Holiday shoppers set to accumulate credit card debt and rely on Buy Now, Pay Later (BNPL) services to cover their expenses

Holiday shoppers set to accumulate credit card debt and rely on Buy Now, Pay Later (BNPL) services to cover their expenses

In the upcoming holiday season, shopping habits are expected to reflect a strategic approach from consumers, as they navigate rising prices and inflationary pressures.

Walmart is set to compete aggressively on price, particularly on seasonal items, leveraging its size and supplier relationships to keep prices lower despite tariff-driven cost pressures. Analysts expect Walmart to face more pronounced consumer price sensitivity due to rising prices, and Walmart has already cut prices on key back-to-school items to attract customers, which bodes well for holiday season pricing competitiveness [1][2].

Other major retailers like The Home Depot, J.C. Penney, Lululemon, and E.l.f. Cosmetics have not yet disclosed their specific holiday season pricing strategies for 2025. However, based on Walmart’s approach, it is likely that large retailers will continue to balance competitive pricing with supply chain considerations amid inflationary pressures and tariffs.

A recent survey indicates that consumers aren't shifting away from spending but are being strategic in their choices. There is a growing intolerance of price increases among consumers, with half of respondents stating they won't shop with retailers that increase their prices (up from 25% in 2024) [3]. More than a third (37%) of Americans consider buying gifts more important than their credit card balance this holiday season [4].

In terms of payment methods, about one in five millennials (19%) and Gen Z (20%) plan to use buy now, pay later services for holiday expenses, and a quarter (25%) of respondents plan to use these services for holiday spending [5]. Furthermore, sixteen percent of respondents will use ChatGPT or another AI tool for holiday shopping [6].

When it comes to where consumers will be spending their holiday purchases, nearly half (47%) of respondents expect to spend most of their budget with Amazon [7]. Nearly a third (32%) of respondents will shop at big-box retailers like Walmart and Target for the holiday season [8].

Notably, Lululemon has warned of higher prices to cope with tariffs, while E.l.f. Cosmetics plans to increase its prices by $1 [9]. On the other hand, J.C. Penney and The Home Depot plan to hold their prices steady [10].

In response to these financial challenges, the majority of respondents to a recent Inmar Intelligence survey plan to reduce their spending on groceries and other necessities to cover their holiday expenses [11]. Consumers are already indicating that they will be choosier with their purchasing decisions for the holiday season.

References:

[1] Walmart to Compete on Price for Holiday Season

[2] Walmart's Holiday Pricing Strategy: A Response to Inflationary Pressures

[3] Consumer Intolerance of Price Increases Rises for Holiday Season 2025

[4] Holiday Shopping Priorities: Credit Card Balance vs Gift Buying

[5] Millennials and Gen Z Embrace Buy Now, Pay Later for Holiday Shopping

[6] AI Tools Gain Popularity for Holiday Shopping

[7] Amazon Dominates Holiday Shopping Budgets

[8] Big-Box Retailers See Increased Holiday Shopper Traffic

[9] Lululemon and E.l.f. Cosmetics Announce Price Increases for Holiday Season

[10] J.C. Penney and The Home Depot Maintain Holiday Prices

[11] Consumers Cut Back on Essentials to Cover Holiday Expenses

1. Despite Lululemon's announcement of higher prices due to tariffs, consumers might be choosey in their purchasing decisions during the holiday season, as they are increasingly intolerant of price increases.
2. In the realm of personal-finance, a significant number of millennials and Gen Z plan to use buy now, pay later services for their holiday expenses, while a quarter intend to use AI tools like ChatGPT for shopping purposes.
3. While Walmart competes aggressively on price for the holiday season, other major retailers like The Home Depot, J.C. Penney, Lululemon, and E.l.f. Cosmetics have not revealed their pricing strategies. However, given Walmart's approach, it could be inferred that large retailers will strive to balance competitive pricing with supply chain considerations.
4. As the holiday season approaches, sports and lifestyle might take precedence over financial concerns for a majority of Americans, with more than a third considering buying gifts more important than their credit card balance. Nevertheless, the inflationary pressures and rising prices are making consumers adopt strategic shopping habits, focusing on sales, discounts, and competitive pricing from retailers.

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