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Suzy Davidkhanian (00:00):

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(00:21):

Hi everyone. Today is Wednesday, December 10th. Welcome to eMarketer's weekly retail show, Reimagining Retail, an eMarketer podcast made possible by Viasat Ads. This is the show where we talk about how retail collides with every part of our lives. I'm your host, Suzy Davidkhanian, and on today's episode, we're going beyond the Thanksgiving headlines to tackle the myths and mixed signals shaping the holiday season's biggest storylines, and what that actually means for the final stretch of 2025. Joining me today, we have two podcast regulars. In the office with me at our studios is analyst, Rachel Wolff. Hi, Rachel.

Rachel Wolff (00:57):

Hey, Suzy.

Suzy Davidkhanian (00:58):

So nice to have you. And senior analyst, Zak Stambor, joining us from Chicago. Hey, Zak.

Zak Stambor (01:03):

Hey guys.

Suzy Davidkhanian (01:04):

So when you look at the top-line results, this Thanksgiving weekend was massive. NRF called it a record 203 million shoppers, more people than we've ever seen across those five days. And Adobe showed online spending hitting new highs, with Cyber Monday alone crossing 14 billion. But then, we also had Macy's CEO telling us last week during their earnings call that shoppers are still selective and pulling back in certain categories. So with headlines swinging from record-breaking to shoppers pulling back, it's really honestly hard to make heads or tails of how we should feel about the holidays right now. But before we dig in, I wanted to do a very quick poll on what did you buy or did you skip buying anything during Cyber Five, Zak?

Zak Stambor (01:52):

Oh my goodness. I bought so much, and I did it on Black Friday.

Suzy Davidkhanian (01:58):

Did you?

Zak Stambor (01:58):

Yes, I did it all online. And I'm almost all done with my shopping, I've got to say.

Suzy Davidkhanian (02:04):

You're not part of the half of the people who still haven't finished?

Zak Stambor (02:08):

I never do this, but I just got started and there were pretty decent deals, and so I just kept going. And I bought from several different retailers, I bought a Lego set, I bought a backpack, I bought some running gear, all sorts of stuff.

Suzy Davidkhanian (02:28):

It sounds like you did self-gifting in addition to gift giving.

Zak Stambor (02:31):

It was not running gear for me, actually, it was for my sons.

Suzy Davidkhanian (02:37):

Rachel, what about you?

Rachel Wolff (02:38):

I was a little more conservative than Zak. I bought a handful of things, like a pair of AirPods. I also bought running gear, although for myself. But I think I honestly felt like the deals weren't as great and I needed to do a lot more comparison shopping to find the best deals. So that was my Black Friday/Cyber Monday experience.

Suzy Davidkhanian (03:00):

Yeah, mine was like that too. I bought, well, I said two, but I bought everything for myself. And I was trying to buy a TV, which I haven't bought one in so long, and I used LLMs, and it discouraged me, so I didn't even end up buying one. But I did buy lots of other stuff.

Zak Stambor (03:15):

You could buy it closer to the Super Bowl and get a good deal.

Suzy Davidkhanian (03:19):

A TV? Yeah. It wasn't even that I was looking for a deal so much as I don't understand there's so much technology now, it's evolved so much, and apparently what I was looking for was good enough, and I don't do well with good enough.

Zak Stambor (03:33):

Yeah, it's very confusing.

Suzy Davidkhanian (03:34):

Yeah. So I didn't pull the trigger. Okay. So we could keep talking about what everybody bought, it sounds like everybody really helped support those big numbers, but let's start with some more basic things. The results were big, but within that, there were some surprises. What surprised you most, Rachel?

Rachel Wolff (03:51):

So this is maybe a bit more, I don't want to say random, but it was just a stat that really jumped out to me that I thought was interesting, and that's TikTok Shop, which generated over $500 million in sales over Black Friday/Cyber Monday. And I was doing a little bit of back of the envelope math, looking at $44.2 billion in total online spending across Cyber Five, so that would be a little over 1% of total e-commerce spending, which is pretty outrageous when you consider that it's only been around for a little over two years. So I think that just tells you how much of a commerce engine it's becoming.

Suzy Davidkhanian (04:26):

Right. TikTok Shop, and probably all influencer/creator, any of those channels, are much more than just a search engine, they're really a conversion engine now.

Rachel Wolff (04:37):

Right. And I think it tells you what is getting shoppers to convert, and that's content that is entertaining, that is informative, and the ability to get an impulse purchase whenever you feel like it.

Suzy Davidkhanian (04:49):

Yeah, absolutely. What about you, Zak?

Zak Stambor (04:51):

Even with so many people shopping on Black Friday and throughout the holiday weekend, there weren't as many people shopping at a lot of department stores than there were last year. We saw declines at JCPenney, at Macy's, at Kohl's, and Dillard's just had the tiniest possible increase of just half a percent. And so, it really was a sign that these mid-market department stores face some real challenges.

Suzy Davidkhanian (05:24):

And so, do you think that the surprise here is even there's selective purchasing that consumers are chasing deals, but they're willing to buy anything that kind of floats their...

Zak Stambor (05:38):

I think people are really on the hunt for value. And so, we saw very big gains in foot traffic at Ross, at TJ Maxx, at a lot of off-price retailers. And so, I think it's just a sign that consumers don't associate these department stores with strong value in deal.

Suzy Davidkhanian (06:00):

Yeah, which is a surprise, and somehow I feel like we've been talking about this for a while. One of the things that surprised me was how important mobile is. Can you guys talk a little bit more about that? Because it really feels like mobile was a default now, right? It helps spur buy now, pay later, it helps spur social commerce.

Zak Stambor (06:22):

Yeah. It's so interesting, because even on Cyber Monday, which was a day that originated because consumers were using the high-speed internet in their offices to shop online, people are using their mobile devices to shop online. Obviously, you don't need your work high-speed internet anymore, but you are largely in front of your computer most of the day. Nonetheless, people were using their phones and like 57.5% of purchases on Cyber Monday were on a mobile device. And like you said, mobile is facilitating buy now, pay later, which is just rapidly emerging as one of the primary ways people are buying online and financing their purchases.

Suzy Davidkhanian (07:16):

Yeah. We know from our forecast data that e-commerce penetration is higher during the holiday season, but so is mobile commerce. So as brands think about Thanksgiving and winning, you have to make sure you have a good app.

Rachel Wolff (07:30):

Yeah. Personal anecdote, I bought everything from my phone, I didn't use my desktop at all, so clearly... Not saying that I'm indicative of the rest of the population.

Suzy Davidkhanian (07:39):

But it's a signal.

Rachel Wolff (07:41):

Right.

Suzy Davidkhanian (07:42):

Okay. So I'm going to zoom out for a second, because underneath all of these results, we're also seeing a few big tension points, and we've been talking a lot about this, places where the narrative doesn't really line up with the data. So I wanted to break down a few of them to try and figure out the signals versus what's actually happening and how that's shaping the season. So the first tension is this idea that the shopper is fragile. There's a lot of narrative around the headwinds, the economy is not doing well, people are pulling back, and yet we're also seeing a lot of retailers post their results right now with significant comp sales up. So tell me more about that, what do you make of it?

Zak Stambor (08:23):

This, I think, is the most interesting one, because people are conditioned to spend even when they're feeling pressured, and there was a survey out that I saw that nearly a third of consumers were prepared and ready to take on debt this season to make their holiday purchases. And so, however they're going to do it, consumers are going to buy their holiday gifts.

(08:53):

Now, there was a really interesting survey result that I saw just last week, when Gallup asked consumers how much they expected to spend on holiday gifts in November, people estimated $778. That was $229 less than October and $234 less than last year. Now, every year, consumers usually trim how much they expect to spend as the season progresses, but that shift is usually like $40 or so. This decline is the biggest ever recorded, even surpassing the drop during the financial crisis. And so, I think that's a real warning sign and a sign that consumers are feeling a little uneasy about taking on some of that debt.

Rachel Wolff (09:56):

Yeah, and I think the other thing to keep in mind too is that a lot of the growth in sales is just being driven by higher prices. I think Salesforce had the stat that they said that US online shopping grows 3%, but there was a 7% jump in average selling price. So people are just paying more, but actually, in terms of units sold, it's gone down, so people are just having to manage higher prices.

Suzy Davidkhanian (10:17):

Yeah, that's a great point. And I think teasing out what you were saying, Zak, there's also this decoupling of consumer sentiment with what they're spending. And so, to your point, Rachel, it's not maybe that they want to spend more, it's they don't have a choice, and that goes back to what the Macy's CEO was saying, that they're just more selective.

Zak Stambor (10:35):

And it's not a monolith. Affluent consumers whose wages have risen quite a bit are spending freely, they feel fine. But the lower income and middle income consumers are pulling back a bit. And so, it's not one big movement, there's a little nuance there.

Suzy Davidkhanian (10:53):

That's really important. I think that's a great place to end on that one tension, you can't group everybody into one bucket.

(10:59):

The other tension that I'm keeping an eye on is this one around timing and budgets. When I was going through the ranks at Macy's, we talked a lot about the calendar for holiday, the purchasing calendar is moving forward more and it's creeping into November, further into November, and then further into October, so there's a big push for retailers to try and capture that dollar early on because people have budgets. But this year, it really feels like people are buying all the time. There isn't a moment where there's a big hourglass figure of a big spike at the beginning and a big spike at the end with all the late gift giver purchases who need to get something just before Christmas or Hanukkah. And so, what does that look like? It's no longer about a bookend calendar and a set fixed budget, it feels like there's that tension too.

Rachel Wolff (11:50):

Well, I think that's the challenge for retailers, because so many of them have relied on these October sales to try and capture that early spending. But as we saw this year, they had mixed results for companies like Amazon. So I think the question is, going forward, do you continue to extend that calendar or do you gradually pare it back and maybe center your deepest discounts, again, around Black Friday and Cyber Monday?

Zak Stambor (12:15):

I also think the way in which consumers shop in October is different than the way that they shop in November and particularly in December. I think a lot of that October spending is on essentials, and to some extent, self-gifting. And then, as the calendar turns to November and particularly December, I think that's when people feel pressed to just get the gifts because the clock's ticking.

Suzy Davidkhanian (12:40):

Pressure.

Zak Stambor (12:41):

Yeah, because it's almost Christmas and you need to have the gift under the tree.

Suzy Davidkhanian (12:46):

Right, that's where you're no longer quite as selective. And to your point earlier, one in two have not finished shopping for the holidays post-Cyber Five, so there's still dollars to be had, people still looking for presents.

(13:01):

So the third tension, for me at least, for this season is around AI, because depending on who you listen to, AI is either transforming the holiday shopping season or it's still really small and just an early adopter behavior. The growth numbers are massive, but if you think about it, the base is still pretty modest. So it's this weird mix of is this the future or is this really even just moving the needle, what do you guys think?

Rachel Wolff (13:27):

Well, I'll start with the stat, to go back to Salesforce, they claim that AI and AI agents influenced 17% of orders placed in the US during Cyber Week, so that would be about $13.5 billion in sales, which is a huge number. But I think you have to investigate that a little bit and think about, well, is it that people really are using ChatGPT or Perplexity to find products and to make decisions for them, or is it they're going on Amazon's website, they're asking Rufus a couple of questions, and is that then the sum total of their interaction with AI?

Zak Stambor (14:05):

I think that's exactly right. I think the way in which search exists has just shifted to Rufus, to Sparky and all of these sorts of tools. And so, I don't think most people are thinking of it in terms of I'm using AI, they're just thinking I'm using search and getting slightly different results than I used to, if they're even thinking about it at all.

Rachel Wolff (14:37):

Yeah. I do think that people are starting to experiment with these tools and to figure out what it is that they can do for them in terms of finding gift ideas or uncovering the best deals, but I don't think we're at that point yet where people are relying on them to make the entire purchase decision for them.

Suzy Davidkhanian (14:55):

Oh, yes. The agentic piece, yes, absolutely. It's more-

Rachel Wolff (14:59):

Well, that, but even just taking the recommendations at face value.

Suzy Davidkhanian (15:02):

Got it, yeah. I think it's interesting, because depending on what stats you see, there was also one that said AI-driven traffic to retail sites was up 670%. But again, on a very small basis, there weren't as many LLMs that were operating as marketplaces last year, if any, to really try and measure that number.

Rachel Wolff (15:22):

Yeah.There was another survey from Visa, half of US shoppers, 47% have used an AI tool for at least one shopping task. There are huge numbers associated with all of these surveys and traffic data, but again, it's still a very small portion of the population.

Suzy Davidkhanian (15:39):

Yes. And it's also, like you were saying before, the embedded tools that are AI that help guide versus truly convert and LLMs that are third-parties.

Zak Stambor (15:49):

But I think as these tools do get better at guiding people, whether it's just on a retailer's website or elsewhere, I think it shows the promise of delivering strong results. I just don't think it's actually doing it to much extent yet.

Suzy Davidkhanian (16:07):

Right. And I think that the holidays is a good time to use guided experiences, because it's such a stressful time and you're trying to do too many things at once and you're worried about what you're buying for other people. But AI right now is a guide, and it sounds like social commerce, based on your TikTok stat, is actually what's helping convert right now at least.

(16:30):

Okay. So before we wrap, I do want to leave our listeners with something practical. So if eMarketer was building a time capsule for holiday 2026, what is one thing that each of you would tell a retailer that they should remember for next year? Rachel?

Rachel Wolff (16:47):

So my advice is to make sure your website is optimized to handle an increase in traffic, particularly on mobile, and this is based on my own Black Friday experience of struggling with very slow websites, which actually stopped me from buying more than I would've done otherwise. So I think that's definitely something that retailers need to think about.

Suzy Davidkhanian (17:08):

Zak?

Zak Stambor (17:08):

Yeah. I think don't lose sight of the importance of the Cyber Five, which I think is an obvious point to some extent. But the season has gotten so long, there's so much emphasis on pulling sales into October, and even early November, that you don't want to deploy all of your very best deals early on, you want to save some for the prime time when consumers are ready and willing and eager to shop.

Suzy Davidkhanian (17:40):

No, because I think it's such a good point, that you need to make sure that you have fresh new merchandise throughout the season versus just at the beginning. And so, for me, fresh merchandise goes with promos, you need to have a strong offering throughout.

Zak Stambor (17:54):

Make your promotions interesting and make them attractive to consumers. I know Sky has referenced on this podcast, Primary offering free delivery for an entire year when you make a purchase over $50, they did that again this year. Target attempted to do something by offering swag bags to the first hundred people, I think, who were in line. Now, that backfired. So you have to find promotions that resonate or will potentially resonate with consumers.

Suzy Davidkhanian (18:30):

Yeah. That was mine too about the... In the time capsule, I would've put make sure that you realize it's a Steady Eddie wins the race versus spurts of beginning and end. But the other one that I would think, that is critical as we continue to talk about AI, is don't forget how important people are in the equation, and that social and stores and that human authentic connection will really help drive more sales. That's all the time we have for today. Thank you, Rachel.

Rachel Wolff (18:59):

Thanks for having me.

Suzy Davidkhanian (19:00):

Thanks, Zak.

Zak Stambor (19:00):

Yeah, happy to be here.

Suzy Davidkhanian (19:02):

And thank you, listeners, and to our team that edits the podcast. Please leave a rating or review, and remember to subscribe. I'll see you for more Reimagining Retail next Wednesday. And on Friday, join Marcus for another episode of Behind the Numbers, an eMarketer podcast made possible by Viasat Ads.