Adobe Report: Online Holiday Spending Sees Significant Growth

Online holiday spending in the United States is projected to increase by 5.3% year over year, reaching approximately $253.4 billion this season. A recent report from Adobe Analytics highlights consumer trends influenced by discounts and technological advancements, such as artificial intelligence-powered chatbots.

Growth Trends in Online Holiday Spending

While the expected growth is significant, it falls short of last year’s 8.7% increase during the same holiday period. Adobe’s analysis is based on over 1 trillion visits to U.S. retail websites, encompassing 100 million unique items across 18 product categories. This year’s growth rate also does not meet the 10-year average of 13% annual growth, which was notably affected by a remarkable 32% increase in 2020 during the COVID-19 pandemic.

Vivek Pandya, Adobe’s director of digital insights, noted that consumers remain eager to celebrate the holiday season despite economic uncertainty. He stated, “The holiday season is one of the areas where they do feel much more of an onus and a drive to get the goods they need.” Shoppers are not only looking for gifts and decorations but are also stockpiling goods amid fluctuating prices, which could help maintain spending levels.

Challenges Ahead

It’s essential to recognize that higher online spending does not guarantee an overall increase in holiday sales. Adobe estimates that online purchases will account for about 25% of total holiday spending. Retail sales in the U.S. have been steady this year, but rising tariffs and declining consumer confidence cast a shadow over predictions for the holiday shopping season.

Consulting firm Bain & Co. projects a more modest growth for overall holiday spending of 4% year over year, down from the 10-year average of 5.2%. Additionally, consumers plan to cut their average holiday expenditures by 5%, spending approximately $1,552 on gifts, travel, and entertainment compared to the previous year. Notably, members of Gen Z expect to reduce their spending by 23% this season.

Peak Spending Predictions

According to Adobe’s analysis, the peak of holiday spending will likely occur during Cyber Week, which spans from Thanksgiving to Cyber Monday. This five-day period is expected to account for about 17.2%, or $43.7 billion, of total online holiday spending, matching last year’s contribution. Discount levels are anticipated to remain similar to those in the past year, though some categories may see slightly lower discounts.

• Electronics discounts projected at 28%, down from 30.1% last year.
• Toy discounts expected to reach 27%, slightly lower than 28% last year.

The Role of Mobile and AI

Mobile devices are predicted to lead online shopping this holiday season, accounting for 56.1% of online spending. This marks a notable increase from the 40% share mobile had in 2020. As consumers search for gifts, many are anticipated to utilize generative AI-powered chat services for gift ideas. Adobe forecasts a 520% increase in AI traffic year over year, especially leading up to Thanksgiving.