WHAT MCKINSEY’S HOLIDAY CONSUMER DATA MEANS FOR RETAIL MEDIA IN 2025
McKinsey’s ConsumerWise data shows shoppers cutting discretionary spend while leaning into essentials, gift cards, and practical gifts. Here’s how brands should adjust retail media strategies at Target and beyond.
McKinsey’s latest ConsumerWise research signals a cautious holiday season. Consumers are spending less on discretionary items and leaning into essentials, gift cards, and practical gifts. For CPGs and retail media buyers, the lesson is clear: shift budgets toward value-driven categories, align with generational shopping behaviors, and double down on loyalty and first-party data activations.
Holiday 2025 will not be defined by lavish spending but by careful choices. Consumers want affordability, utility, and trust. For brands investing in Target Circle, Roundel, or other RMNs, aligning media plans with these consumer shifts will be the difference between wasted spend and measurable ROI.
Key Takeaways at a Glance
- Essentials like grocery, baby, and pet categories remain resilient.
- 46% of consumers plan to give gift cards, reshaping promotional strategies.
- Generational differences mean timing and targeting matter more than ever.
- Practical gifting opens the door for “everyday” brands to shine.
What categories will win this holiday season?
Answer: Essentials are the safe harbor.
McKinsey data shows consumers still prioritize grocery, baby, and pet supplies. DIGITS clients already see stronger Circle and Roundel performance in these categories. Essentials offer stability and a chance to gain share as others pull back.
Why are gift cards such a major opportunity?
Answer: 46% of consumers plan to buy them.
Gift cards represent practicality and flexibility in a cautious economy. Smart brands should design retail media that pairs with Target Circle gift card promos, capturing both the initial purchase and the redemption trip.
How are different generations approaching holiday shopping?
Answer: Each generation has distinct patterns.
- Millennials (37%) shop earlier.
- Gen Z (17%) still views Black Friday as the kickoff.
- Baby Boomers (22%) are pulling back altogether.
Retail media needs segmentation. Timing, creative, and Circle offers must match generational behaviors.
What does “practical gifting” mean for brands?
Answer: Utility is the new premium.
Consumers are gifting groceries, gas cards, and essentials. That reframes commodities as thoughtful, practical gifts. Retail media can highlight these products as smart, valuable choices.
Action Steps
- Audit holiday media plans: are essentials getting priority?
- Layer gift card promotions with Circle offers.
- Segment messaging by generation, not just demographics.
- Refresh creative to emphasize value and practicality.
- Start earlier: sustain Q4 activations beyond Black Friday.
FAQs
Q: Should brands cut spend in discretionary categories?
Not entirely. Focus spend on categories where innovation and style-forward newness drive traffic, while shifting more budget to essentials and gift cards.
Q: How important is Target Circle in this environment?
Critical. With over 125M members, Circle offers first-party data that aligns perfectly with consumer demand for value and rewards.
Q: What about 3P retail media?
Third-party media remains essential. It reaches cost-conscious shoppers beyond Target’s ecosystem, often at lower CPMs.
Q: Are consumers trading down across categories?
Yes. McKinsey shows trading down in 75% of categories. Messaging must emphasize affordability and practicality.
Q: When should campaigns launch?
Earlier than usual. Millennials are already starting holiday shopping, making early Q4 activations a must.
Holiday 2025 is a reset, not a retreat. Brands that lean into essentials, gift cards, and practical gifting will outperform. The opportunity lies in adapting quickly and aligning with consumer realities. The question is: how will your retail media strategy evolve to capture this shift?
Dave Glaza, Founder & CEO of DIGITS, remains committed to bringing digital capabilities to physical stores!
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