What's Happening?
A Mastercard survey, conducted in collaboration with The Harris Poll, indicates that Gen Z and millennial consumers are increasingly integrating artificial intelligence (AI) and prioritizing experiences in their holiday shopping routines. The survey, which
included 9,034 adults globally, found that 40% of Gen Z and millennial consumers trust AI more than their own judgment for gift selection. This demographic also shows a strong preference for experience-driven gifts, with 78% of Gen Z and 81% of millennials favoring experiences over material items, with dining and entertainment being top choices. AI is facilitating this shift, as a third of Gen Z and 36% of millennials report that AI increases their likelihood of booking experiences. Value remains a key factor, with 84% prioritizing low-cost, high-impact gifts and 83% planning to use loyalty points. Secondhand shopping is also notable, with 72% of younger shoppers maintaining or increasing purchases of secondhand gifts. Additionally, 85% of consumers intend to support small or local businesses, driven by a desire to bolster local economies.
Why It's Important?
These holiday shopping trends have significant implications for retailers and marketers in the U.S. The growing trust in AI among younger consumers suggests a need for businesses to integrate AI into their shopping platforms, offering personalized recommendations and streamlined purchasing processes. The strong preference for experiential gifts over material goods indicates a shift in consumer values, moving towards memorable moments rather than physical possessions. This trend creates opportunities for businesses in the hospitality, entertainment, and travel sectors, while challenging traditional retail to adapt its offerings. The continued emphasis on value, secondhand shopping, and supporting local businesses reflects a conscious consumer base that prioritizes sustainability, affordability, and community impact. Retailers must consider expanding resale options and highlighting their local connections to resonate with these evolving preferences. Failure to adapt to these shifts could result in lost market share, particularly among the influential Gen Z and millennial demographics.
What's Next?
As the holiday season approaches, retailers are expected to adapt their strategies to align with these evolving consumer preferences. This will likely involve increased investment in AI-powered shopping tools and personalized marketing campaigns. Businesses in the experience economy, such as restaurants, event venues, and travel agencies, are poised for growth and will likely enhance their gift-package offerings. Traditional retailers may explore partnerships with resale platforms or develop their own secondhand marketplaces to cater to the demand for sustainable and affordable options. Furthermore, marketing efforts will likely emphasize the community benefits of shopping local, appealing to consumers' desire to support their local economies. However, logistical challenges, such as shipping costs for local purchases, will need to be addressed to fully capitalize on this trend. The Mastercard Economics Institute forecasts the strongest retail sales growth in four years for 2026, driven in part by AI's influence, indicating a dynamic and competitive retail landscape.
Beyond the Headlines
The survey findings reveal a deeper cultural transformation in how younger generations approach consumption and gift-giving. The trust placed in AI for gift selection suggests a comfort with technology that extends to personal decision-making, potentially reshaping the role of human interaction in retail. The preference for experiences over material gifts reflects a broader societal shift towards valuing intangible assets and personal growth, moving away from materialism. This could lead to a redefinition of 'luxury' and 'value' in the consumer market. The embrace of secondhand shopping and local businesses also points to a heightened sense of social and environmental responsibility, where purchasing decisions are increasingly aligned with ethical considerations. This holistic approach to shopping, integrating technology, sustainability, and community, indicates a more mindful and purpose-driven consumer base that will continue to influence market trends for years to come, pushing businesses to innovate beyond traditional retail models.
