New York
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The nation’s largest retailers are taking significant measures this holiday period, aiming to differentiate themselves and draw in consumers who remain hesitant about spending. President Donald Trump’s imposed tariffs, persistent inflation, and increasing joblessness are causing Americans to exercise greater caution with their seasonal purchases.
Wells Fargo’s forecast indicates that holiday sales this year will see an increase ranging from 3.5% to 4% compared to the previous year. Nevertheless, once the impact of elevated prices due to inflation is factored out, actual expenditures might remain essentially unchanged.
“This season is truly about returning to fundamentals, capitalizing on robust merchandising, offering significant markdowns, and ensuring that retailers successfully entice their customers through the doors this holiday,” Wells Fargo retail analyst Lauren Murphy communicated to CNN.
The established department store, Macy’s, is overhauling its in-store atmosphere to appeal to hesitant patrons. Budget-conscious Old Navy is capitalizing on the involvement of Zac Posen, who transitioned from a couture designer to the retailer’s chief creative officer. Furthermore, even the world’s biggest retailer, Walmart, is guaranteeing an online order-to-delivery-truck turnaround time of just 30 minutes.
Leaders from all three corporations shared with CNN that, independent of climbing prices, their objective is to assist patrons in maximizing their budgets and acquiring greater value.
Reigniting the Macy’s Allure
Macy’s is returning to its origins, hoping to immerse shoppers in the era of spectacular department stores.
At its flagship store in New York City, six distinct partnerships await visitors, including an NBA Experience zone and a unique Disney collaboration. The physical space is lavishly adorned with holiday lighting and decorations, featuring an indoor holiday bazaar, a DJ, and newly introduced brands on display.
Even Macy’s signature Thanksgiving Day Parade Santa, who traditionally signals the start of the holiday season upon his parade arrival, is embarking on his inaugural cross-country tour to various store locations.
Decorations for Macy’s Thanksgiving Day Parade and the holidays are installed outside Macy’s Herald Square, as the Empire State Building rises in the background, in New York City on November 24, 2025.
Decorations for Macy’s Thanksgiving Day Parade and the holidays are installed outside Macy’s Herald Square, as the Empire State Building rises in the background, in New York City on November 24, 2025. Kylie Cooper/Reuters
“What we’ve observed about the customer is that they are far more judicious in their choices,” stated Macy’s chief merchandising officer, Nata Dvir, to CNN. “I believe there are an abundance of shopping destinations available, so we are truly focused on guaranteeing that the offering is paired not only with excellent products but also with inherent quality, value, and a compelling experience.”
This represents a deliberate gamble, putting to the test a multi-year program aimed at regaining customer interest and modernizing Macy’s remaining physical sites. This mid-tier department store has successfully deflected challenges from activist investors amidst declining sales figures. Last year, Macy’s publicized its intention to shutter 150 underperforming branches by 2026 while simultaneously boosting investment in customer service and inventory at its remaining 350 locations.
The strategy appears to be gaining traction; Macy’s recently reported its first sales increase in three years. However, like all retailers, it must now contend with the impact of tariffs.
Nata Dvir, chief merchandising officer at Macy’s, during an interview with CNN’s Vanessa Yurkevich.
Nata Dvir, chief merchandising officer at Macy’s, during an interview with CNN’s Vanessa Yurkevich. CNN
The chain finalizes its holiday planning nearly a year in advance, drawing inventory from over 25 different nations. Macy’s collaborated with its suppliers to maintain low prices across as many product groups as feasible. Nevertheless, Dvir noted that some price increments are unavoidable for items such as toys and sweaters.
“Although we foresaw the tariffs approaching, our effort was to truly absorb that cost burden by enhancing the product itself,” she explained to CNN.
This translates into dedicating more resources to superior materials, such as cashmere, with the hope that customers will perceive the enhanced quality as justification for the price.
As the holiday purchasing period progresses, Macy’s is utilizing its in-house economists to analyze the implications of the most current economic indicators for its clientele. This allows Macy’s the agility to adapt its product selection and pricing strategies swiftly.
“It involves a scientific basis, yet there’s an element of intuition involved as well,” Dvir concluded.
Infusing Couture Flair at Old Navy
Millions of units. Twenty-two distinct styles. Pajama bottoms priced at $5.
If the holiday season equates to Old Navy’s “Super Bowl,” as described by CEO Horacio Barbeito, then their family pajamas represent the game-winning score. These seasonal sleepwear sets constitute a multimillion-dollar segment and register among the company’s most significant sales events in terms of volume.
However, Old Navy, whose stores are present in 49 out of 50 states, will require more than festive sleepwear to capture sales from consumers feeling financial strain this holiday season. Consequently, the company is also placing significant emphasis on its inaugural designer collaboration with Anna Sui, alongside novel designs conceived by one of the US’s most acclaimed high-fashion designers, Zac Posen—who now serves as Old Navy’s chief creative officer.
Zac Posen, chief creative officer of Old Navy, during an interview with CNN’s Vanessa Yurkevich.
Zac Posen, chief creative officer of Old Navy, during an interview with CNN’s Vanessa Yurkevich. CMM
“This presented an unparalleled career opportunity. This is the brand that outfits the entire nation,” Posen commented to CNN while situated in Old Navy’s Times Square location. Posen highlighted specific design elements he incorporated into the merchandise displayed, such as bow-tie shoulder straps and pockets on a taffeta holiday dress.
Old Navy forms a crucial component of its parent company, Gap Inc. The corporation recently reported third-quarter earnings that surpassed expectations, detailing a 5% year-over-year revenue increase attributed solely to Old Navy.
Yet, consumers are approaching spending with prudence, and tariffs continue to pose a challenge for Old Navy’s merchandise. The retailer has implemented RFID technology, enabling staff to instantly verify inventory levels and locate items within the store, thereby ensuring prompt product retrieval and preventing customer walkouts that result in lost sales.
The CEO maintains that Old Navy’s core dedication to value means it will “not engage” in the broader economic instability. Posen expressed confidence that the brand will prevail regardless of the obstacles encountered.
“Every year brings its unique set of difficulties. Sometimes it’s the economy, sometimes it’s meteorological conditions, occasionally it’s a shift in administration,” Posen remarked. “Fundamentally, people desire to look appealing and feel good, and that desire persists. I believe that when circumstances become more demanding, we rise to meet the occasion.”
The Urgency of Speed at Walmart
In Greencastle, Pennsylvania, a staggering 1.5 million square-foot fulfillment center stands where automated systems execute the majority of online order processing and packaging.
Machines powered by artificial intelligence construct bespoke containers for every order, accurately sort the contents, and seal the boxes shut. Associates operate amidst these systems, surrounded by the subdued whir of automation.
This state-of-the-art facility, one of four such “NexGen” fulfillment centers nationwide, underpins Walmart’s strategy to secure customers this holiday season by offering unparalleled speed. America’s largest retailer asserts that this center is equipped to process 100,000 parcels daily.
Walmart’s Greencastle, Pennsylvania, fulfillment center CNN
“The moment you click ‘buy,’ we are equipped to have that item leave the digital realm and onto a trailer en route to your residence within 30 minutes,” Barat Smith, vice president of US supply chain operations for Walmart, informed CNN.
Walmart enters this holiday season with a strong position, bolstered by robust earnings. Revenue expanded by 5.8% in the most recent quarter, with e-commerce specifically surging by 27%. Since the onset of the Covid-19 pandemic, as prices have climbed, Walmart has successfully courted more middle- and upper-income shoppers in search of value.
Nonetheless, Walmart confronts clear competition in the online shopping arena this holiday season—primarily from the behemoth Amazon, as well as budget-focused Chinese drop-shippers such as Temu and Shein.
AI-powered machines make custom boxes for each order, sort the product and tapes the box shut at Walmart’s Greencastle fulfillment facility.
AI-powered machines make custom boxes for each order, sort the product and tapes the box shut at Walmart’s Greencastle fulfillment facility. CNN
“Our concentration is on maintaining an everyday low cost structure so that we can consistently deliver everyday low prices,” stated David Guggina, executive vice president and chief e-commerce officer at Walmart, to CNN. “In this context, we are referring to speed. If we engineer a superior customer experience, it generates a greater volume of orders; increased order volume fosters logistical density, which, in turn, permits us to reduce our operational costs.”
These fulfillment centers operate at double the efficiency of Walmart’s older facilities and manage half of the company’s total shipping volume.
Walmart employees now interact with packages a mere five times, a significant reduction compared to the 12 distinct employee handling steps required in legacy fulfillment centers.
“In some of our older sites, our associates could clock nearly 10 miles of walking daily. Now, the maximum distance they travel is from their vehicle to their designated workstation,” Smith clarified.
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