The high-stakes nature of the 2025 holiday retail season is palpable, as outlined in the new strategy report by the Boston Consulting Group (BCG). The message: success hinges on agile planning, pricing discipline, and omnichannel execution in one of retail’s most volatile years on record, when every move is magnified and failure can deliver a beautifully wrapped disappointment, even for the strongest brands.
Headwinds: Inflation, Tariffs, and Uncertain Consumers
According to BCG, 2025 presents new and unique challenges, including macroeconomic uncertainty, increased tariffs, wavering consumer confidence, and growing inventory pressures. Starting in Q2 2025, an ever-changing tapestry of tariffs began to complicate inventory decisions and raise price awareness among shoppers. In a June 2025 BCG survey, 65% of U.S. consumers said tariffs would lead to higher prices, and roughly 75% said they would alter their shopping—buying cheaper goods, less frequently, or both if prices continued rising. This strategic trade-down behaviour will especially impact discretionary categories like sports equipment and home improvement. However, BCG expects buyers to prioritize core gifting categories such as beauty and toys, with this effect even sharper in lower-income consumer segments.
Tariffs are also throttling inventory flexibility. Many brands pulled back on purchases during the first half of the year, creating relative inventory scarcity and narrower assortments during the holiday season. As a result, eMarketer forecasts that 2025 total U.S. retail sales for November and December will rise only 1.2%, sharply down from 4.3% growth in 2024, potentially amounting to a $36–100 billion sales shortfall versus pre-tariff expectations.
The Return of Malls and Complex Shopper Journeys
While e-commerce soared during the pandemic, 80% of 2024 holiday sales still happened in-store or via wholesale, and BCG reports the resurgence of malls and in-store retail will continue in 2025. Placer.ai’s data shows rising year-over-year foot traffic to all mall formats and increased in-mall visit durations—hinting at bigger basket sizes. Retailers must engage consumers who blend online research with offline purchases; nearly 75% of holiday shoppers bought gifts in-store in 2024 even if they started their journey online. Salesforce data cited by BCG finds that 75% of Gen-Z shoppers plan to shop in stores at some point, with immediacy and in-person experiences ranking high.
Shallow Promotions and Slimmer Assortments
Another notable trend is shallower promotions and narrower product assortments, as brands feel the weight of shrinking margins and inventory pullbacks. “Brands feeling margin pressure have already adjusted their promotional plans and inventory purchases,” BCG writes, meaning consumers will see less broad-based discounting and more focus on top-performing products. According to BCG, brands will need full visibility in their inventory positions and on trade-offs between volume and margin to build successful holiday pricing, promo and marketing plans.
Strategies for De-Risking the Holidays
BCG recommends a three-pronged approach for retailers determined to “de-risk” the holiday season:
- Reshape the Plan to Demand:
Quickly reevaluate and reset sales targets, product mix, promotions, and marketing budgets. Align hero items, prioritize early wins, and prepare to redistribute resources as the season unfolds. - Execute with Excellence:
Set up a command center for agile, cross-functional decision-making—monitoring sales, margin, and inventory in real time, and rapidly adjusting tactics to seize demand or respond to slowdowns. - Tune and Scale with Agility:
With plans in place, move swiftly to execute product flows, promos, and marketing across all channels (especially physical stores and mobile). Test, measure, and iterate based on daily performance—not just week-over-week.
Case Study: Acceleration in Action
BCG cites a client case where redesigning the holiday promo calendar and repositioning marketing led to a 7% boost in incremental revenue—a fivefold return on investment—by prioritizing weekday and early season sales moments, maximizing coordinated communications, and running a war-room style command center across all sales and marketing functions.
Final Thoughts
With tariffs, narrow promos, and omnichannel complexity at their highest in years, retailers in 2025 must act early, be bold, and leverage AI-driven agility to adapt to an economy where every promotional moment and inventory decision counts. As BCG concludes, “With a mindset oriented toward early action along with a commitment to excellence and agility in execution, retailers can celebrate wins in the months ahead.”
