US online holiday sales to slow as shoppers tighten budgets, Salesforce forecasts

Salesforce projects U.S. online holiday sales growth for 2025 to slow to 2.1% ($288 billion), a notable decrease from 4% last year, as price-conscious consumers contend with rising living costs and economic uncertainty. This subdued outlook, aligning with other industry reports, suggests shoppers will prioritize essentials and seek deeper discounts, prompting retailers to be more cautious with promotions due to higher supply chain costs. Despite this, AI-powered recommendations are anticipated to drive $51 billion in U.S. online sales, highlighting technology's role in a challenging retail environment.

Analysis

The 2025 holiday season forecast from Salesforce signals a marked deceleration in U.S. online sales, with projected growth slowing to 2.1% ($288 billion) from 4% in the previous year. This slowdown is attributed to persistent inflation and economic uncertainty, fostering a more price-conscious consumer who is expected to prioritize essentials and cut back on discretionary purchases. The retail sector's response is anticipated to be cautious, with fewer promotions as companies manage higher supply chain costs. However, performance outlooks are divergent: Walmart (WMT) and Macy's (M) have raised their forecasts, while toymaker Mattel (MAT) has cut its guidance and Target (TGT) has maintained its own, indicating that value-oriented retailers may outperform. A significant bright spot is the role of technology, with AI-powered recommendations projected to drive $51 billion, or 18% of total online sales, highlighting its importance as a key differentiator in a challenging market.

Key Decisions for Investors

• Investors should adopt a cautious stance on the consumer discretionary sector, as the projected 2.1% online sales growth slowdown indicates significant pressure on spending for non-essential goods.
• Focus on specific stock selection within retail, favoring companies demonstrating pricing power and a strong value proposition, such as Walmart and Macy's, which are outperforming peers with more discretionary exposure like Mattel.
• Evaluate retailers based on their adoption and execution of AI-powered commerce tools, as this technology is forecast to drive a substantial $51 billion in sales and could be a critical performance differentiator in a competitive market.