How Are Marketers Thriving in High Holiday Sales Despite Plummeting Consumer Confidence?

This holiday season, marketers are staring down a paradox that’s hard to ignore: Consumers are feeling cautious, cutting back and worried about affording gifts — yet total retail sales are expected to hit an all-time high.

On the one hand, sentiment surveys paint a picture of a financially strained shopper. Nearly half of Americans (47%) say they’re worried they won’t be able to afford gifts this year, according to research by Narvar, a post-purchase platform vendor. Two out of three plan to cut back. Deloitte is forecasting a 10% drop in average individual holiday spend, and PwC puts the decline at 5%. Also, 44% of middle-income consumers say they’re worse off financially than a year ago, according to the University of Michigan.

Dig deeper: U.S. online holiday shopping expected to hit a record $253 billion

But the big-picture forecasts? They tell a very different story. Mastercard, Visa, Adobe and the National Retail Federation all project U.S. retail sales will grow between 3.6% and 4.6% year over year, with ecommerce expected to hit a record $253.4 billion.

The truth is, both views are technically correct. And that disconnect is exactly what marketers need to navigate.

Rising sales, shrinking carts

Let’s start with the math. Most of that projected growth is nominal — not real. In other words, shoppers are spending more because things cost more, not because they’re loading up their carts.

Inflation, combined with new tariffs on categories such as electronics and apparel, is driving up prices. Visa’s forecast shows a 4.6% increase in sales — but only 2.2% of that is actual growth in goods sold. The rest is just higher prices.

Meanwhile, Catherine Dummitt, VP of Marketing at Narvar, sees that tension playing out in consumer behavior. 

“The 2025 holiday shopper isn’t just browsing; they’re budgeting and they’re being smart about it,” she said. “That mindset shifts everything. In a cautious economy, consumers are scrutinizing where their money goes and who they trust with it.”

Wealthier households are propping things up

The other big reason total sales are expected to rise? The wealthiest households are still spending — and they account for the majority of holiday spending. The gap between the haves and have-nots is widening and marketers need to be cognizant of that.

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Consumers earning over $100,000 represent 60% of expected holiday spend, according to Deloitte. They’re not pulling back as much, and in many cases, they’re still splurging on discretionary items. That’s masking the deep cuts coming from younger and lower-income shoppers — such as Gen Z, who, according to Deloitte, expect to spend 23%–34% less than they did last year.

“This group tends to skew younger: 58% are 44 or under, and many have kids at home,” Dummitt said. “Most live in households earning under $100,00 a year, and they are starting their holiday shopping even earlier than average, making deliberate choices as they go.”

Winners and losers in the holiday basket

Despite all the belt-tightening, some categories are still expected to perform well — especially those that align with cultural trends or are fueled by wealthier shoppers. Think high-demand electronics, gaming consoles, toys and viral fashion brands. Adobe’s forecast puts these in the growth category.

However, traditional discretionary retail — like apparel and home goods — is taking a hit. Average spend on retail goods is expected to fall 14% YoY, according to Deloitte, with shoppers trading down or skipping big-ticket items altogether.

But that doesn’t mean people are skipping the holidays, far from it.

“Consumers are thoughtful, engaged and paying close attention to value,” Dummitt said. “But they’re not cutting back on joy, they’re just being smarter about how they spend.”

What marketers need to change — fast

So what does this mean for holiday marketing teams?

For starters, urgency-heavy language like “don’t miss out” or “last chance” might backfire. “The holidays still sparkle, but the sentiment has shifted,” Dummitt said. “Many consumers are feeling cautious, not carefree, and the tone needs to evolve with that reality.”

Instead, she suggests shifting to messages rooted in support and reassurance — things like “Gifting made easy” or “We’ve got you covered.” But messaging alone isn’t enough.

Dig deeper: Your holiday marketing playbook must put sincerity before sales

“Messages that center on support land better when they’re paired with meaningful actions like flexible returns, clear delivery guarantees, or protection if something goes wrong,” she said. “These aren’t just logistics. They are trust signals.”

In a year when so many shoppers feel financially stretched, small moments of reassurance matter. Especially with rising concerns around porch piracy, late deliveries and unclear return policies, brands that overpromise and underdeliver will lose customers fast.

“When budgets are tight, the loss of a single package isn’t just an inconvenience, it’s a financial setback,” Dummitt said. “Those questions weigh heavily on consumers’ minds, and they directly influence where people choose to shop.”

Early birds, higher stakes

Marketers also need to recognize that the traditional Q4 shopping window is already out of sync with consumer behavior. Shoppers started early — 73% started shopping before Cyber Week, according to research by RetailMeNot, and nearly a quarter of budgets are spent before November even begins.

That means campaigns that launched last week may already be too late to capture peak consumer attention.

Dig deeper: Shoppers expect fewer discounts this holiday season

It also means expectations are higher. Consumers want free shipping, BNPL options and simple paths to checkout. They expect real-time updates and instant order confirmations. If something goes wrong, they want resolution — not excuses.

“Compared to last year, the margin for error is smaller. Loyalty is harder to earn and easier to lose,” said Dummitt. “The brands that deliver confidence, from product page to doorstep and beyond, will turn one-time buyers into lasting customers.”

Lead with confidence, not noise

This season, the brands that win won’t be the loudest — they’ll be the most dependable.

“This season calls for messages grounded in value, empathy and simplicity,” Dummitt said. “It’s not about pushing harder; it’s about listening better. The brands that demonstrate they understand what matters most to people right now will stand out, not with volume, but with authenticity.”

So yes, sales may hit record highs. But don’t mistake that for enthusiasm. For many consumers, this holiday isn’t about buying more. It’s about buying better — and from brands they can count on.