The National Retail Federation expects record holiday sales and UPS just raised its outlook. The headline number is real. The way most small brands chase it is the problem.
The article
One trillion dollars. That's the headline for this holiday season. Just don't confuse the size of the ocean with the size of your boat.
On October 15, the National Retail Federation forecast that U.S. retail sales in November and December will grow 4.2% over last year, to $1.013 trillion. That's faster than 2025, when holiday sales rose 3.1% to $972 billion. Twelve days later, UPS reported third-quarter revenue of $22.9 billion, up 6.7%, raised its full-year outlook and said it's heading into peak shipping season from a position of strength.
So demand looks solid and the carrier network looks ready. Good. Now read the fine print, because that's where small brands win or lose December.
What the trillion actually measures
NRF's number is sales revenue, not units. It covers November 1 through December 31 and excludes car dealers, gas stations and restaurants. Part of that growth is simply higher prices: Retail TouchPoints, covering the forecast call, reported that NRF expects core goods inflation to average 2.5% this year, up from 1.6% in 2025, and that nearly half of the projected growth comes from real spending rather than higher prices. A bigger dollar total doesn't mean shoppers are buying a lot more stuff.
NRF's own chief economist, Mark Mathews, added the warning that matters most. Inflation, rising gas prices and pressure on household budgets will hit consumers differently across income groups. Retailers are reacting the same way: NRF expects 325,000 to 375,000 seasonal hires, in line with last year's estimated 356,000, and describes the approach as measured because of higher gas prices, persistent inflation, higher interest rates and elevated consumer debt.
Translation: some customers will spend freely, others will hunt for value, and many will do both depending on who the gift is for.
The discount trap
That split is exactly why blanket discounts are dangerous. Here's the math most founders skip. Say a product sells for $100 and costs you $40, so you keep $60 in gross profit. Run 20% off and you sell at $80, keeping $40. To earn the same $60 per original sale, you now need to sell 1.5 orders for every one you'd have sold at full price. That's 50% more volume just to stand still, before extra ad spend and shipping.
Big retailers can absorb that because they buy at massive scale. A small brand usually can't. The goal for December isn't to grab the largest slice of $1 trillion. It's to make every order you do take worth taking.
What works better than a bigger discount
Give budget-conscious shoppers a cheaper way in, and give generous shoppers a reason to spend more. A starter bundle at an accessible price, a premium gift set at the top and a free-shipping threshold set just above your average order value all do more than one sitewide percentage cut. You protect margin with the people who'd pay full price anyway and still welcome the ones who can't.
The calendar matters too. Thanksgiving falls on November 26 this year, which puts Black Friday on November 27 and Cyber Monday on November 30. Christmas lands on a Friday. Your shipping cutoff dates will decide a lot of last-week revenue, and customers will forgive almost anything except a late gift.
Don't forget January
Holiday buyers include a lot of first-time customers. Most brands spend heavily to win them in December and then go quiet. The cheapest growth of the new year is a thoughtful second message: a thank-you, a care guide, a reason to come back for themselves rather than as a gift giver.
Do This Now
Set a discount floor with real math. For each hero product, calculate how many extra orders a discount requires to match full-price gross profit. If you can't realistically hit that number, don't run the discount.
Publish your shipping cutoffs early. Put the last order dates on your site, emails and checkout before Black Friday, and build a gift card or digital option for late shoppers.
Write your January sequence today. Draft three post-purchase messages for first-time holiday buyers before the rush starts, while you still have time to make them good.
Your Next 30 Days
The trillion-dollar season starts in four days, and the brands that do well usually decided their offers before November, not during it. Spend this week building one bundle for value seekers and one premium gift set, setting your discount floor with the math above and posting your shipping cutoffs where every customer will see them. Then schedule the January follow-up so December's buyers don't disappear. Protect your margin first and let volume come from good offers, not desperate ones.
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