News

With Thanksgiving and Christmas approaching, the holiday season is officially underway. St. Olaf College’s Assistant Professor of Economics Kulsoom Hisam discusses holiday shopping trends, shifting consumer behavior, and the economic factors influencing how U.S. shoppers spend. 

What holiday shopping trends are we seeing this year, and how are consumer spending habits changing compared with previous years?
United States’ shoppers are still in the holiday shopping spirit, despite concerns about inflation and household budgets! According to the National Retail Federation, holiday retail sales are projected to increase by 4.2 percent in 2026, reaching approximately $1 trillion. That is a faster pace of growth than last year, when holiday sales increased by 3.1 percent. However, here is the economist’s caveat: Spending more money doesn’t necessarily mean we’re buying more things. Some of the projected increase in 2026 may reflect higher prices rather than more goods being purchased.

What’s interesting is that consumers continue to prioritize holiday spending while remaining mindful of their budgets —and perhaps that’s not surprising. Holiday shopping isn’t just about buying things; it’s also tied to traditions, gift-giving, and spending time with people we care about. Even when budgets are tight, people look for ways to preserve those experiences, whether through discounts, comparing prices, or choosing more affordable gifts. In economics, we talk about maximizing satisfaction subject to a budget constraint. In everyday language, that means trying to find the perfect holiday gift without emptying your wallet!

How are factors such as inflation, economic uncertainty, and household budgets influencing what shoppers buy and how much they spend during the holiday season?
One thing I often remind my students is that inflation slowing down doesn’t mean prices are going back to where they were. It simply means prices are rising more slowly. That’s an important distinction, especially when households are already spending more on necessities such as groceries, housing, and transportation. Add uncertainty about the economy or future income, and holiday shopping becomes a balancing act between what we want to give and what we can comfortably afford.

Interestingly, despite these pressures, Deloitte’s 2026 holiday survey finds that U.S. shoppers expect to spend an average of $1,654 this holiday season, about 4 percent more than last year. But what they’re buying is also interesting: half of shoppers plan to give an experience, such as a restaurant meal or tickets to an event, rather than relying only on traditional gifts. At the same time, 38 percent of shoppers are actively seeking value through promotions, rewards, and more affordable alternatives. 

Here is the surprising part: Bargain hunters typically expect to spend 12 percent more than other shoppers. It’s a reminder that finding a good deal doesn’t necessarily mean spending less overall. Economics is all about trade-offs, and during the holidays, we’re balancing our budgets with the joy of giving.

How are shopping behaviors shifting between online shopping, in-store purchases, and early holiday sales events such as Black Friday?
Black Friday is no longer confined to a single day. Holiday promotions now begin weeks — sometimes even months — before Thanksgiving. This gives consumers more opportunities to compare deals and spread their purchases over time. Adobe projects that online holiday sales will reach approximately $275 billion in 2026, a 6.7 percent increase over last year. While Cyber Monday is still expected to be the biggest online shopping day, Black Friday is projected to grow faster. This prediction is partly because retailers are offering some of their deepest discounts that day.

Another shift is how consumers discover deals. Shopping is no longer just about browsing store aisles or websites. Social media influencers and AI-powered tools are increasingly becoming part of the process of deal hunting. That said, physical stores still offer something that online shopping cannot fully replicate: an experience. Here in Northfield, our annual Winter Walk, with its decorated storefronts, caroling, and holiday shopping, is a wonderful example of how shopping can bring a community together. There’s an economic lesson here, too: Consumers don’t just value the products they buy –– they also value the experience of buying them.

How can retailers respond to these holiday spending trends and meet consumer demand?
For retailers, the message is clear: Shoppers are looking for value, but value means different things to different people. Deloitte’s 2026 holiday survey finds that younger shoppers tend to prioritize personalized gifts, convenience, and faster delivery, while older shoppers place greater emphasis on clear pricing and a more independent shopping experience. This means retailers need to think beyond discounts and offer options that appeal to different consumers. With holiday shopping starting earlier, businesses can no longer rely entirely on the traditional Black Friday rush.

But price isn’t everything. Minnesota’s Mall of America is a great example of how shopping can be about more than simply making a purchase. With restaurants, entertainment, and even an indoor amusement park, it offers an experience that goes beyond traditional retail. The same economic principle applies to smaller businesses in communities like Northfield, where personalized service, unique products, and community connections help local shops stand out. Economists call this product differentiation. Sometimes we’re willing to pay a little more because the experience itself has value. For retailers, that can be an important competitive advantage.

How does your work at St. Olaf contribute to shaping a generation of responsible consumers?
One of my favorite things about teaching economics at St. Olaf is helping students recognize that economics is everywhere — not just in textbooks or financial markets. It’s in deciding whether to buy coffee before class, wait for a holiday sale, or purchase that 40-percent-off sweater that the advertiser assures you is a good deal!

In my Urban Economics course, for example, we explore why businesses locate where they do, how cities grow, and how individual decisions shape the communities around us. I encourage students to think beyond the price tag and consider opportunity costs: What are we giving up when we choose to spend money on something? This practice of responsible consumption also means recognizing that our choices can have consequences beyond our own wallets, whether for local businesses, workers, or the environment.

Ultimately, I want students to become thoughtful consumers who ask good questions, recognize trade-offs, and understand how their decisions affect both themselves and their communities. After all, responsible spending isn’t necessarily about spending less; it’s about making choices that reflect what we value — whether that’s finding the perfect gift, supporting a local business, or creating memories with the people we care about.

About Kulsoom Hisam
Kulsoom Hisam is an assistant professor of economics at St. Olaf College. She earned her Ph.D. in Economics from Clark University in May 2024. Hisam’s research interests include urban development and economic history, where she applies spatial and historical data to study different topics in urbanization. She also writes for Dawn, a leading English-language newspaper in Pakistan, approaching social issues through an economic lens.