To cope, store owners have adjusted their business strategy, focusing on products with better profit margins such as decorative wood or gift baskets. The store owner also noticed that customers are tightening spending this year, such as choosing a 100 USD gift basket instead of a 150 USD gift or buying only one decoration instead of many items as before.
In addition to tariff policies, persistent inflation and slow labor market growth have shaken consumer confidence in the US economy. According to a December survey by the AP-NORC Center for Public Affairs Research, the majority of adults in the US have seen food, electricity and holiday gifts increase more than normal in recent months.
The Gallup index reflects Americans' assessment of current economic conditions, falling to a 17-month low in November. Consumers have also been less excited about shopping for holiday gifts, with their gift budgets estimated to fall by $229 from October to November, the biggest drop Gallup has seen at this time of the year-end shopping season.
However, the worst case scenario of price escalation that many economists are concerned about from the US tariff policy has not yet occurred widely but has a different impact on each group of goods.
To avoid the impact of price increases due to tariffs, Mr. John harmoni - director of technology research at consulting firm Coresight Research, recommends that consumers should look to secondhand stores and low-cost retail chains.These systems typically sell inventories imported into the US before the new tariffs take effect.
Mr. Joe Adamski - senior director of ProcureAbility shopping services company - said that US-made books, food and beverages are suitable gift options, less affected by tariffs.
In its 2025 retail summary, Bloomberg pointed out that the industry has experienced more volatility in 2025 than most other industries.
At the beginning of the year, consumer confidence indicators began to decline, with several University of Michigan long-term consumer psychology surveys showing that shoppers' sentiment was almost at an all-time low. Consumers are becoming more cautious and economical.
The tariffs were then imposed in April, which President Donald Trump declared Liberation Day. The initial tax rate is very high and is determined differently by country. As retailers quickly adjust, US officials are also constantly changing and delaying the tax rate, even for a short time.
To cope, retailers have imported a large quantity of inventories before the expected tariffs take effect, looking for supply sources for cheaper versions of products or finding suppliers in countries with lower taxes as well as putting pressure on manufacturers to get better prices. Many stores have adopted spot, postpaid payment companies such as Klarna and Affirm, allowing consumers to divide some types of shopping into many installments, helping to reduce the cost burden. Many retailers are also looking to cut costs internally, some systems have laid off thousands of workers or significantly cut seasonal staff recruitment during the holiday season.
Bloomberg pointed out that retailers have been prepared for the impact of tariffs and are still there. Meanwhile, shoppers, despite signs of stress, do not spend much. This year's holiday shopping season is far ahead of 2024, even with inflation accounting for the majority of income gains in some sectors. Retailers and brands are trying to curb prices and have so far succeeded in many items.
