The state of the consumer in 2025 is shaping up to be a story of dichotomies. Consumer trends in 2025 reveal cautious spending meets chronic shopping behaviors – and even reckless spending among some segments. While many Americans perceive an improvement in economic stability, inflation continues to fluctuate, and the perception of a recession persists, shaping how consumers allocate budgets.
So, just how healthy is the American consumer in 2025?
Explore seven key retail and consumer behavior trends that represent critical aspects of consumer confidence and spending plans, accompanied by considerations for how brands can adapt to these shifting dynamics and thrive in 2025.
Economic Trends and Consumer Spending in 2025
Despite economic data showing signs of stabilization, consumer outlook paints a gloomier picture of spending projections for 2025. More than half of American consumers believe the country is in a recession--a perception at odds with actual economic trends and some optimistic retailer outlooks. Persistent concerns about inflation further shape behavior, with consumers prioritizing essential spending over discretionary purchases as they plan for 2025. This sentiment could amplify a post-holiday spending slowdown--not uncommon in Q1 with money- and consumption-related New Year’s resolutions--leaving retailers grappling with cautious buying patterns early in the year.
Takeaway for 2025:
- Target consumer segments that align with brand value proposition rather than trying to appeal to all segments
- Value brands must acknowledge and address consumer concerns through a pricing strategy geared toward affordability
- Rethink product lines to include SKUs at opening price points that align with consumer willingness to pay and price sensitive consumers
- Refocus efforts on consumer acquisition to protect market share
- Leverage promotional efforts and markdowns/clearance to drive spend even as consumers aim to tighten their wallets.
How Gen Z and Millennials Are Driving Consumer Spending in 2025
Younger generations, particularly Gen Z, are reshaping spending growth in 2025 by prioritizing categories that align with self-expression and lifestyle enhancement. Their focus on experiences, travel, beauty, and fashion accessories underscores a cultural shift away from material accumulation toward creating meaningful personal narratives. Millennials, often balancing the needs of multi-person households, drive growth in family-centric categories such as toys and electronics, reflecting their dual roles as providers and consumers. Meanwhile, the phenomenon of ‘doom spending’ among Gen Z—a form of retail therapy in response to societal pressures and economic uncertainty—poses both opportunities and risks for brands. While this behavior can generate short-term sales, it also highlights the need for brands to foster financial literacy and long-term loyalty, ensuring sustainable engagement rather than perpetuating impulsive consumption.
Takeaway for 2025:
- Younger consumers offer a prime opportunity for consumer acquisition, but their impulsive tendencies may lead to higher cart abandonment and returns.
- Retailers should focus on delivering seamless shopping experiences, from curated promotions that encourage trial to streamlined returns, to secure loyalty.
Financial Savviness Shapes Spending Habits
During the 2024 holiday season, consumers exhibited greater financial discipline by reducing their reliance on credit cards and borrowing tools, opting instead for cash and fewer payment methods compared to the previous year, according to our Holiday Shopping Report. This behavior reflects a broader shift toward simplicity and financial control, driven by heightened concerns over debt and rising interest rates. Additionally, consumers shared their spending plans for the coming year: 30% intend to increase essential spending, while 70% plan to maintain or decrease it. Conversely, only 24% expect to increase discretionary spending, with 76% aiming to either maintain or reduce it. These trends underscore a cautious approach to financial management as consumers navigate economic uncertainty.
Takeaway for 2025:
- Financial conservatism will continue to drive consumer behavior.
- Brands should double down on flexible payment options like buy-now-pay-later and focus on creating value-driven relationships rather than relying solely on discounts.
- Rebalance product assortments to align with the consumer shift toward essential products.
The Rise of Experiential Shopping
Americans continue to indicate a growing preference for personalized experiences over physical goods. As evidenced by holiday spending trends, experiences outpaced spending on traditional high-ticket items like appliances and electronics, signaling a lifestyle-first mindset. Consumers allocated 11% of their holiday budgets to experiences like travel and events, with nearly half spending at least $200 on such trips and experiences as gifts.
Takeaway for 2025:
- Brands should reframe their products as enablers of experiences, highlighting how they fit into a specific lifestyle.
- Consider using bundles or campaigns that showcase emotional benefits rather than functional features.
- Experiment with retail store formats that harmonize products with experiences.
We’re in an “Always-On” Shopping Culture
The proliferation of deal days in 2024 reinforced an "always-on" shopping mentality. Smaller sales events like Shop Small Saturday gained ground (+22% consumer participation YoY), while traditional events like Black Friday showed signs of fatigue (-6% YoY). Many consumers now maintain ‘open’ carts when online shopping, actively monitoring for price drops or using alerts to secure deals, which factors into their purchasing decisions. This behavior highlights their consistent effort to find the best value in their purchases.
Takeaway for 2025:
- Revisit broad-based loyalty initiatives, such as:
- Gamification to drive conversions (e.g., abandoned cart initiatives).
- Rewards programs to boost upselling and customer lifetime value.
- Paid membership programs to provide exclusive year-round benefits.
- Revisit broad-based loyalty initiatives, such as:
Instant Gratification Remains Key Amid Supply Chain Challenges
Fast and free shipping continues to be a top consumer priority, with Amazon reasserting its dominance as a go-to shopping destination. However, supply chain disruptions and rising costs—compounded by looming tariffs and evolving sourcing strategies—remain a challenge for retailers trying to meet these expectations.
Takeaway for 2025:
- Proactive inventory management and clear communication will be critical for managing consumer expectations.
- Brands that can navigate supply chain complexities while maintaining competitive shipping policies will retain a distinct advantage.
Social Media Shopping is for all Customer Personas
Social media and digital experiences continue to play a pivotal role in shaping consumer decisions across demographics. During the 2024 holiday season, 1 in 4 consumers looked to social platforms for gift inspiration, including 24% of Gen X shoppers, showcasing the power of algorithms in personalizing the shopping experience. That said, social media had the greatest disparity between consumers who browsed for products there (27%) and those who were comfortable making a purchase there (14%).
Takeaway for 2025:
- Invest in data-driven, platform-specific social media campaigns to attract consumer interest.
- Leverage storytelling and influencer partnerships to amplify reach and create meaningful connections.
- Establish trustworthy and seamless purchasing experiences both on and off social platforms to boost conversion rates.
In 2025, consumers are more discerning and deliberate in their spending, and the spread in behaviors will only grow. For tailored strategies to drive sustainable growth, build lasting value, and foster loyal consumer relationships, contact our experts today. Together, we can help your brand build strategies that work with these trends and achieve long-term success.