As the 2025 holiday season begins, retailers are trying to reach a customer who is both value-driven and increasingly unforgiving. Effective supply chain strategies will be essential to meet this demand.
After two years of inflation and rising living costs, consumers are entering the holiday season more value-conscious than ever. Sentiment remains fragile, impacted by economic uncertainty. Tariff volatility has added another layer, especially for consumers in the US, where prices are edging up. This heightened sensitivity is now colliding with a retail sector navigating tougher margins, earlier promotions and more demanding delivery and returns expectations.
According to marketing platform Klaviyo’s recent Black Friday and Cyber Monday European Forecast report, which surveyed 1,750 consumers across major European markets including the UK, 81% of shoppers in Europe say inflation is shaping their spending decisions, while 77% say the same in the UK. The research suggests that consumers will be intentional about their shopping, rather than panic buying; Klaviyo found that online browsing is up 36% year-on-year, indicating that consumers are researching, comparing and planning before making a purchase.
If consumers are browsing earlier but buying later, retailers may face longer and less predictable conversion windows. This makes demand forecasting harder, increases the risk of over or under-stocking, and puts pressure on supply chains to stay responsive during peak trading periods. More research online may also result in more returns, if customers order multiple options after comparison. Retailers, therefore, will need strong reverse-logistics planning in place. Value-conscious, intentional shoppers are also more likely to respond strongly to price movements and targeted offers, so supply chains need to support dynamic pricing and frequent assortment tweaks, which requires flexible fulfilment.
“For Black Friday and Christmas 2025, what will set brands apart isn’t just the deals they offer, but how they operate behind the scenes to meet soaring consumer expectations,” says Ben Jackson, managing director for Europe, the Middle East and Africa (EMEA) at Klaviyo.
The impact of tariffs
Tariffs have forced brands and retailers to act earlier than usual. National Retail Federation (NRF) chief economist Mark Mathews says American retailers anticipated tariff pressure long before the holiday season began. “Many retailers pulled orders forward in early 2025 to ensure availability of products for key moments of the year, including the critical winter holiday season,” he says. “Retailers continue to be nimble with their approach to tariffs and want to avoid passing along the cost to consumers. As retailers begin to exhaust remaining mitigation measures, tariffs will likely have a bigger impact on pricing early in the year.”
The American Apparel Footwear Association (AAFA) says the same dynamic has defined holiday assortments this year. “What consumers will see on racks and shelves this holiday season is largely the result of decisive action taken by companies months ago at the height of tariff uncertainty,” says Steve Lamar, AAFA president and CEO. “Apparel and footwear companies accelerated shipments and pulled product forward to avoid the worst of the chaos and cost hikes, while tariff rates on imports from our key trading partner cycled through peaks and valleys. Because of this planning and front-loading, much of this year’s holiday merchandise actually arrived earlier than usual.”
The AAFA has seen US companies try to shield shoppers from the full cost of tariffs so far, but that buffer won’t last forever. “Unfortunately, we expect this to change in 2026,” explains Lamar. “Supply chains will not be able to absorb significant cost burdens for long with many of the tariff mitigation planning tools that existed in 2025 no longer available. Persistently high tariffs will begin to translate forcefully into higher prices, further challenging already-nervous consumers.”
Because of this, Deloitte retail partner Kelly Miely notes that retailers may pull back slightly on discount depth. “To offset any impact from tariffs, retailers may reduce the scale of percentage discounts offered during the holiday season,” she says. “This approach allows them to protect margins while offering competitive pricing to attract cost-conscious consumers. Retailers will employ the same strategy in terms of possible short-term currency changes also.”
AI as a lever
This is the first year where both consumers and retailers are using AI simultaneously: consumers to find deals, recommend gift ideas and compare value; retailers to forecast and personalize. “This will be the first major retail season where consumers use AI to shop and brands deploy AI at scale to personalize the experience,” says Klaviyo’s Jackson. “Those who get it right — elevating their customer experience and operations with AI — won’t just make more sales, they’ll win the customer service champion’s league.”
For retailers, AI is emerging as a critical tool for managing supply chain volatility. “Retailers that have worked on the long-term transformation of their demand-forecasting processes by using advanced analytics, AI and machine learning are better equipped to predict demand patterns and optimize inventory levels,” says Miely. “Retailers must also carefully balance their pricing strategies to remain competitive, all while protecting margins. This is made easier when there is early collaboration with suppliers to build a resilient supply chain.”
However, a report from credit insurance firm Atradius found that while 87% of UK retailers are leaning on AI to handle holiday demand, 44% are still only in the pilot or planning phase of AI rollouts. This indicates a gap in readiness to make AI-informed holiday planning decisions. Atradius warns that while the tech is powering efficiency, it also increases exposure to supply chain shocks and data risks.
“Retailers are right to see AI as a powerful ally during the busiest trading season of the year,” says Owen Bassett, senior risk underwriter at Atradius UK. “But as automation becomes more embedded in everything from forecasting to fulfilment, it also introduces vulnerabilities — from data leaks to supply chain shocks. We’ve seen how one failure in a key supplier or a single data-privacy issue can ripple through entire networks. That’s why, alongside responsible AI use, financial protection is vital — giving suppliers and retailers the confidence to innovate without fear of cash flow disruption when something goes wrong.”
Delivery demands
Consumer expectations are higher than ever, particularly around product availability, personalization and fast delivery. “Shoppers no longer make allowances for slow deliveries, delayed refunds, or patchy customer service,” says Jackson. “After years of exposure to ultra-fast, ultra-transparent fulfilment from major shopping platforms, customer expectations have shifted permanently. Fast shipping, quick refunds and personalized recommendations have become the baseline for customer experience, and consumers won’t accept anything less.”
In response, retailers are developing plans to address potential disruptions. “Scenario planning and risk management have become critical, with retailers proactively developing contingency plans to address potential disruptions, such as supply chain delays or unexpected demand spikes,” Miely says. “Additionally, we may see retailers strategically positioning finished stock in onshore or nearshore distribution centers, enabling quicker transportation to final destinations and reducing lead times.”
To address the demand for a smooth returns process, retailers are extending delivery windows, but, to curb returns, they are simultaneously updating their policies to include small returns fees, for instance.
“Retailers are extending delivery windows to manage supply chain constraints and ongoing disruptions, such as port delays and labor shortages, while reducing costs and managing customer expectations,” says Miely. “A growing number of retailers are also offering credit as the primary refund option. This allows them to retain sales revenue within their business, encouraging either exchanges or new purchases, as opposed to outright refunds.”
This returns challenge is part of why retailers have been encouraging consumers to shop earlier this season. Miely has also seen retailers use loyalty programs to offer exclusive access in advance.
Despite the challenges, experts are confident that brands and retailers will rise to the occasion. “Retailers are highly attuned to consumer shopping habits,” says NRF’s Mathews. “We expect them to continue to meet the needs of their customers, despite the many challenges they have faced this year.”
