Summer kicks off the start of holiday shopping for consumers, relying on credit to fund their seasonal purchases.
Holiday Shopping Trends in 2025: Gen Z and Millennials Embrace Buy Now, Pay Later and Savings
In the holiday season of 2025, American shoppers are showing a significant shift in their spending habits, particularly among the younger demographics. According to a survey conducted by Invoice Home and Censuswide, 25% of U.S. consumers plan to use Buy Now, Pay Later (BNPL) services for their holiday spending[1][5].
This trend is particularly notable among Gen Z and Millennials, with 20% and 19% respectively intending to rely on BNPL for holiday expenses[1]. Gen Z shoppers, in particular, show a strong preference for maintaining their holiday spending without cutbacks, with only 15% saying they would reduce holiday shopping for other financial needs[2].
Alongside BNPL, 40% of Gen Z plan to use savings to cover holiday costs, indicating a willingness to leverage multiple financial strategies to maintain spending[1]. Millennials, meanwhile, are more inclined to incur credit card debt (27%) compared to the previous year[1].
The growing reliance on BNPL and other debt tools among these demographics reflects broader economic pressures, including inflation and constrained budgets. However, younger shoppers are less willing to compromise on holiday purchasing than older generations[1][2].
Retailers also anticipate these trends, with expectations of increased spending at major retailers like Amazon, Walmart, and Target[1][5].
Incentives for Holiday Shopping
The survey also reveals that discount codes and gifts with purchase can significantly influence shopping decisions. A discount code for the next order would incentivize 19% of respondents to buy from a brand/business that isn't offering a discount at the time of purchase during the holidays[1]. Similarly, a gift with purchase would incentivize 28% of respondents[1].
Interestingly, free shipping/returns can be just as effective, with 42% of respondents still feeling incentivized to buy from a brand/business that isn't offering a discount at the time of purchase during the holidays[1].
Deterring Factors
However, there are factors that can deter shoppers from buying. An increase in cost to return items will deter 25% of U.S. consumers from shopping with a retailer this holiday season[1]. Poor communication from a retailer about delayed shipping will discourage 22% of U.S. consumers[1].
Impact on Other Spending
If prices increase due to inflation and tariffs, Gen Z and Millennials may opt not to travel, stop gifting, or thrift gifts[1]. This could potentially impact the holiday season and extend celebrations into 2026 when costs may be lower[1].
AI and Holiday Shopping
AI is employed by 16% of consumers to seek out the best prices during the holiday season[1]. This trend suggests that shoppers are increasingly relying on technology to make informed decisions about their holiday spending.
In conclusion, the holiday shopping landscape in 2025 is witnessing a significant shift, with Gen Z and Millennial shoppers embracing BNPL services and leveraging multiple financial strategies to maintain their holiday spending. This trend underscores both economic pressures and strong consumer desires to maintain holiday gift-giving traditions despite tighter budgets[1][2][5].
[1] Invoice Home and Censuswide Survey, 2025 [2] Gen Z Holiday Shopping Habits Report, 2025 [3] Millennial Holiday Shopping Habits Report, 2025 [4] Holiday Spending Trends Report, 2025 [5] Buy Now, Pay Later Trends Report, 2025
- In the holiday season of 2025, Gen Z shoppers are anticipated to use savings as a financial strategy for holiday gifting, indicating a desire to maintain their spending without incurring excessive debt.
- The technology sector could see potential growth during the holiday season, as AI tools are increasingly used by consumers to seek out deals-and-discounts and data-and-cloud-computing services that can offer budgeting solutions.
- Despite plans to use Buy Now, Pay Later services for holiday expenses, many Gen Z and Millennials still express concerns about inflation and tariffs impacting their personal-finance, leading them to consider alternative options such as reducing travel or gifting.
- Alongside holiday season sales and discounts, lifestyle brands could attract more customers by offering incentives like gifts-with-purchase, as these can significantly influence shopping decisions for a substantial percentage of shoppers.
- As the holiday shopping landscape undergoes transformation, retailers need to be mindful of deterrents like increased costs to return items or poor communication about delayed shipping, which can drive away consumers and impact sales in the home-and-garden, technology, and other categories.
