What Lessons Can Be Learned From Physical Retail's Dominance This Holiday Season?

Overall spend increased by a significant 4.2% year-over-year this holiday season, according to the results of the Visa Consulting & Analytics Retail Spend Monitor. The report also contained other potentially surprising data points -- perhaps most notably, that physical retail stores had captured 73% of total spend, with e-commerce retailers snagging the remainder (27%).

"Whether shoppers were upgrading their tech, refreshing their closets, or stocking up at one-stop shops, retailers delivered seamless shopping experiences both in stores and online," Wayne Best, chief economist for Visa, said.

"This season also marked a turning point, with artificial intelligence shaping how people discover products, compare prices, and interact with offers. This led to a more informed, more intentional consumer, ensuring they could stretch their discretionary spending," he added.

However, even despite this showing from physical retail operations, e-commerce companies also notched improvements: Online retail spending saw an uptick of 7.8% in 2025 versus 2024 over the holiday period, attributed to the convenience factor as well as a slew of early-season offers.

Other findings pulled from the report:

• Global markets also saw growth in retail sales for the holidays this year: Australia showed growth of 5%, Canada 4.4%, South Africa 7.9%, and the U.K. 3.6%.
• Consumer electronics took the category sales crown, with fashion not far behind: Highlighting the importance of tech devices in the AI-era, Visa registered growth in U.S. retail electronics sales of 5.8%. Meanwhile, clothing and accessories sales stateside improved by 5.3% over 2024's figures.
• Home goods showed resilience with U.S. shoppers: Furniture and home furnishings managed to eke out a slight 0.8% sales improvement, which Visa suggested reflected "a consistent seasonal demand."
• By contrast, home improvement as a segment showed some weakness: Per Visa, building materials and garden equipment sales cooled off by about 1%.

Visa Economist Weighs in on U.S. Consumer Spending This Holiday Season, Growth of AI Influence in Retail Moving Forward

Further comments delivered to CNBC by Michael Brown principal U.S. economist at Visa, delved deeper into what these data points suggest.

“The underlying surprise here… is that consumer spending is holding up reasonably well in light of softer consumer confidence than we had this time last year and a number of headwinds and concerns about inflation," Brown said, pivoting to underscore the growing influence of AI in the retail sphere.

"We are seeing consumers use AI in a big way in comparison shopping and then helping to narrow down that perfect gift. This is the first holiday shopping season where roughly half of the consumers in that survey responded that they are going to leverage AI for one of those two tasks," he added.

Brown also noted that real spending growth was more modest than the broader growth statistic mentioned above, once inflation was calculated into the mix -- after allowing for inflationary pressure, real spending growth YoY was ~2.2% for 2025's holiday retail season.