Holiday Tightrope: Consumers Pull Back as Gen Z Leads a Spending Slowdown

Read Time: 10 minutes

A Season of Caution
For decades, American retailers have relied on the holiday season to lift their bottom lines, local media companies have timed their biggest ad pushes to capture the surge, and agencies have scrambled to allocate budgets in a way that makes clients shine amid the competition.

This year, the holiday rush may be less of a surge and more of a shuffle. According to PwC’s 2025 Holiday Outlook. PwC is PricewaterhouseCoopers,one of the “Big Four” global professional services firms. The study notes consumers expect to reduce seasonal spending by an average of 5% compared with 2024, the first decline since the pandemic year of 2020. The pullback isn’t spread evenly: Gen Z—those between 17 and 28—plan to slash their budgets by 23%, an abrupt reversal from 2024, when the same cohort boosted holiday spending by 37%.

The shift reflects an economy caught in a tug-of-war between resilience and restraint. Prices for essentials remain elevated, tariffs loom, and households feel the cumulative weight of higher living costs. Eighty-four percent of Americans say they’ll cut back in the next six months, especially on discretionary categories like dining out (52%), apparel (36%), and big-ticket items (32%).

For retailers, brands, and—crucially—the media professionals tasked with reaching consumers, the message is clear: this holiday season won’t be about excess, but about value, timing, and emotional resonance.

Why Gen Z Matters
Older consumers have historically driven holiday spending, but Gen Z’s outsized swing this year deserves attention. This cohort is digitally fluent, trend-setting, and culturally influential. Their abrupt pivot from exuberance to caution sends a warning signal.

In 2024, Gen Z holiday spending ballooned, driven by rising wages, pent-up demand for experiences, and the “treat yourself” ethos that animated younger consumers. Marketers tailored campaigns to this optimism—plenty of luxury streetwear drops, pop-up shopping experiences, and influencer-driven promotions.

But sentiment is fragile. Gen Z’s 2025 retreat illustrates how quickly consumer mood can sour. PwC notes their survey was conducted in June, when tariffs were uncertain; some of those have since been delayed, but the perception of volatility has already reshaped attitudes.

For local sales reps and ad agencies, the lesson is stark: don’t anchor strategies in last year’s exuberance. Instead, reframe pitches around affordability, flexibility, and practical delight.

The Compressed Calendar
As if economic headwinds weren’t enough, this year’s calendar creates additional pressure. Thanksgiving falls late—November 27—with Black Friday and Cyber Monday squeezed into the Nov. 27–Dec. 1 window. That leaves fewer shopping days before Christmas.

According to PwC, 39% of holiday gift spending will happen during this five-day stretch, and 80% will be completed by Cyber Monday. That’s not just an acceleration; it’s a compression that changes how advertising must be timed.

For media sellers, this is both a challenge and an opportunity:

• Local TV and radio reps can pitch “event-based blitz” packages targeting the five-day window, emphasizing reach during high-mobility moments (Black Friday commutes, Cyber Monday lunch breaks).
• Digital reps can position campaigns as “front-loaded urgency” buys, ensuring clients capture the lion’s share of budgets before wallets close.
• Agencies should advise clients to shift promotions earlier, leveraging “pre-holiday teasers” and loyalty nudges before Thanksgiving.

A Value-First Mindset
Across generations, the dominant theme is value. Seventy-eight percent of consumers say they’ll seek less expensive alternatives; 65% expect post-holiday discounts to be deeper. Search interest for “discount” and “coupon code” has risen 11% in the past year.
Consumers will still give gifts, but the choices will be quieter and more thoughtful. Think fewer tech splurges, more gift cards (planned by 52% for friends, 47% for family), and scaled-back at-home gatherings.

This value orientation creates multiple levers for local advertising:

• Highlight affordability: Media reps should push clients to promote “good-better-best” tiers. Even affluent shoppers are looking for justification.
• Stress convenience: With time short, value isn’t just about price—it’s about ease. Messaging that saves consumers hassle will resonate.
• Lean into emotional value: Families want to preserve traditions even while tightening budgets. Ads that tap into nostalgia and togetherness can bridge the gap.

Where Consumers Will Shop
For the first time, holiday shopping is nearing channel parity: 51% of consumers plan to shop online marketplaces, 53% will shop in person. The store still matters—48% cite the ability to interact with products directly as a reason to visit, along with promotions (38%) and holiday atmosphere (25%).

This is good news for local businesses and the media outlets that serve them. The “shop local” story carries fresh weight when households are deliberate about each dollar.

Media reps can leverage this trend by:

• Offering geo-targeted digital campaigns to capture nearby shoppers weighing “click vs. brick.”
• Encouraging clients to market in-store experiences (try-ons, demonstrations, holiday events) that justify the trip.
• Tying campaigns to community pride, framing local purchases as both practical and values-driven.

How People Will Pay
Payment behavior is shifting. Credit card use has surged—52% cite it among their top three payment methods, up from 40% last year. Cash is also rising sharply (48%, up from 41%), suggesting some households are using it to enforce budgets. Debit cards remain on top at 55%.

The rise in cash is telling. Consumers are willing to forgo rewards points or deferred payments in order to stay disciplined. For advertisers, it signals caution: promotions that require stretching (e.g., “Buy Now, Pay Later”) may see less traction than those that fit neatly within a cash-based budget.

Gift cards are another standout. Half of respondents plan to give them, reflecting a desire to control costs while preserving generosity. For local merchants, this is a powerful product to push through media buys—gift cards keep dollars in the community.

Tariff Jitters
Shoppers concerned about tariffs are slashing deeper than others. On gifts, they expect to spend 10% less ($690 vs. $756), and 90% of them say they’re cutting back overall compared with 75% of other consumers.

Even if tariffs are delayed, the perception lingers. For advertisers, that means transparency around pricing matters more than ever. Ads that acknowledge stability (“No price hikes this holiday”) or emphasize fixed-value bundles can earn trust.

Implications for Local Media Sellers
For local media sales reps, the PwC data is not just macroeconomics—it’s a roadmap to pitch with precision. Five practical strategies emerge:

1. Position media as the urgency driver. With 80% of budgets spent by Cyber Monday, reps must convince advertisers to commit early and concentrate spend. Build packages around “capture the window” campaigns.
2. Sell value alignment. Emphasize that local media delivers cost-efficient reach. In an era of cautious consumers, “every dollar works harder here” is a compelling message.
3. Promote gift cards and experiences. Suggest campaigns highlighting local gift cards, dining vouchers, or experience packages. These resonate with consumers’ budget discipline and desire for shared moments.
4. Advocate omnichannel storytelling. With online and offline near parity, reps should encourage clients to integrate digital and physical presence. Highlight case studies where a mix of local radio + geo-targeted digital boosted store traffic.
5. Stress community and trust. In uncertain times, consumers retreat to the familiar. Ads that emphasize local roots and neighborly reliability will out-perform generic promotions.

The Agency Perspective
Ad agencies face their own challenge: balancing client anxieties with the need to invest in visibility. Many clients will arrive asking for cuts; agencies must redirect the conversation toward smarter allocation.

Tactics include:

• Front-loading spend. Encourage clients to invest in early bursts—particularly before Thanksgiving. Waiting risks missing the budget window entirely.
• Testing creative built around restraint. Ads should not scream indulgence, but rather emphasize thoughtful giving, value, and practicality.
• Recommending cross-media reinforcement. Ensure the message follows the consumer from radio to digital to in-store signage.
• Highlighting local data. Agencies can borrow from The Media Audit or other sources to show how specific demographics in their market respond differently.

Stories That Sell
Consider how a local jeweler might adapt. Last year, their pitch was about “upgrading the diamond” and “luxury made affordable.” This year, the more effective narrative might be:

“Celebrate love with timeless gifts that fit every budget. A lasting treasure doesn’t have to cost more this year.”

Or a restaurant chain:
2024: “Make it a season of indulgence—book your holiday feast.”
2025: “Gather your family for a cozy holiday meal without the stress. Reserve early and lock in today’s value.”
In both cases, the message shifts from excess to reassurance—exactly the pivot consumers are making.

Long-Term Shifts
While this holiday season may look restrained, it also foreshadows longer-term shifts. Younger consumers are proving they can swing from free-spending to frugal in a matter of months. Economic sentiment, not just income, drives behavior.

For local media professionals, the takeaway is adaptability. Campaigns, pitches, and messaging must be nimble, tuned not just to what consumers can afford but how they feel about the moment.

Conclusion: Selling the Season
The 2025 holiday season is shaping up as a test of discipline—for consumers, for retailers, and for the media ecosystem that connects them. Gen Z’s retrenchment, a compressed calendar, and tariff fears mean this will not be the year of indulgence.

But value, community, and timing still offer fertile ground. For sales reps, the task is to help local businesses pivot: to tell stories of practical generosity, to deliver campaigns that meet consumers in their frugality, and to remind advertisers that trust and local presence are themselves gifts.

In short: the dollars are fewer, but they can still be won—by those who listen closely and sell with precision.

Source: https://www.pwc.com/us/en/industries/consumer-markets/library/holiday-outlook-trends.html#:~:text=According%20to%20PwC apos;s%202025%20Holiday,the%20higher%20cost%20of%20living.