What back-to-school spending is signaling for holiday shopping
Record back-to-school spending and falling consumer confidence sent seemingly contradictory signals this year, but together they point to the trend likely to define the holiday 2026 shopping season: Consumers remain willing to spend, yet increasingly focused on value, promotions and purchase timing.
As the second-largest retail event of the year behind the holidays, the back-to-school (BTS) season provides an early read on spending patterns that often carry into the fourth quarter.
To understand what these seemingly conflicting signals could mean for the holiday season, it’s helpful to look at how consumer sentiment, spending patterns and shopping behaviors have evolved over the past three back-to-school seasons.
Signals behind the spending
Consumer confidence during the back-to-school months of June, July and August has declined in each successive year from 2024 through 2026.
In 2024, confidence ranged from 97.8 to 105.6 across June through August, with August marking the high point. This is an unusual pattern suggesting consumers grew more optimistic as the season progressed. The macro backdrop that year was one of moderating inflation and a resilient labor market.
In 2025, confidence ranged from 95.2 to 98.7, a meaningful step down from 2024. The season was bookended by a sharp April 2025 trough of 85.7, the lowest reading in years at the time, driven by tariff-related uncertainty. By June, confidence had partially recovered but never regained 2024 levels.
In 2026, confidence declined sequentially through the season, from 92.2 in June to 89.4 in August, the weakest BTS reading across all three years and the only year in which confidence fell month-over-month throughout the season. Elevated gasoline prices and persistent cost-of-living concerns were the primary headwinds.
Retail sales growth: Nominal strength masks real weakness
Despite declining consumer confidence, nominal retail sales growth has accelerated sharply over the last three years. This is a dynamic that reflects rising prices more than rising volumes.
In 2024, retail sales growth was nearly flat, with June through August year-over-year increases of just 0.2%, 1.5% and 0.5%, respectively. This was the weakest BTS sales environment of the three years, reflecting a consumer under genuine pressure from elevated interest rates and residual post-pandemic normalization.
In 2025, there was a significant acceleration, with June to August year-over-year growth of 3.9%, 3.7% and 4.4%, respectively. Early tariff-driven purchasing pulled spending forward and lower gasoline prices relative to 2024 provided additional wallet share.
The strongest nominal growth of the three years was achieved in 2026, with June at 5.9%, July at 4.5% and August surging to 10.5%. However, this growth is heavily price-driven as inflation-adjusted spending per child declined and the bifurcation between income cohorts widened further.
The consistent thread across all three years is the value-seeking consumer. In 2024, this manifested as outright spending declines and a shift to private label. In 2025, it appeared as brand-switching and tariff-driven front-loading. In 2026, it took the form of comparison shopping, promotional waiting, and a concentration of wallet share in clothing and footwear at the expense of technology and supplies.
Channel trends: Online wins every year
Online and mass-merchant channels have gained share in each successive BTS season. In 2024, large retailers positioned to gain share as consumers sought value, even as overall spending declined. In 2025, over half of consumers shopped online for school items.
In 2026, e-commerce sales grew 10.4% year-over-year in August. Off-price retail continued to outperform, while discretionary apparel and electronics saw negative foot traffic.
Lessons from recent holiday seasons
To forecast holiday 2026, the starting point is understanding what actually happened in prior holiday seasons and what drove the differences.
Consumer confidence: Holiday 2024 vs. 2025
The contrast between the two holiday seasons could not be more different from a sentiment perspective.
In 2024, consumer confidence surged into year-end, reaching 112.8 in November and holding at 109.5 in December. These are the highest readings of the entire 2024 to 2026 period. This provided a powerful tailwind for discretionary spending.
In 2025, confidence deteriorated through the season, falling to 92.9 in November and recovering only modestly to 94.2 in December. Despite this, spending held up, which is a testament to the resilience of occasion-driven consumer behavior around Black Friday and Cyber Monday.
Black Friday and Cyber Monday: 2024 vs. 2025
Something to note for 2025 was that while headline online sales figures were strong, real volume growth was negative.
Black Friday U.S. online spending rose 3% year over year in nominal terms, but prices rose 7% and volumes fell 1%. This means that consumers were paying more for less. Nearly 202.9 million shoppers turned out over the 2025 traditional Black Friday and Thanksgiving weekend, exceeding the original National Retail Federation (NRF) forecast of 186.9 million, indicating strong. responsiveness to promotional events even amid weak confidence.
Looking ahead to holiday 2026
Recent back-to-school results provide a useful read on consumers’ willingness to spend, channel preferences and sensitivity to promotions, although the relationship with holiday performance is not always straightforward.
In 2024, a weak back-to-school season (decline of 1.9%, according to the National Retail Federation) was followed by a holiday season that exceeded expectations as consumer confidence surged into year-end. In 2025, a somewhat stronger back-to-school season (increase of 1.5%, according to the NRF) preceded a holiday season that met, but did not surpass, expectations as confidence deteriorated during the fall.
The key difference between those two years was not spending during the back-to-school season itself, but the direction of consumer confidence heading into the holidays.
In 2024, confidence rose from 99.2 in September to 112.8 by November. In 2025, it fell from 95.6 in September to 92.9 in November. That distinction is particularly important for 2026. While this year’s back-to-school season delivered the strongest nominal sales growth of the past three years, consumer confidence fell to 89.4 in August, its weakest back-to-school reading of the period. For holiday 2026 to resemble the strong results of 2024, confidence would need to rebound sharply over the next several months, a scenario with little recent precedent.
Our base case is a trajectory closer to 2025. Consumers are likely to continue spending, particularly around major promotional events such as Black Friday and Cyber Monday, but much of the growth may reflect higher prices rather than increased unit demand. Promotions, value positioning and execution during key shopping periods are expected to play an outsized role in determining which retailers gain share.
Highlights and risk considerations for retailers
Holiday 2026 should produce positive headline growth, but underlying performance will be less robust than the topline suggests. Inflation, promotional timing, channel mix and consumer divergence will determine whether that growth translates into units, margins and sustainable demand. Based on published forecasts and our historical analysis, our base case is for holiday sales to remain positive in nominal terms, with growth around the mid-single digits and e-commerce continuing to outperform overall retail.
Highlights
- Occasion concentration will intensify: In both 2024 and 2025, spending concentrated around Black Friday and Cyber Monday rather than spreading evenly through December. With confidence at multi-year lows, this pattern is expected to be even more pronounced in 2026. The concentration of purchases around major promotional events means that execution during a relatively small number of shopping days could determine much of a retailer’s holiday performance.
- Price vs. volume divergence will persist: As seen in 2025, nominal sales growth will likely overstate real consumer activity. Apparel discounts are expected to average approximately 25% in 2026, up from 23% in 2024, compressing gross margins even as top-line sales hold.
- Online continues to take share from stores: In-store traffic on Black Friday has declined for two consecutive years (-3.2% in 2024, -3.6% in 2025). This trend is expected to continue in 2026, with digital sales growth of 8 to 10% on key promotional days.
- AI-enabled personalization becomes a differentiator: Artificial intelligence influenced approximately 20% of e-commerce sales, roughly $260 billion, during the 2025 holiday season. Retailers with integrated AI search and personalization are expected to capture a disproportionate share of online holiday spending in 2026.
- Value retail will outperform again. Value and off-price retailers gained share in both 2024 and 2025 BTS seasons. This positioning is expected to carry into holiday 2026, particularly for lower-income households facing revolving credit growth.
Risk considerations
- December fade: The clearest lesson from 2025 is that a strong Black Friday can pull spending forward, leaving December underwhelming. With confidence at 89.4 entering the season, below the 95.6 reading at the same point in 2025, the December fade risk is elevated.
- Promotional margin compression: Two consecutive years of rising apparel discount rates (23% in 2024, 25% in 2025) suggest a structurally more promotional environment. Gross margin pressure will be a key earnings risk for apparel-focused retailers in Q4 2026.
- Price vs. volume divergence: If the 2025 pattern repeats (prices up 7%, volumes down 1%), nominal sales growth will mask real consumer retrenchment, making headline figures misleading for assessing underlying demand health.
- Weather: Warmer weather could delay the transition to fall and holiday assortments, with the risk of lost sales and heavier markdowns particularly acute for transitional apparel and footwear.
- Tariff and geopolitical uncertainty: Uncertain tariff policies continue to create a challenging retail environment, with the risk of cost pass-through to consumers further eroding real purchasing power.
