Retail stocks, including Amazon.com Inc. (NASDAQ:AMZN), Walmart Inc. (NASDAQ:WMT), and Target Corp. (NYSE:TGT), are drawing renewed investor focus as early indicators suggest the 2025 holiday shopping season is proving more resilient than expected.
Holiday Spending Holds Up Despite Inflation Pressures
U.S. consumers showed notable resilience during the holiday season, driving retail spending up 4.2% year-over-year despite inflation concerns and economic uncertainty, according to preliminary data from Visa Consulting and Analytics on Tuesday.
Visa Inc.’s (NYSE:V) analysis, which tracked payment activity over a seven-week period beginning November 1 and excludes autos, gasoline, and restaurants, showed that consumer spending remained steady, particularly in technology and personal goods.
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The figures are not adjusted for inflation.
Online Sales Drive Growth As AI Shapes Shopping Behavior
In-store shopping continued to dominate, accounting for 73% of total holiday retail payment volume, while online purchases made up 27%.
However, e-commerce was the main growth driver, with online sales rising 7.8% as convenience and early promotional events lure customers.
Michael Brown, principal U.S. economist at Visa, told CNBC on Tuesday that consumer spending held up better than expected despite softer confidence levels compared with last year and ongoing inflation-related headwinds.
He noted that the 2025 holiday season marked a shift in shopping behavior, with artificial intelligence playing a larger role in how consumers discover products, compare prices, and narrow down gift choices.
Roughly half of surveyed consumers reported plans to use AI for those tasks, making it a first for the holiday season, Brown said.
High-End Spending Lifts Totals, Lower-Income Shoppers Stay Cautious
By category, electronics led gains with a 5.8% increase, driven by demand for high-performance devices in the AI era, he said.
Apparel and accessories sales climbed 5.3%. General merchandise stores offering one-stop convenience posted a 3.7% increase.
Home-related categories lagged behind, Brown added.
Spending on building materials and garden equipment fell 1%, while furniture and home furnishings edged up 0.8%, indicating consumers prioritized gifts and gadgets over home improvement projects, he said.
Brown added that when adjusted for inflation, real spending growth is closer to 2.2%, which he characterized as solid given the level of uncertainty facing consumers.
U.S. consumers are on pace to spend over $1 trillion this holiday season for the first time.
Industry Outlook And Price Pressures
The National Retail Federation expects total sales in November and December 2025 to land between $1.01 trillion and $1.02 trillion, up 3.7% to 4.2% from a year earlier.
Much of that increase, however, reflects higher prices.
Economists point to inflation still running around 2% to 3%, along with tariff-related price increases on goods like toys and electronics, as key dollar growth drivers.
Higher-income consumers continue to open their wallets, buoyed by stock market gains and rising home values.
Lower-income shoppers, by contrast, are proceeding more cautiously, increasingly relying on credit cards and buy-now-pay-later options to stretch budgets through the season.
Price Action: AMZN shares were up 0.25% at $232.71 at the time of publication on Wednesday, according to Benzinga Pro data. WMT was up 0.23%.
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