Hey friends,

Holiday 2025 is proving to be one of the most complex retail seasons in over a decade. Growth is slowing for some, accelerating for others, some consumers are cautious others not so much, and the "t-word" (tariffs) are reshaping how and when people spend.

Yet, with the right strategy, we've seen that brands can turn volatility into opportunity to gain market share and protect profitability that can determine success throughout holiday and well into 2026. Let's dive in.

Tariffs: The Buzzword You Can Beat

eMarkerter’s release of their annual holiday shopping report confirms the tariff uncertainty felt amongst shoppers and how it's driving them to start buying earlier to avoid potential price hikes.

Nearly half (47%) of holiday gift buyers reported that they would either buy fewer gifts or spend less on gifts due to concerns about tariffs. A higher share (54%) of consumers under 30 are planning to cut back.

This holiday is not about outspending competitors, it’s about out-planning them. And this will carry forward into 2026.

Through the latter half of Q3, we’ve been working with brands to test small 2-3 day promotions ahead of holiday. Where we’ve seen success, particularly with growing the new customer file and driving incremental revenue, has been with single product or category-level promos versus site-wide.

These tariff changes that are happening can pull demand forward instead of delaying purchases, but it all depends on the tone, messaging and channel strategy you deploy.

AI Compatibility: Become One with the AI Disruption

13% of consumers now start shopping with AI tools. Brands must anticipate that the accelerated shifts in search habits will continue by optimizing product pages with product summaries and creating gift guides for AI and LLM-driven discovery.

Led by Gen Z, more consumers will turn to social and AI search throughout the holiday shopping journey. Younger consumers are looking to platforms like TikTok and ChatGPT for gift inspiration and research.

Feeling overwhelmed by the sheer volume of all the new AI tools? Don’t be. Our team created an AI tools guide specifically for in-house brand teams after research, trials, and internal discussion looking at over 100 AI tools that were focused on marketing optimization. You can check it out here.

Financial Guardrails: Securing Profit Post-holiday

Brands must get their forecast dialed in not just for holiday, but through the end of 2026 because this cautious mindset isn’t going to shift suddenly after the season ends.

82% of consumers may try to save on groceries and/or essentials in order to cover other holiday expenses…19% of respondents worldwide plan to cut back on non-discretionary items and splurge on discretionary ones—signaling a shift in cross-category spending behavior.

As former brand operators, we advise our clients to ditch the lightweight KPIs and in-channel signals as primary growth indicators.

Instead, develop profit guardrails that track your overall business results daily against your forecast. Tie every dollar of paid media back to contribution margin and new customers acquired and keep the calendar fluid based on daily demand, CAC, MER, and contribution.

One way to support this through holiday and beyond without resorting to deep discounts is through emphasizing flexible payment solutions. During the 2024 holiday season alone, American shoppers spent over $16 billion through buy now, pay later (BNPL) services, including nearly $1 billion on Cyber Monday.

BNPL isn’t just a checkout button for brands, it’s a proven way to increase AOV and reduce cart abandonment without resorting to deep discounts. We’ve seen that A/B testing BNPL messaging in ads, such as “flexible options at checkout,” can make prices and products feel attainable to shoppers without the use of a percent off.

The path to profitable growth doesn’t end in December. The systems we build now fuel next year’s success.

Our framework combines financial discipline, creative excellence, and aligned channel execution to ensure each campaign not only drives seasonal sales but strengthens long-term customer value.

Ready to scale more profitably in 2026? Reach out to us at hi@sunnysidecalifornia.com