Holiday shopping in the USA and Canada is showing early shifts in spending patterns that promise a transformative season for retailers, one defined by surging e-commerce, inflation-driven behaviors, and the outsized influence of social media, according to the Mastercard Economics Institute (MEI) 2025 holiday forecast. While inflation remains a key contributor to headline retail growth, consumers’ changing preferences and retailers’ evolving strategies are shaping a much more nuanced holiday landscape.
E-Commerce Surge Outpaces In-Store Growth
E-commerce is again set to outdistance traditional brick-and-mortar shopping this season. The MEI projects online holiday sales in the U.S. to grow 7.9% year over year, compared to just 2.3% for physical retail stores. Similar trends are expected north of the border, with projected online retail growth in Canada at 5.3% versus 2.5% in-store. While inflation is a significant driver of these increases, potentially more so than actual sales volume, shoppers are seeking digital convenience,…
choice, and value, amplifying the ongoing shift to online-first holiday shopping. Total Retail Expansion and the Impact of Tariffs Across all channels, total U.S. retail sales (excluding autos) are expected to rise 3.6% from November 1 to December 24, 2025. Canadian retail sales are on track for 2.8% year-over-year growth.
One wild card is tariffs—retailers face difficult choices about absorbing cost increases or passing them onto consumers, creating pricing uncertainty heading into the peak shopping period.
Gift Cards Rise as Shoppers Navigate Inflation With prices climbing, many shoppers are expected to gravitate toward gift cards—offering both flexibility and a way to manage rising costs for loved ones.
MEI forecasts an above-normal use of gift cards this season, with as much as a third of annual gift card spending happening in December and January…
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