Holiday retail sales in 2026 are anticipated to surpass $1 trillion for the first time, driven largely by inflationary pressures rather than a significant increase in the number of items sold. Bain & Company projects a 4.5% year-over-year growth in holiday spending, with 70% of sales occurring in physical stores even as e-commerce steadily expands its share. Higher tax refunds, which have increased by $43 billion this year, are providing consumers with more spending power, though a substantial portion of these funds is being offset by elevated gas prices, tightening household budgets.

Despite these macroeconomic challenges and declining consumer confidence—the Conference Board recently reported its lowest levels since 2014—spending is expected to remain robust across the retail sector. Deloitte offers a more optimistic forecast, projecting holiday sales to reach $1.7 trillion. Shoppers are adopting more value-focused behaviors, increasingly seeking discounts, promotions, and switching brands to stretch their budgets. This trend toward value-conscious shopping spans income levels, influencing purchasing decisions during the holiday season.

Consumer habits are evolving in other ways as well. According to AlixPartners, shoppers are making more frequent trips with smaller baskets and shifting toward private-label brands rather than premium products. They also tend to be more selective about self-gifting, prioritizing quality while staying within budget constraints. The use of buy now, pay later options is projected to hit a record $21.3 billion, reflecting consumers' cautious approach to managing their holiday spending.

Artificial intelligence is emerging as a key tool in holiday shopping, with AI-generated traffic to retail websites growing substantially. Adobe reports that AI-driven visits increased 127% year-over-year in August and expects continued growth through the holiday season. PwC notes that nearly 30% of consumers plan to utilize AI during their holiday shopping, mainly for product research and price comparisons, although direct AI-powered purchases remain limited. This indicates that AI is becoming a valuable aid in the decision-making process, rather than a method of transaction, as shoppers navigate their holiday purchases.