Black Friday 2025: Sales Rise 4.1% Amid K-Shaped Economy

Retail sales in the United States during Black Friday 2025 increased by 4.1% compared with the previous year, according to Mastercard SpendingPulse. Online spending grew even faster, reaching US$11.8 billion—an increase of 9.1% year over year, based on Adobe Analytics data.

However, these gains occur in an inflationary environment of around 3%, meaning that real growth in consumer spending is significantly smaller. Adjusted for inflation, analysts estimate that the increase is closer to 1%, reflecting cautious and value-driven purchasing behavior.

A K-Shaped Economy: Divergent Spending Patterns

Recent data from the Federal Reserve highlights a widening gap in consumer behavior across income levels:

• Lower- and middle-income households: reducing discretionary spending due to tighter budgets, higher prices, and weaker economic sentiment.

• Higher-income households: continuing to spend, supported by stronger earnings, stock market gains, and rising home equity.

This reflects a K-shaped economy, in which higher-income consumers maintain spending capacity while lower-income groups face increasing financial pressure and prioritize essential or discounted purchases.

Consumer Behavior: Fewer Items, Higher Average Prices

Consumers are purchasing fewer units overall this season, but average selling prices have risen. This demonstrates a shift toward selectiveness as inflation, rising living costs, and higher service expenses reshape household budgets.

Lower-income consumers in particular are adopting more conservative strategies, focusing on necessities, comparing prices more frequently, and adjusting their spending to avoid additional financial strain.

Cost-of-Living Pressures and Pricing Expectations

Several factors continue to shape consumer decisions:

• Expected price increases driven by tariffs and regulatory changes.

• Weak consumer sentiment tied to slower job growth and the recent federal government shutdown, which temporarily affected programs such as SNAP.

• Higher costs for energy, groceries, and housing, which continue to outpace wage growth for many households.

As a result, value and affordability have become central to retail strategies, as shoppers prioritize retailers that help stretch their budgets.

Retail Winners and Losers in 2025

Retailers focused on value pricing are gaining market share:

Strong performers:

• Walmart

• TJ Maxx

• Gap

These chains reported solid quarterly results supported by consumers seeking affordability.

Weaker performers:

• Target

• Bath & Body Works

These brands face declining demand for non-essential goods and gift items.

Holiday Season Outlook

The National Retail Federation (NRF) expects holiday sales in November and December to grow between 3.7% and 4.2% year over year, similar to last year’s pace. Total holiday spending could reach a record US$1 trillion, up from US$976 billion in 2024.

Continued Momentum in E-Commerce

• Online sales on Thanksgiving increased 5.3% to US$6.4 billion.

• Heavy discounting remains a key driver of digital demand.

• “Buy Now, Pay Later” (BNPL) usage is projected to exceed US$20 billion this season—an 11% increase from 2024.

Category Highlights for Black Friday 2025

• Apparel: up 6.1% online and 5.4% in physical stores.

• Everyday essentials: leading sales growth in value-focused retailers.

• Electronics and home goods: strong performance supported by promotions and flexible financing.

Cautious but Engaged Consumers

Although shoppers are more cautious overall, many remain eager to participate in the holiday season. Early shopping continues to grow, with a significant share of consumers making purchases even before Halloween.

For retailers, the challenge lies in balancing competitive pricing, value-driven messaging, and strong omnichannel experiences to maintain demand in a fragmented economic environment.