early December.