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Holiday Spending Set for Strong Growth: ETFs in Focus
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Key Takeaways
Holiday sales could hit a record $1 trillion-plus this season, per Bain & Company.
E-commerce, AI-powered shopping and travel offer key ETF themes.
Consumer spending remains resilient despite inflation and other headwinds.
U.S. holiday retail sales are expected to hit a record $1 trillion-plus during the November-December shopping season, according to Bain & Company. Sales are projected to rise 4.5% year over year, faster than the 3.5% growth seen in 2025.
However, the headline growth may look stronger than the underlying demand. Bain expects more than half of the increase to come from higher prices, meaning inflation will account for a significant portion of the sales growth.
Meanwhile, Mastercard Economics Institute expects U.S. retail sales, excluding autos and gas, to rise 5.5% year over year from Nov. 1 to Dec. 24, marking the strongest holiday growth since 2022. Healthy employment, wage gains and household wealth are supporting consumer spending, although higher-income households are likely driving much of the strength.
Online Shopping Takes the Lead
E-commerce is expected to remain the biggest growth engine. Bain projects non-store sales to increase 9%, generating about 60% of total holiday sales growth. In-store sales, meanwhile, are expected to rise 2.5%.
Meanwhile, Mastercard report says that E-commerce is expected to lead, with sales projected to jump 11%, while in-store spending could increase 3.6%, its strongest growth in four years. The data puts the ProShares Online Retail ETF (ONLN - Free Report) in focus.
Clothing and accessories are likely to be among the strongest categories, while consumers also expect to spend heavily on groceries, gift cards and health and personal-care products, per Bain. This draws attention to apparel-heavy retail ETF State Street SPDR S&P Retail ETF (XRT - Free Report) . Meanwhile, consumers’ inclination for grocery and personal care products put spotlight on State Street Consumer Staples Select Sector SPDR ETF (XLP - Free Report) .
AI Is Changing How Consumers Shop
AI is also becoming part of the shopping journey. About 24% of online shoppers plan to begin their holiday shopping on AI platforms such as ChatGPT, Gemini and Claude, up from 17% last year. Another 13% expect to use AI agents on retailer websites, per Bain.
Mastercard found that consumers with paid AI subscriptions tend to shop across a wider range of merchants and make purchases earlier. The trend points to agentic commerce becoming a bigger part of holiday shopping as consumers use AI tools to discover products, compare prices and find deals.
About 29% of consumers plan to use AI at some point in their holiday shopping, up from last year’s 22%, per PWC. In this regard, Roundhill Generative AI & Technology ETF (CHAT - Free Report) and the Meta-Alphabet-heavy ETF Vanguard Communication Services Index Fund ETF Shares (VOX - Free Report) could be apt plays.
Travel Plays
Travel interest remains fairly steady, with 40% of consumers planning winter trips versus 44% in 2025, per PWC. However, expected spending per traveler has fallen 24% to $419 from $553, suggesting that consumers still want to travel but are tightening their budgets. Invesco Leisure and Entertainment ETF (PEJ - Free Report) still should be in focus.
Any Wall of Worry?
The outlook isn't entirely upbeat. High gasoline prices, tariffs, geopolitical uncertainty, weaker savings and elevated credit-card delinquencies could pressure household budgets. Still, higher tax refunds, rising stock prices and potential tariff-related price cuts could provide some support, particularly for higher-income consumers.
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Image: Bigstock
Holiday Spending Set for Strong Growth: ETFs in Focus
Key Takeaways
U.S. holiday retail sales are expected to hit a record $1 trillion-plus during the November-December shopping season, according to Bain & Company. Sales are projected to rise 4.5% year over year, faster than the 3.5% growth seen in 2025.
However, the headline growth may look stronger than the underlying demand. Bain expects more than half of the increase to come from higher prices, meaning inflation will account for a significant portion of the sales growth.
Meanwhile, Mastercard Economics Institute expects U.S. retail sales, excluding autos and gas, to rise 5.5% year over year from Nov. 1 to Dec. 24, marking the strongest holiday growth since 2022. Healthy employment, wage gains and household wealth are supporting consumer spending, although higher-income households are likely driving much of the strength.
Online Shopping Takes the Lead
E-commerce is expected to remain the biggest growth engine. Bain projects non-store sales to increase 9%, generating about 60% of total holiday sales growth. In-store sales, meanwhile, are expected to rise 2.5%.
Meanwhile, Mastercard report says that E-commerce is expected to lead, with sales projected to jump 11%, while in-store spending could increase 3.6%, its strongest growth in four years. The data puts the ProShares Online Retail ETF (ONLN - Free Report) in focus.
Clothing and accessories are likely to be among the strongest categories, while consumers also expect to spend heavily on groceries, gift cards and health and personal-care products, per Bain. This draws attention to apparel-heavy retail ETF State Street SPDR S&P Retail ETF (XRT - Free Report) . Meanwhile, consumers’ inclination for grocery and personal care products put spotlight on State Street Consumer Staples Select Sector SPDR ETF (XLP - Free Report) .
AI Is Changing How Consumers Shop
AI is also becoming part of the shopping journey. About 24% of online shoppers plan to begin their holiday shopping on AI platforms such as ChatGPT, Gemini and Claude, up from 17% last year. Another 13% expect to use AI agents on retailer websites, per Bain.
Mastercard found that consumers with paid AI subscriptions tend to shop across a wider range of merchants and make purchases earlier. The trend points to agentic commerce becoming a bigger part of holiday shopping as consumers use AI tools to discover products, compare prices and find deals.
About 29% of consumers plan to use AI at some point in their holiday shopping, up from last year’s 22%, per PWC. In this regard, Roundhill Generative AI & Technology ETF (CHAT - Free Report) and the Meta-Alphabet-heavy ETF Vanguard Communication Services Index Fund ETF Shares (VOX - Free Report) could be apt plays.
Travel Plays
Travel interest remains fairly steady, with 40% of consumers planning winter trips versus 44% in 2025, per PWC. However, expected spending per traveler has fallen 24% to $419 from $553, suggesting that consumers still want to travel but are tightening their budgets. Invesco Leisure and Entertainment ETF (PEJ - Free Report) still should be in focus.
Any Wall of Worry?
The outlook isn't entirely upbeat. High gasoline prices, tariffs, geopolitical uncertainty, weaker savings and elevated credit-card delinquencies could pressure household budgets. Still, higher tax refunds, rising stock prices and potential tariff-related price cuts could provide some support, particularly for higher-income consumers.