Holiday shoppers plan to trim both trees and budgets this season, with average outlays slipping as younger consumers pull back, according to a new PwC survey.

Gen Z Leads Holiday Spending Pullback With A Value Focus

Across generations, respondents expect to spend about $1,552 on gifts, travel and entertainment, roughly 5% less than last year and Gen Z plans the sharpest cut, trimming expected spend by about 23%.

Findings of the survey, first reported by CNBC, show PwC's findings highlight a value-first mindset among the youngest shoppers. "Price is Gen Z's love language," said Ali Furman, U.S. consumer markets industry leader for PwC.

"They've been raised in an era of rising costs. They're laser-focused on value and cost transparency. For them, dupes aren't a downgrade. They're proof of smart shopping." Furman added that "Entertainment and vacations are taking up more of their wallet than they have, and therefore they have less to spend on holiday," and that retailers face a moving target because Gen Z are "the fastest generation to adopt trends and abandon trends."

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Retailers Brace For Price-Sensitive Holiday Season

For merchants, the backdrop points to a season shaped by price sensitivity and experiences-over-stuff tradeoffs. Analysts say tariff uncertainty is another swing factor as companies decide how much of the higher import costs to absorb or pass through to consumers, a debate that has surfaced on earnings calls and in retail commentary this year.

Retailers already see the strain in baskets. Executives at value-focused chains have flagged customers trading down and stretching budgets, while department stores highlight heavier demand for opening-price items. Those patterns suggest that deal timing, couponing and sharp price points will again be pivotal between Thanksgiving and New Year's.

Warehouse clubs and big grocers largely rode solid holiday traffic last season. Costco Wholesale Corp. (NASDAQ:COST) said early holiday demand helped it beat quarterly sales and profit expectations in December, highlighting strong footfall through the period.

BJ's Wholesale Club Holdings Inc. (NYSE:BJ) later reported a double-digit jump in adjusted earnings on higher membership revenue and steadier baskets in its holiday quarter, while Kroger Co. (NYSE:KR) posted a 2024 fourth-quarter earnings beat and highlighted double-digit digital growth as shoppers mixed value hunting with convenience.

On consumer spending, the National Retail Federation said Americans planned to shell out about $902 per person on gifts, food and decorations for the 2024 holidays, and total holiday sales ultimately rose roughly 3% year over year. Those figures help explain why value-oriented chains with strong membership models and sharp price points saw brisk business even as shoppers grew more price-sensitive.

Mixed Spending Picture, Rising Anxiety Over Prices

All told, PwC's survey, conducted in late June and early July, paints a mixed picture. Older shoppers are roughly flat year over year, with baby boomers planning a modest uptick, while Gen Z's pullback drags the average lower. That gap mirrors broader consumer splits across travel and discretionary categories, where higher-income households have kept spending even as middle- and lower-income shoppers hunt for bargains and switch to cheaper alternatives.

Furman said the anxiety isn't just about what's on shelves. It's also about what could happen to prices next. "It's not necessarily the tariffs themselves that are driving sentiment and behavior," she said. "It's the threat prices may go up, and people have a consciousness around that."

Photo Courtesy: AnnaStills on Shutterstock.com

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