Buy This, Not That: 5 Trade-Offs To Help You Stick To Your Holiday Budget

Deloitte’s 2025 Holiday Retail Survey finds consumer sentiment at its weakest in 28 years: 77% of shoppers expect higher holiday prices and 57% expect the economy to weaken over the next six months (the most negative outlook since 1997). As a result, shoppers plan cost-saving trade-offs—65% will switch brands if preferred options are too expensive, 26% will compromise on brand names, and many intend to reuse wrapping (54%), regift (52%), send fewer cards (34%) or give DIY gifts (49%). For investors, this signals pressure on retailers’ pricing power and margins, potential upside for discount and private-label formats, and a need for retailers to recalibrate promotions, inventory and marketing toward highly price-sensitive shoppers to preserve holiday sales.

Analysis

Deloitte's 2025 Holiday Retail Survey shows consumer sentiment at a 28-year low: 77% of shoppers expect higher holiday prices and 57% expect the economy to weaken over the next six months, the most negative outlook since 1997. The survey quantifies behavioral changes that directly affect retail demand and mix—65% of consumers will switch brands if preferred options are too expensive, 26% will compromise on brand names, 54% plan to reuse packaging, 52% would consider regifting, 49% will give DIY gifts and 34% will send fewer holiday cards.

These shifts imply weakening pricing power for brand-focused retailers and heightened price sensitivity that favors discount, private-label and value-oriented formats; retailers may need deeper promotions or assortments skewed to lower-price points to preserve unit volumes. Expectations of higher prices coupled with a deteriorating six‑month economic outlook increase the risk of margin compression from promotional activity and inventory misalignment.

Key risks are elevated inventory write-downs and softer-than-expected holiday comps if promotions fail to stimulate volume; conversely, value formats could capture share. Ticker-level signals flagged COST and NDAQ with neutral per-ticker sentiment, suggesting investors should monitor where exposure aligns with the survey’s value-shift themes rather than treating this as uniformly negative for all retail-related names.

Key Decisions for Investors

• Investors should increase exposure to retailers with clear value propositions and strong private-label or warehouse formats (example: COST flagged in signals) given 65%+ willingness to shift brands and broad price sensitivity
• It may be prudent to trim or hedge positions in brand-dependent, full-price retailers and watch for margin risk from deeper promotions and potential inventory markdowns as 77% expect higher prices but consumers trade down
• Monitor short-term indicators—weekly retail sales, retailer guidance on holiday inventories and promotional depth, and same-store sales—and be prepared to reallocate if early holiday data confirm weaker demand and elevated markdown risk