As the 2025 holiday season unfolds amid economic headwinds, Gen Z is wielding unprecedented influence over retail strategies, curbing spending while demanding authenticity, AI-driven personalization and influencer-led discovery. With Deloitte forecasting a weakening economy—the worst outlook in decades—this cohort, born between 1997 and 2012, is projected to cut holiday budgets by 34%, per recent surveys, compelling brands from Marketing Dive.

Gen Z’s product discovery remains firmly rooted in social media and influencers, but they’re embracing retail media networks and AI tools at accelerating rates. A Marketing Dive analysis highlights how this demographic, representing 27% of holiday shoppers, prioritizes platforms like TikTok and Instagram for recommendations, with 62% discovering gifts via influencers, according to YPulse data cited in the report.

Brands ignoring these shifts risk missing out, as traditional TV and email blasts fade in efficacy. Instead, micro-influencers—those with under 100,000 followers—are gaining traction for their perceived relatability, as noted in posts found on X emphasizing Gen Z’s preference for authenticity over celebrity endorsements.

Budget Constraints Reshape Shopping Habits

TD Bank’s 2025 Merry Money survey of 2,521 U.S. adults reveals 88% of Gen Z plan to curb holiday overspending, with 67% overall setting budgets and 59% aiming to spend under $600. This caution stems from inflation and economic pessimism, leading to smarter, value-focused shopping, as detailed in TD Stock News.

YPulse reports Gen Z as the most likely to reduce spending, prompting marketers to pivot toward promotions highlighting value. Retailers like Shopify note 44% longer sessions driven by AI deal-hunting, per WebProNews, where transparent pricing and shoppable videos yield 36:1 email ROI.

Forbes underscores Gen Z’s shift toward experiences and community over materialism, with economic uncertainty amplifying demands for meaningful connections in a flat retail sales environment projected by eMarketer.

Social Media and Influencers Dominate Discovery

Sprout Social data shows Gen Z redefining brand engagement on social platforms, with daily TikTok and Instagram use for product hunts. Marketing Dive notes sustained reliance on influencers, but with a twist: Gen Z favors those solving real problems through fun, shareable content, echoing sentiments in X posts from marketers like Alex Nguyen.

Viral Nation’s 2025 trends report predicts omnichannel campaigns and influencer collaborations as key, with brands like Dove and Lululemon gaining ground via authentic partnerships, per Ad Age.

Bazaarvoice insights reveal Gen Z and millennials prioritizing social trends and sustainability, with 40% influenced by user-generated content during holidays.

AI and Retail Media Gain Traction

Gen Z’s comfort with AI is transforming retail: Wunderkind data shows them using tools for personalized deals, reshaping holiday strategies amid deceleration in sales growth, as eMarketer forecasts. Marketing Dive reports rising adoption of retail media for targeted ads on platforms like Amazon and Walmart.

Attest’s Gen Z media consumption study highlights social dominance but emerging AI integration, with brands leveraging chatbots for 24/7 assistance. X discussions amplify this, with posts noting AI’s role in extending shopping sessions.

Camphouse.io advises marketers to adapt to tech-savvy habits, emphasizing mobile-first AI experiences for this cohort spending 4+ hours daily on apps.

Economic Pressures Demand Value Innovation

Inside Retail Australia quotes analysts expecting flat holiday spending, urging retailers to focus on Gen Z’s preparation tactics like early deal scouting. Forbes details how this generation shapes retail through tradition-tinged experiences, countering budget squeezes.

Brands succeeding, like Wingstop and ChatGPT per Ad Age’s Q3 Harris Poll, blend utility with engagement. Suzy’s consumer insights stress transparency, as omnichannel and AI meet high value expectations.

Compliance Geek points to AI helpers and in-store returns boosting loyalty, advising brands to integrate these for smarter holiday plays.

Strategic Pivots for Brands

Marketing Dive recommends brands invest in micro-influencers, AI personalization and retail media buys. YPulse suggests experience-focused gifting, like customizable bundles, to combat tightening budgets.

WebProNews urges prioritizing shoppable content and data-driven personalization, with Gen Z rewarding brands delivering real value. As Gary Vaynerchuk notes in X posts, social live shopping and influencers remain underutilized goldmines for agile players.

Ultimately, brands mastering Gen Z’s blend of frugality, tech affinity and authenticity will thrive in this restrained season, setting the stage for 2026 resilience.