By Bill Peters
Adobe expects shoppers to spend $253.4 billion online over the holidays, as businesses try to salvage bottom lines. ‘This is a throwaway year for us,’ toy maker says.
Herald Square shopping district on Black Friday, Nov. 29, 2024, in New York City.
U.S. shoppers are expected to keep spending online at record levels this holiday season, but spending growth itself might slow and the discounts might not be as steep, as retailers and customers try to stay ahead of tariffs and inflation.
Adobe on Monday said it expects shoppers to spend around $253.4 billion online from Nov. 1 to Dec. 31. That would mark a 5.3% year-over-year gain but a slight slowdown from last season’s 8.7% increase.
Vivek Pandya, director at Adobe Digital Insights, said the deepest discounts overall this year would run at about 28%, led by items like electronics. That’s compared with 30% last year.
“We do expect the discounts to be a little weaker than 2024’s holiday season, but pretty much on par with where we saw discounts at in 2023,” he said, adding that the discounts still represented a lot of value for shoppers.
He said factors like higher grocery prices and efforts by consumers to stockpile things like furniture ahead of potential tariffs had kept discounts overall from running lower. But as the U.S. trade war upends shipments, he said there weren’t yet too many issues with items being out of stock at online retailers.
“We see a consumer being very cautious and strategic in how they buy in order to get the most value, and the online sector is supporting the most in that effort,” he said.
As consumers face higher costs of living, big discount events from Amazon.com Inc. and other retailers have played a bigger role during the holiday shopping season, pulling its start time – once generally seen as the Friday after Thanksgiving – earlier. Adobe expects shoppers to spend $9 billion Oct. 7-8, the two-day time frame for Amazon’s (AMZN) October Prime Day event. Similar, longer events held by Target Corp. (TGT) and Walmart Inc. (WMT) also run through those two days.
And as customers hunt for Oura rings and Labubu toys this year, Pandya said artificial intelligence and online influencers working with brands are likely to play a bigger role in shaping shopping decisions. More people will shop on their phones.
Albert Ko, the chief executive of Auctane, an Austin, Texas-based software company that helps large and small retailers manage inventories and shipments, said this holiday season’s shorter shopping window would make for tighter delivery times and more pressure on retailers and other businesses.
He said that over the summer, U.S. retailers made a “dramatic short-term increase” in purchases from abroad to stay ahead of the tariffs. Right now, he said, as consumers remain stretched, retailers were opting to stomach the extra import costs themselves.
“The new tariff regime and the changes to de minimis rules are pushing up price and complexity for parcel imports,” he said. “We actually see, right now, retailers eating most of those margins because there’s a lot of consumer pushback.”
But he said they were making other adjustments. U.S. retailers were pulling back from selling abroad in part due to retaliatory tariffs. Fewer of the company’s Canadian customers were selling to the U.S. To speed up shipping times, others have begun to work with multiple smaller warehouses as opposed to a single larger one.
“It used to be, if I’m a small business, I try to keep it simple,” he said, adding: “Now, with the changes, it necessitates even these smaller businesses becoming vastly more sophisticated in terms of inventory management, fulfilling, shipping, and then having much more choice and flexibility.”
Retailers that sell clothes, electronics and other typical holiday gift items have seen subdued demand over the past few years. But on earnings calls this summer, chains like Gap Inc. (GAP), Williams-Sonoma Inc. (WSM), Macy’s Inc. (M) and Five Below Inc. (FIVE) have expressed confidence about the holiday season.
Toy maker Mattel Inc. (MAT) said it hadn’t seen retailers temper their buying patterns for the holidays. Executives noted “general uncertainty regarding consumer demand” for the latter half of the year. But they said they were upbeat about demand for Hot Wheels, better trends for Barbie dolls and solid momentum for action figures related to “Jurassic Park” and the 30th anniversary of “Toy Story.”
Chris Cocks, the chief executive of rival Hasbro Inc. (HAS), said in July that company hadn’t seen much evidence that consumers were buying early to avoid tariffs. But he noted that toy prices would likely go higher.
And he said that retailers would likely still take a cautious approach to what products they buy and stock on their shelves. Hot items, he said, could end up out of stock amid shifts in warehouse and stockroom supplies.
“So like a Play-Doh, Barbie, Nano-Mals, a baby Evie, if you’re a mom or a dad, you’re probably going to want to go and buy that early,” he said.
BTIG analyst Janine Stichter, in a research note on Monday, said that the consumer retail and lifestyle brands she covered – which include Abercrombie & Fitch & Co. (ANF) and Boot Barn Holdings Inc. (BOOT) – had managed on average to offset around half of their tariff-related costs this year.
The Trump administration has argued that U.S. tariffs on imports will help strengthen domestic manufacturing. Over recent months, some signs have emerged that those extra import taxes were starting to nudge prices higher, but no major impact has surfaced yet.
Shizu Okusa, founder of Apothekary, an herbal medicine and wellness brand, said in an interview last month that while the company no longer sourced ingredients directly, the packaging it used, for to make presentations more attractive for the holidays and launches with retailers, still came from China.
“Regardless of 150% tariffs, 200%, the cost was actually cheaper than making them in the U.S.,” she said.
Jay Foreman, the founder and chief executive of Basic Fun, which makes classic toys like Care Bears and Tonka Trucks, said that consumers have yet to feel the full force of tariff-related price increases, as manufacturers and retailers try to manage their costs in other ways. That could bode well for the holiday season overall.
“Even though the retailers might be a little bit nervous, and we’re a little bit nervous, the consumer seems to be showing up, and part of that is just because they’re not feeling it as much yet,” he said.
Foreman said that to make its products more palatable to the retailers that pay tariffs on orders from its factories in China, the company had shrunk the size and complexity of the packaging from some of its Care Bears toys to reduce costs and, in turn, the overall price. In some instances, the company had taken the batteries out of those toys.
Still, he expressed concern about what impact the current government shutdown might have on the economy, as well as the ability of customs and U.S. ports to run efficiently. After some big sales gains in 2024, he said that heading into this year, he expected continued increases. But after the U.S. tariffs led to weeks of shipping interruptions, he said the company would shipping fewer toys to retailers.
“This is a throwaway year for us, from a profit perspective, where we’ll basically do enough sales and make enough profit to pay our bills this year to be able to get through the year without really having to do any layoffs.” he said. “Probably won’t be a bonus year for our employees.”
He added: “We’re setting the table now for 2026.”
-Bill Peters
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10-06-25 1923ET
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