As the 2025 holiday season kicks off, retailers are targeting shoppers who are focused on value and have little patience for shortcomings. Strong supply chain strategies will be crucial to satisfy these customers.
After two years of inflation and higher living expenses, consumers are more budget-conscious than ever. Economic uncertainty has left them cautious, and in the US, fluctuating tariffs have pushed prices upward. This increased price sensitivity comes at a time when retailers are already dealing with tighter profit margins, earlier promotions, and higher expectations for delivery and returns.
According to a recent Klaviyo report on Black Friday and Cyber Monday in Europe, which surveyed 1,750 shoppers in major markets including the UK, 81% of European consumers say inflation is influencing their spending, with 77% in the UK agreeing. The study shows that shoppers are being deliberate, not impulsive—online browsing is up 36% compared to last year, indicating that people are researching, comparing, and planning before they buy.
If customers are browsing earlier but delaying purchases, retailers may face longer and less predictable sales cycles. This makes it harder to forecast demand, increases the risk of stocking too much or too little, and puts pressure on supply chains to stay flexible during busy periods. More online research could also lead to more returns if shoppers order multiple items to compare. Retailers will need solid reverse logistics to handle this.
Value-driven, intentional shoppers are also more responsive to price changes and personalized offers, so supply chains must support dynamic pricing and frequent product adjustments, requiring adaptable fulfillment.
Ben Jackson, Klaviyo’s Managing Director for EMEA, says, “For Black Friday and Christmas 2025, what will set brands apart isn’t just the deals they offer, but how they operate behind the scenes to meet rising consumer expectations.”
The Impact of Tariffs
Tariffs have pushed brands and retailers to act sooner than usual. Mark Mathews, Chief Economist at the National Retail Federation, notes that US retailers prepared for tariff pressures well before the holidays. “Many moved up orders early in 2025 to ensure products were available for key moments, including the winter holidays,” he says. “Retailers are staying flexible with tariffs and trying to avoid passing costs to consumers. But as they use up their options, tariffs are likely to affect prices more early next year.”
Retailers have sped up shipments to avoid disruptions.
The American Apparel & Footwear Association reports a similar trend for this year’s holiday inventory. “What shoppers see on shelves this season is largely due to decisions made months ago during peak tariff uncertainty,” says Steve Lamar, AAFA President and CEO. “Companies accelerated shipments and brought in products early to avoid chaos and cost increases as tariff rates fluctuated. Because of this planning, much of this year’s holiday stock arrived ahead of schedule.”
So far, US companies have tried to absorb tariff costs to protect shoppers, but that may not last. “Unfortunately, we expect this to change in 2026,” Lamar explains. “Supply chains can’t handle significant cost burdens for long, especially since many of the tariff mitigation strategies available in 2025 won’t be there. Persistently high…”Rising tariffs are set to push prices higher, putting additional pressure on consumers who are already feeling uneasy. As a result, Kelly Miely, a retail partner at Deloitte, points out that stores might offer slightly smaller discounts. She explains, “To counter the effects of tariffs, retailers could scale back the percentage discounts they typically provide during the holidays. This helps them maintain profit margins while still attracting budget-aware shoppers with competitive prices. The same tactic will be used to handle any short-term currency fluctuations.”
AI as a Tool
This year marks the first time both shoppers and retailers are using AI in tandem: consumers to hunt for bargains, get gift suggestions, and compare value, and retailers to predict trends and tailor experiences. “This holiday season will be the first where consumers rely on AI for shopping and brands use it extensively to personalize interactions,” says Jackson from Klaviyo. “Those who succeed in enhancing their customer service and operations with AI won’t just boost sales—they’ll become leaders in customer satisfaction.”
For retailers, AI is becoming essential for navigating supply chain ups and downs. “Retailers who have invested in upgrading their demand-forecasting with advanced analytics, AI, and machine learning are better prepared to anticipate buying patterns and manage stock levels,” notes Miely. “They also need to strike a careful balance in pricing to stay competitive without sacrificing margins. Early cooperation with suppliers to build a robust supply chain makes this easier.”
However, a report from credit insurer Atradius reveals that although 87% of UK retailers are turning to AI for holiday demand, 44% are still only testing or planning their AI initiatives. This suggests many aren’t fully ready to use AI for holiday planning. Atradius cautions that while AI boosts efficiency, it also raises the risk of supply chain disruptions and data issues.
“Retailers are correct to view AI as a strong partner during the peak shopping season,” says Owen Bassett, a senior risk underwriter at Atradius UK. “But as automation becomes integral to everything from forecasting to delivery, it brings vulnerabilities like data breaches or supply chain shocks. We’ve seen how a single supplier failure or data problem can affect entire networks. That’s why, along with responsible AI use, financial safeguards are crucial—they give suppliers and retailers the assurance to innovate without worrying about cash flow if problems arise.”
Delivery Expectations
Shoppers now have higher standards than ever, especially regarding product availability, personalized service, and speedy delivery. “Consumers no longer tolerate slow shipping, delayed refunds, or inconsistent customer service,” Jackson states. “Years of experiencing fast, transparent service from major platforms have permanently raised expectations. Quick delivery, instant refunds, and tailored suggestions are now the minimum for customer experience, and shoppers won’t settle for less.”
In response, retailers are refining their strategies to meet these heightened demands for faster delivery and reliable stock. “Scenario planning and risk management have become vital, with retailers actively creating backup plans for potential issues like supply chain holdups or sudden demand surges,” Miely says. “We may also see retailers strategically storing finished goods in local or nearby distribution centers to speed up shipping to customers and cut down on delays.”To meet the demand for a hassle-free returns process, retailers are lengthening delivery times. At the same time, to reduce returns, they are revising their policies to include small fees for returns.
“Retailers are extending delivery windows to cope with supply chain issues and ongoing disruptions like port delays and labor shortages, all while cutting costs and managing customer expectations,” explains Miely. “More retailers are also making store credit the main refund option. This helps them keep sales revenue in-house, promoting exchanges or new purchases instead of full refunds.”
This returns issue is one reason retailers have been urging customers to shop earlier this season. Miely has also observed retailers using loyalty programs to grant early access to products.
Despite these hurdles, experts believe brands and retailers will adapt successfully. “Retailers are very aware of consumer shopping behaviors,” says the NRF’s Mathews. “We anticipate they will continue to fulfill their customers’ needs, even with the numerous challenges they’ve encountered this year.”
Frequently Asked Questions
Of course Here is a list of helpful and clear FAQs about the factors influencing holiday supply chain plans
Beginner Definition Questions
1 What is a holiday supply chain anyway
Its the entire process of getting holiday productsfrom raw materials to the finished itemto you the customer This includes manufacturing shipping warehousing and final delivery
2 Why is the holiday supply chain such a big deal
The holiday season can account for a massive portion of a retailers annual sales A smooth supply chain means products are on shelves on time leading to happy customers and strong profits
3 What are the main goals of a holiday supply chain plan
The main goals are to have the right products in the right quantities at the right locations and at the right time to meet the surge in customer demand
Key Influencing Factors
4 Whats the single biggest factor affecting holiday supply chains
Consumer Demand Forecasting This is the process of predicting what customers will buy how much and when If a company guesses wrong they end up with either empty shelves or warehouses full of unsold stock
5 How does transportation and shipping impact holiday plans
Its a huge factor During the holidays planes ships and trucks are all in high demand leading to higher costs potential delays and limited space Bad weather can also shut down major shipping routes
6 Why is labor so important during the holidays
Theres a massive need for extra workers in warehouses distribution centers and for delivery drivers A shortage of labor can bring the entire supply chain to a halt causing major delays in getting packages out the door
7 How do global events affect my holiday gifts
Events like international trade disputes port congestion or geopolitical conflicts can disrupt the flow of goods from factories overseas This can lead to product shortages and longer wait times
8 Does inventory management really matter that much
Absolutely Companies have to decide how much stock to keep in which warehouses Holding too much inventory is expensive but holding too little means they risk selling out of popular items and losing sales
Common Problems Challenges
9 What is the lastmile problem
This is the final and often most expensive step getting a package