US shoppers are expected to spend more online this holiday season, but the growth will be powered by discounts rather than a sudden burst of consumer confidence. According to Adobe Analytics, online spending from November through December is projected to rise 6.7% year over year to $275.1 billion. That is a solid increase, but the forecast also highlights how retailers are leaning heavily on promotions to attract budget-conscious buyers.
Why discounts are doing the heavy lifting
The picture Adobe paints is familiar to anyone who has watched consumer behavior over the past couple of years. After a stretch of higher everyday costs for groceries, rent, and other essentials, many households are more careful about how they spend. They are still willing to buy gifts and seasonal items, but they want a deal before they click “buy.”
That is why retailers are expected to offer markdowns that peak at 30% on Cyber Monday, the online shopping event that follows Thanksgiving. Deeper discounts are a way to move inventory and keep sales volumes up, even if each sale brings in less revenue per item. For shoppers, that means the best prices may come later in the season rather than early.
Adobe’s forecast also points to specific categories where the deals will be most aggressive. Electronics and computers are expected to see the deepest markdowns, as retailers compete for big-ticket purchases. Meanwhile, Black Friday is being positioned as the best day for deals on TVs, toys, apparel, appliances, and furniture. Cyber Monday, by contrast, is expected to be the single largest online shopping day of the season, with total spending reaching roughly $13 billion.
What this means for investors
For investors, the takeaway is not just that online sales are growing, but that the growth is coming with a cost. When retailers rely on steep discounts to drive volume, their profit margins can shrink. That is a key dynamic to watch as companies report holiday-quarter earnings in the new year.
Retailers that can manage inventory well and avoid excessive discounting may be in a better position to protect profitability. On the other hand, those that are forced to slash prices to clear shelves could see their bottom lines take a hit. This is especially relevant for companies that have already signaled cautious consumer spending, such as restaurant chains seeing diners watch their wallets or warehouse clubs benefiting from inflation-driven bulk buying.
The broader economic backdrop also matters. If inflation continues to ease, consumers may feel less pressure to hunt for bargains, which could support healthier margins for retailers. But if prices stay elevated, the discount-driven shopping pattern could persist beyond the holidays. Investors should also keep an eye on how retailers manage their supply chains and inventory levels, as those factors often determine whether a company can offer attractive deals without sacrificing profitability.
What to watch next
Adobe’s forecast is just one data point, but it sets the stage for a holiday season that will be closely watched by investors. Key questions include whether the 6.7% growth rate holds up, whether Cyber Monday lives up to its billing as the biggest online shopping day, and whether retailers can convert higher sales into actual profits.
For everyday investors, the most important thing to remember is that sales growth is not the same as earnings growth. A retailer can post strong revenue numbers but still disappoint investors if its profit margins shrink due to heavy discounting. That is why it is worth paying attention to how companies talk about their holiday performance in their next earnings calls, especially when they discuss promotional activity and inventory levels.
In the meantime, the forecast reinforces a broader trend: consumers are still spending, but they are doing so selectively. That is a theme that has been visible across the economy, from UK retailers cutting orders to retail sales drops in Canada. The holiday season will be a test of how far that caution goes.
