McKinsey Forecasts Drop in Holiday Jewelry Spending

McKinsey Forecasts Decrease in Holiday Spending on Jewelry

Early shopping, generational shifts, and the rise of practical gifting redefine consumers’ approaches for the 2025 holiday season.

Every quarter, we ask US consumers how they feel about the economy and how those sentiments influence their spending. As inflation and rising costs continue to weigh on households, we conducted a targeted survey to understand how consumers are planning for the holiday season ahead.

Our findings reveal that many shoppers are approaching the holidays with caution and practicality, adjusting their budgets and habits accordingly. Many consumers plan to scale back on discretionary and semi-discretionary purchases, a shift that has prompted some to begin their holiday shopping earlier than usual with a stronger focus on essentials.

The following charts present insights from our latest ConsumerWise research, offering a closer look at how shoppers are navigating these challenges as they gear up for the holidays.

Consumer optimism has been steadily declining since November 2024. While pessimism has shown more volatility, it too has experienced a recent drop. Together, these shifts have driven net sentiment—the gap between optimism and pessimism—to a level 35 percent below its peak in November last year.

Rising prices, fueled by persistent inflation, remain the leading concern for consumers. Notably, concerns about tariffs have eased, with 24 percent fewer consumers citing them as a primary issue than in the previous quarter.

Across income groups and generations, sentiments reflect a growing sense of caution and uncertainty. More individuals express mixed feelings about the economy, highlighting how economic pressures are taking a toll on consumer confidence.

Consumers say they plan to prioritize essentials over the next three months, with net intent remaining positive across most necessity-driven categories. However, this trend shifts when it comes to semi-discretionary items, where spending intent shows noticeable cuts, and net intent turns negative across many categories.

The most striking development is the sharp decline in discretionary spending intentions. Although higher-income consumers are somewhat less affected by this pullback, this trend is observed across all income groups. This underscores a broader, cautious approach to spending as economic pressures continue to shape consumer behavior.

Consumers are likely to change their shopping habits this holiday season, reflecting an increasingly diverse shopping landscape across generations. Our survey findings show a blend of practicality, tradition, and varying levels of engagement between age groups.

Millennials are leading the trend of shopping earlier in the year, with 37 percent starting before October—significantly higher than the 28 percent average across all generations.

Meanwhile, only 11 percent of consumers surveyed are planning to kick off their shopping during Black Friday weekend. Gen Z stands out as an outlier, with 17 percent still associating Black Friday with the start of their holiday shopping.

Baby boomers are showing a reluctance to engage in holiday shopping altogether. A significant 22 percent of boomers report they don’t plan to participate in holiday shopping this year, eight percentage points higher than the cross-generational average.

Nearly half (46 percent) of US consumers plan to keep their holiday spending in line with last year’s levels, while roughly one in four intend to spend less. This share is significantly lower than in many European countries, where a greater proportion of shoppers intend to maintain their holiday budgets.

But spending intentions vary significantly by income group: 65 percent of high-income consumers plan to spend the same or more compared to last year, while this figure drops to 56 percent for middle-income shoppers and just 48 percent for those in lower-income brackets. This disparity highlights how economic pressures are disproportionately affecting lower-income households who are less optimistic about the economy, further shaping holiday spending behaviors.

Many consumers have clear preferences on shopping channels as well. About one-third of consumers plan to shop mostly or entirely online, while only 16 percent intend to do most, if not all, of their shopping in-store. This underscores the continued growth of e-commerce and digital convenience. However, the majority (54 percent) of consumers intend to split their shopping between online and in-store, signaling that the in-person shopping experience still holds value for many.

Spending trends for the upcoming holiday season reveal notable differences in preferences and priorities. Gift cards take the top spot as the most popular planned purchase, with 46 percent of baby boomers leading the charge. Groceries and food for home follows closely as the category where consumers plan on spending, also driven predominantly by baby boomers. This focus on gift cards and food highlights a priority on holiday hosting, entertaining, and practical gifting even amid economic pressures and uncertainty.

With the holiday season fast approaching, economic pressures, shifting sentiments, and evolving shopping preferences are creating both challenges and opportunities for retailers and consumer goods companies. Success in this environment lies in taking decisive action to address emerging consumer needs. This includes offering value-driven options that appeal to budget-conscious shoppers, enhancing omnichannel experiences to provide seamless online and in-store integration, and tailoring strategies to reflect the distinct spending priorities of different demographics.

Source: McKinsey & Co. Top image by Steve Buissinne via Pixabay.