Will Holiday 2025 See Fewer Footwear Purchases?

PwC's 2025 Holiday Outlook survey forecasts a significant consumer spending pullback, projecting a 5% decline in overall holiday spending from 2024 levels—the first notable drop since 2020. Footwear is particularly vulnerable, with purchases expected to fall 7-10% year-over-year, primarily due to tariff-induced price increases and broader cost-of-living pressures. While initial tariff concerns may have been partially mitigated by brands implementing "surgical" price adjustments, 84% of consumers still anticipate spending cutbacks, signaling a pervasive shift towards value-seeking and less expensive options across retail.

Analysis

PwC's 2025 Holiday Outlook survey indicates a significant contraction in consumer spending, with overall holiday expenditures projected to fall 5% from 2024 levels—the first notable decline since 2020. The footwear sector is expected to be disproportionately affected, with a forecasted 7% to 10% year-over-year decline in shoe purchases, driven by tariff-induced price hikes and broader cost-of-living pressures. This bearish outlook is supported by 84% of surveyed consumers planning to cut back spending and 78% actively seeking cheaper options. Brands like Nike have implemented 'surgical' price increases, such as a $2 to $10 rise on specific items, in an attempt to manage margins without alienating their entire customer base. However, a crucial caveat is that the survey was conducted in June when tariff uncertainty was higher; the more moderate price adjustments since then may temper the actual decline. A stark generational divide is also evident, with Gen Z planning a 23% spending cut, while Boomers project a 5% budget increase, signaling a significant divergence in consumer resilience.

Key Decisions for Investors

• Given the projected 5% decline in overall holiday spending and an even sharper 7-10% drop in footwear, investors should consider a defensive posture on the consumer discretionary sector, particularly for companies heavily reliant on holiday sales.
• The consumer pivot to value, with 78% seeking less expensive options, suggests that discount retailers and private-label brands may outperform premium brands, warranting a portfolio review to favor companies with a strong value proposition.
• For Nike (NKE), its 'surgical' pricing strategy may offer a defensive advantage, but investors should closely monitor Q3 and Q4 sales data to validate if this targeted approach is preserving volume better than the industry average.
• The stark spending divergence between Gen Z (-23%) and Boomers (+5%) indicates that companies targeting the more financially resilient Boomer demographic may present a lower-risk investment compared to those focused on younger consumers.