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CHICAGO — After a flurry of last-minute holiday shopping boosted retail sales in December 2024, U.S. consumers have hit the brakes, shifting their focus back to essentials and taking a breather from discretionary spending. According to Circana, a consumer behavior analytics firm, discretionary retail sales during the five weeks ending January 4, 2025, grew 9% compared to the previous year, with unit demand rising 5%. However, spending quickly tapered off in January, reflecting familiar patterns of post-holiday caution.
The holiday season, marked by a late surge in spending, ended with 2% growth in dollar sales and a modest 1% increase in unit sales for discretionary general merchandise compared to the previous year. Total retail sales, which include food, beverages, and non-edible consumer packaged goods (CPG), also grew 2% in dollars and 1% in units for 2024.
Marshal Cohen, Circana's chief retail industry advisor, attributed the late-season lift to a combination of economic concerns and calendar quirks. "The U.S. presidential election and economic uncertainty kept consumers cautious early in the season," Cohen explained. "But an abbreviated shopping window between Thanksgiving and Christmas, coupled with last-minute urgency, drove spending during the final days."
January Slowdown and Changing Priorities
As the holiday rush faded, consumer spending patterns reverted to baseline levels. During the weeks ending January 11 and 18, discretionary retail sales fell 4% year-over-year, with unit demand dropping 5% and 8%, respectively. Environmental disruptions—including a widespread winter storm, extreme cold, and Southern California wildfires—exacerbated the slowdown.
Meanwhile, spending on food and CPG products remained steady, reflecting consumer prioritization of essential purchases amid elevated prices.
"Consumers are taking a post-holiday respite, grappling with inflation on non-discretionary goods while navigating new distractions," Cohen noted. "The resilience demonstrated during Holiday 2024 is promising, but retailers must anticipate challenges like shifting purchase priorities and changing spending schedules."
Takeaways for Retailers
The 2024 holiday season underscored consumer adaptability and resilience, with consumers willing to spend under the right circumstances. While the moderate 2% growth aligns with industry expectations, the rapid January downturn signals that discretionary spending remains highly sensitive to economic and environmental factors.
As 2025 unfolds, experts advise retailers to focus on value-oriented marketing and timing strategies to capture consumer attention amid ongoing price pressures and potential distractions.
