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Here's Where All the Retail Spending is Going This Holiday Season

Author

Noah Zelvis
December 21, 2025

October retail sales came in flat, and the vibe is clear: people are still buying stuff, but they are far more selective about what makes the cut.

After Fed cut week, this is the kind of slow-but-stable setup where value wins, impulse fades, and retailers that feel like a deal keep the traffic.

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Retail sales stalled in October after a small gain in September, which is another sign the consumer is cooling off. This is not a sudden drop-off. It is more like a downshift. Shoppers are still showing up, but they are picking their spots and stretching their dollars harder.

The mood explains a lot. Consumer sentiment has slid close to the lows, even while spending continues. High prices still feel fresh, wage growth has cooled, and the job market is no longer giving people that fearless confidence to toss extras into the cart.

That tension shows up in how different retailers are behaving. Value-focused chains are holding up better because they match the moment. Some big retailers have talked up a decent holiday season, while others have sounded cautious as shoppers trade down, buy smaller quantities, or wait for promotions instead of paying full price.

Fed cut week helps at the margin, but it does not magically fix household budgets. Lower rates can take the edge off borrowing costs over time, but right now the consumer is acting like a person who saw the menu prices and decided water is fine.

What matters for you is the spending pattern:

  • Essentials and repeat purchases stay steady

  • Trade-down behavior picks up

  • Promotion-driven traffic becomes more important

  • Price hikes get punished fast

So we want mid-caps that benefit when consumers get practical and picky.

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Actionable Stuff

  • Stay in the trade-down lane. If retail is flat, share gains matter more than the overall market growing.

  • Prioritize everyday categories. Groceries, basics, and functional items win when budgets get tight.

  • Look for traffic, not vibes. Stores that drive repeat visits have a cushion when discretionary slows.

  • Buy in pieces. Start small, add on weak headline days, add again if earnings confirm steady demand.

  • Keep a cash sleeve. A cranky consumer economy creates dip opportunities when markets overreact.

Poll: Have you ever hidden a purchase to stay “within” the Christmas budget?

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Top Picks

Grocery Outlet (NASDAQ: GO)

This is basically built for a flat-sales world. Grocery Outlet wins when shoppers want cheaper groceries without feeling like they are settling.

The rotating closeout model keeps prices sharp and gives people a reason to visit often because the deals change.

If consumers keep trimming the “nice to have” items, they still need food, and they will hunt harder for savings.

Ollie’s Bargain Outlet (NASDAQ: OLLI)

When wallets tighten, people do not stop shopping, they just want to feel smart about it. Ollie’s is a deal factory, and the treasure-hunt vibe turns discounting into entertainment.

In a slower consumer environment, retailers that make bargains obvious tend to pull trips away from full-price competitors.

Boot Barn (NYSE: BOOT)

Boot Barn sits in the practical zone. Work boots and functional apparel do not depend on shoppers feeling wealthy, they depend on people needing durable gear.

Even when discretionary spending cools, customers still replace worn essentials. If consumers get more selective, this kind of utility-first retail can hold up better than trend-driven categories.

Academy Sports + Outdoors (NASDAQ: ASO)

Academy is a strong value discretionary pick. Families still want low-cost fun, fitness basics, and practical outdoor gear, but they want it at a price that does not sting.

Academy’s positioning fits the current mood: shop smart, buy what you need, skip the premium markup. If promotions drive traffic in 2026, this format can keep capturing trips.

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Bottom Line

Flat retail sales are not a red alert, they are a warning light. The consumer is still alive, just more cautious, more price-sensitive, and less willing to pay up.

After the Fed cut week, that points to a market where value and essentials outperform flash and impulse.

That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.

Best Regards,
—Noah Zelvis
Macro Notes