Adobe: AI, discounts to drive record holiday spend despite tariffs
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U.S. shoppers will spend $253.4 billion online this holiday season, up 5.3% year-over-year, according to Adobe's new forecast out Monday.
Why it matters: Tariffs and inflation are squeezing budgets, but shoppers will lean on discounts, flexible payments and AI-powered tools to stretch their dollars, Adobe said.
- The shopping season begins Nov. 1 and runs through Dec. 31, according to Adobe, but the deals are already rolling out at the nation's largest retailers, with early holiday sales this week.
The big picture: 2025 is expected to have the first true AI holiday season.
- Traffic from AI-powered chat tools is expected to surge 520% year over year, Vivek Pandya, a director at Adobe Digital Insights, tells Axios, noting it could rise to more than 1,000% on peak days like Thanksgiving.
- At the same time, social media commerce is forecast to rise 51%, with influencers driving a disproportionate share of sales.
By the numbers: Cyber Monday is expected to be the biggest online shopping day of the season and year with $14.2 billion in sales, up 6.3% year-over-year.
- Black Friday is expected to have higher growth, rising 8.3% to $11.7 billion.
- Mobile will account for 56.1% of holiday spend — $142.7 billion — cementing the smartphone as the primary shopping device.
- Buy Now Pay Later (BNPL) is expected to drive $20.2 billion in online spend — up 11% year over year.
What they're saying: "This will truly be one of the first holidays where we'll see consumers really lean on generative AI platforms," Pandya told Axios.
- "With discounts, we're not expecting them to be stronger than last season," Pandya said. "We're expecting them to be kind of on par, a little weaker across a couple of categories, but still quite competitive in this broader retail space."
- Electronics will see the steepest markdowns, with prices cut up to 28%, while toys are forecast to be discounted by as much as 27%, Pandya said.
Zoom in: Electronics ($57.5 billion), apparel ($47.6 billion) and furniture ($31.1 billion) will anchor holiday shopping, together accounting for more than half of projected online spend.
- The fastest growth is coming from home upgrades and health tech, Adobe said. Spending on power tools is forecast to climb more than 1,060%, activity trackers will jump 1,055%, and home security systems are expected to surge 1,050% compared with average levels earlier this year.
- Hot sellers range from Nintendo Switch 2 and iPhone 17 to Dyson's Airwrap and buzzy toys like Labubu dolls.
What to watch: Many of the popular holiday gift categories are vulnerable to tariffs.
- "Ultimately, all these retailers have to be able to drive up demand in this moment, so they're going to be looking to try to offer competitive pricing in this promotional period at a very elevated rate," Pandya said.
