Celebrating the holidays is still a top priority for consumers, but several factors make this season unique. Shoppers are balancing tighter budgets, adapting to a rapidly evolving digital landscape, and carrying ever-higher expectations. At the same time, many employers are grappling with how best to show appreciation to their teams.
In a recent PaymentsJournal webinar, BHN’s Director of Global Research, Sarah Kositzke, Head of Global Commerce, Brett Narlinger, and Head of Global Incentives, Jeff Haughton, along with Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research, discussed the key forces shaping holiday shopping behavior, the influence of promotions and technology, and the central role gift cards are set to play.
The Impacts of Holiday-flation
One of the defining factors this season is the shifting economic environment. According to BHN’s 2025 holiday research, which tracked consumer sentiment throughout the year, price anxiety has risen sharply in recent weeks.
Rising costs for groceries, food, and utilities remain top concerns for most consumers, and these everyday pressures are directly influencing holiday shopping behavior.
“What we see is that about 13% of people are buying fewer gifts for fewer people this year,” Kositzke said. “When we asked why, there’s this notion (that) there is potentially less money, so there’s cautiousness and carefulness as it comes to increased costs that might be out there.”
“We’ve also seen some people mention that maybe it’s a shift from, ‘I used to give a gift for every single person,’ to now it might be more like a Secret Santa or a white elephant or draw a name out of a hat,” she said.
Even though shoppers are buying fewer gifts this holiday season, the number of gift exchanges is on the rise. Where once people may have only exchanged presents at family gatherings, many are now also participating in gift swaps at work, school, and other social groups.
This increase in occasions has pushed consumers to be more strategic with their budgets, fueling a shift toward gift cards—even in situations where a physical gift might once have been the preferred choice.
Shifting to gift cards has positive impacts for buyers. According to BHN’s research, roughly 74% of respondents said they bought gift cards because it helped them stick to their holiday budget, and more than half reported that buying a gift card reduced their financial stress.
Gift cards are also well-received by recipients. As economic conditions have tightened, more people now prefer gift cards that help offset everyday expenses. This has fueled growing demand for cards from grocery stores and big-box retailers like Walmart and Target. Additionally, many recipients are also seeking gift cards that support entertainment costs, like Netflix or HBO Max subscriptions.
While the macroeconomic environment is shaping holiday shopping behaviors, it hasn’t diminished consumers’ determination to enjoy the season.
“I heard a new term this morning: holiday-flation,” Narlinger said. “(Despite) the challenges and all the things that we’re worried about, there’s still a desire to have a lot of fun and have a holiday. So, how do I change my behavior? How do I stretch my dollar to get the most, given this holiday-flation moniker?”
Getting Out of Bed for Promotions
As consumers become more calculated and creative in their holiday purchases, strategic promotions can be a boon for businesses.
“What gets people out of bed to go shopping for the holidays?” Kositzke said. “Promotions do—sales, deals, anything that people gravitate toward. When we asked people after last holiday if they had leveraged any of these promotional opportunities, three-quarters said, ‘Yeah, we took advantage,’ and I think we’re going to start to see a lot of that again this year.”
Some of the most effective promotions include discounts on frequently purchased products, variations of the “buy one, get one” model, and the traditional use of coupons and price reductions.
Shoppers are discovering these deals through traditional channels such as word of mouth, in-store flyers, and email campaigns. However, younger consumers are increasingly turning to third-party platforms like social media and AI-powered chatbots, which they use to compare prices and gather personalized recommendations.
“There are two things that are happening,” Narlinger said. “One, you have a generation that’s like, ‘I’m not paying a dollar for a dollar; I want value; I want something more than that spend.’ The second is the continued use and evolution of technology to find better deals, whether it’s using AI or being able to use those frequent places where they can get discounts.”
Where Consumers Are Shopping
Along with shifts in how consumers shop, there are also continued changes in where they buy their gifts.
“What we find is that it’s equal for generations to be shopping in-store: 77% of younger people, 77% of older people,” Kositzke said. “Where we see a slight difference is that younger people do tend to be a bit more online than older people, but there is this notion of convenience and elements of being able to avoid the crowds, being open 24/7. We’re going to continue to see shifts to online, but it’s great to see that we’ve got a lot of people still shopping in-store.”
To avoid crowds, many shoppers are starting early. BHN’s research found that roughly a third of respondents have either already begun their holiday shopping or plan to do so before November. This is critical, as early shoppers typically spend 20% more on holiday gifts.
However, many shoppers also start early to stay within their budgets and take advantage of deals throughout the season. As a result, retailers should launch promotions early and maintain them throughout the holidays.
While most consumers still plan to shop in-store, retailers can’t afford to overlook their omnichannel strategies. E-commerce will continue to be a strong draw, especially for younger generations, but it is equally important for merchants to highlight digital gift cards.
“Try to get as many deals out there at the beginning to grab that customer and that brand share—but keep that drumbeat going,” Narlinger said. “Last year on December 23, we broke a record internally for us. Then did it again on the 24th, related to volume.”
“They may start in these early times, but they’re going to finish the day of, and we even did a tremendous amount of volume digitally on the 25th,” he said. “You’re going to need to have a strategy that understands that it’s the start all the way to the last procrastinator. It’s going to be critical because this is the most elongated holiday we’ve had in a long time.”
Avoiding Damaged Relationships Through Gift Cards
Although this holiday season is only one shopping day longer than last year, there are four full shopping weekends after Thanksgiving. This gives retailers an extended holiday window to leverage, which could pay off significantly.
“This is everybody’s most favorite and anticipated numbers for the holiday, and good news: they’re strong numbers,” Kositzke said. “We see that overall holiday gifting spending is rising, but the percentage that is being dedicated to gift cards is rising even more. Men are dedicating about 41% of their overall holiday gifting budget to gift cards—that’s up about 18% year over year. Women are at 36%, which is up about 5%.”
“One of the most interesting things was we took a look at people who are budgeting,” she said. “We asked a question, ‘Are you budgeting for this holiday season with gift spend?’ Of those who said ‘Yes,’ 43% of their dollars are dedicated to gift cards.”
When it comes to the type of gift cards recipients prefer, choice is the top priority. That’s why general-purpose cards, such as those from Visa and Mastercard, remain the most popular.
Beyond multipurpose cards, Gen Z consumers and women tend to gravitate toward beauty and wellness cards, while men show a stronger preference for video games. For boomers, dining out gift cards are often the go-to choice.
Regardless of demographic, there is a growing consensus among consumers: they are fed up with bad gifts. The three most common offenders are clothing that doesn’t fit, generic or impersonal items, and gifts that don’t suit the recipient’s lifestyle—like giving a bottle of wine to a non-drinker.
While many givers may feel that it’s the thought that counts, a poorly chosen gift can do far more harm than good.
“This is one of my new favorite findings,” Kositzke said. “We asked people to think about a time when a gift missed the mark and how does it make you feel about the person that sent you that gift? One in three relationships this holiday season have the chance to be damaged.”
“This is not good,” she said. “We do not want to have damaged relationships over holiday gifts because it does make people feel like ‘You don’t know me; you don’t understand who I am.’”
Making Employees Feel Valued
Unfortunately, many employers have also given poor gifts. Common mistakes include giving nothing at all or opting for impersonal items.
“It reminds me of a movie I know my family watches every year, which is Christmas Vacation, where Clark Griswold gets the Jelly of the Month Club,” Haughton said. “The worst thing an employer can do is not recognize or reward their employees at all, but a very close second is doing something that feels impersonal.”
“The reality is there’s a very simple way to give employees choice, let them make their selections for the needs that they want, and do it in a way that it’s at scale, it’s effective and it can feel very personal to those employees,” he said.
Some of the best choices for employer-provided gift cards are practical options, such as fuel, groceries, or everyday essentials. After practicality, employees appreciate having options, like those offered by multi-purpose gift cards.
Even a small touch of personalization can go a long way with employees—but finding the right balance can sometimes be challenging for employers.
“The concern sometimes with employers is, ‘Gosh, it’s a lot of work,’” Haughton said. “How do I do this at scale? How do I do something personal for an employee when we’ve got a lot of employees? The reality is, if you couple it with choice—prepaid cards or even a curated digital catalog of specific branded cards or multi-branded cards—there’s a lot of ways that you can get employees what they want.”
Extending the Holiday Season
There is a common thread when it comes to gift giving—a bad gift can strain a relationship, while the right one can leave a lasting impression.
“There’s a certain time of the year where employees look back at everything that they’ve worked so hard for,” Haughton said. “Get out in front of it, think about it early and often and then give them choice. If you do those things, it’s invaluable in terms of being able to recognize your employees.”
Similarly, the holiday season is a critical time for retailers. To make the most of it—and set their business up for success in the year ahead—they need a robust holiday plan and jam-packed promotional calendar.
“When you’re giving a gift card, the loading of the gift card and the giving of it starts the journey,” Hirschfield said. “The recipient getting it and having that self-use motivation is really what completes the journey and what extends the relationship. That gift is the first step of what can be a long-term relationship.”
“Those promotions don’t need to end because the holiday season is over,” he said. “The ability to provide additional benefit to that user continues through loyalty programs, through benefits, and through rewards. Keep thinking about, ‘How do we extend a successful holiday season into a successful 2026?’”
For more holiday insights and best practices, download BHN’s eBook, “Holiday Hearts, Tight Wallets.”
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