FERNDALE, Michigan — Concerned about this year’s holiday season, the owners of Modern Natural Baby and Kids planned ahead. In addition to mailing out 10,000 Christmas catalogs for the first time, the store opened a warehouse to house more inventory, including stuffed animals and books.

"We bought a lot of this stuff in March and April when we were worried about tariffs and not having stuff available for Christmas,” said Emily Murray, who co-owns the Ferndale store with her husband, John. “We've been buying this stuff for a long time this year, and we have a warehouse that we've never had before, so primarily that was a result of tariffs.”

Retailers are preparing for a holiday season clouded by tariffs, inflation and economic uncertainty. Consumers will see higher prices, fewer deep discounts and tighter inventory in some categories. As a result, they are expected to be more selective with their purchases, trading down on everyday items like groceries to afford higher-priced gifts.

Deloitte projects that overall holiday spending will decline about 10% this year as consumers spend less due to economic concerns, while Adobe Analytics expects online holiday sales to rise about 5%, pointing to the strength of e-commerce even among increasingly budget-conscious households.

Despite these mixed forecasts, retailers remain optimistic that holiday sales will improve over slower traffic earlier this year.

“We’ve had such a long season of decline,” said Vic Veda, vice president of communications for the Michigan Retailers Association. “We’re continually hoping that we’re going to turn that corner. Seeing our retail index as high as it is for the outlook at the end of the year really tells us that retailers are very much looking forward to this holiday shopping season and hoping that the holidays will get folks back a little more compared to what they were this summer.”

Shoppers face higher prices

According to the Michigan Retailers Association, about 63% of retailers surveyed expect sales to increase through the end of the year, one of the highest outlooks in recent months. Of those surveyed, 31% said they anticipate their sales will decline, while 6% expect no change.

Veda said robust Halloween spending could point to a stronger-than-expected holiday season; the National Retail Federation projected sales would total a record $13.1 billion. She said that while inventory levels are generally stable, smaller stores face greater uncertainty due to tariffs and limited funds to buy ahead.

Overall, prices of goods are expected to keep increasing due to the tariffs and inflation, said Juan Mundel, associate professor of advertising and public relations at Michigan State University.

“Prices are expected to be higher this season, and while retailers are going to introduce discounts … consumers should not expect the same prices as last year,” he said.

Then there’s the issue of leaner supply. Stanley Lim, assistant professor of supply chain management at Michigan State, advises shoppers to buy early if they see something they want. This year’s retail challenges stem mostly from economic pressures, particularly rising logistics costs and tariffs.

"The supply chain isn't broken ... but it's definitely running a lot leaner and more compact than before," he said. "And so retailers will not feel the tinge of not having the stock or missing the containers, but (instead) maybe longer replenishment cycles and tighter margins. So they may be more selective in terms of what items they want to make available on the shelf this holiday season."

Lim said many retailers are launching promotions at the beginning of November to get ahead of Black Friday, and even offering price guarantees to assure customers that early purchases will match any later markdowns.

Some retailers have already announced Black Friday and Cyber Monday deals. For example, Walmart offered a sneak peek last week of its first Black Friday Deals event that begins Nov. 14 online and in-store. The retailer is promoting what it calls its biggest lineup of deals, including "thousands of deals under $20," John Furner, president and CEO of Walmart U.S., said in a statement.

Earlier this month, Meijer announced an early promotion of double mPerks savings on toys through Nov. 4, as well as the return of its Santa Bucks during select weeks in November and December. The retailer said it has hundreds of toys and gifts priced under $10, $20 and $30.

Mundel said Black Friday sales are ideal for consumers shopping for items like TVs and sportswear, while Cyber Monday will offer the best overall deals of the season.

“After Cyber Monday, prices will continue to increase, leading to the holiday season,” he said. Consumers will likely trade down on everyday goods like groceries and cosmetics to free up money for higher-priced gifts such as electronics and video games.

According to Deloitte, consumers are expected to spend an average of $1,595 this holiday season, down 10% from $1,778 in 2024. A majority of shoppers, 70%, plan to shop during the Thanksgiving week, up slightly from 68% in 2024. Traffic is expected to peak between late November and early December, including shopping events on Thanksgiving Day, Black Friday, Small Business Saturday and Cyber Monday.

One recent weekend at Modern Natural Baby and Kids, shoppers including Marisa Vinsky, 31, and Jon Young, 34, took advantage of the store's free gift wrapping service. The Lansing, Michigan, couple bought a pop-up book that says "Hello" in seven languages as well as a sensory, weighted stuffed octopus for a 10-month-old baby girl.

Vinsky said she'd be shopping again online and at big-box stores like Costco and Home Depot around Black Friday in search of the best deals for an electric meat smoker for Young.

"The way the economy is right now ... I typically shop online," she said. "I don't really go to stores, and that's how I find things. One year, I got him a KitchenAid, and that was really easy to find online. I can imagine that with the economy and how much everything is being raised with tariffs, I can imagine the prices are going to be higher than average."

At Twelve Oaks Mall in Novi, Michigan, last week, holiday decorations were already on display amid preparations for Santa's visit this week. General Manager Scott Lofton said he expects the mall to be busy during the holiday shopping season, especially on Black Friday.

Sisters Constance Laderoot and Chibwe Powell, both in their 40s, brought their mother to the mall to walk around. They weren’t holiday shopping just yet — instead, they picked up some clothing for themselves.

Laderoot said she thinks Black Friday shopping habits have changed, with fewer people lining up before dawn for deals. She said she’d like to see retailers offer more in-person deals and increase the number of items available at discount prices.

“I think most of us have scaled back a little, right?” she said. “So most people are doing online shopping, and then there’s some in-person shopping.”

Powell said she plans to start holiday shopping right after Thanksgiving, adding that because she also has some birthday gifts to buy: “I start shopping early.”

She's looking forward to Macy’s perfume deals during the holidays. “Macy's perfume situation, when it happens, it’s impressive,” she said.

Black Friday is still relevant, Powell said. “It's just been a tradition. You don't want to always go away from the tradition. I remember being nine months pregnant and shopping.”

'If you see it now, get it'

Elle Dare, owner of Genuine Toys in Plymouth, Michigan, said preparing for this year’s holiday season has been especially challenging because tariffs have disrupted toy production and driven up prices.

“The toys that are produced for Christmas are made in the summer, and they stopped production because of tariffs,” she said. “So it's spotty getting things in. Some things we know aren't going to come in until January. One company, we get a box every other day of just one item. It's hard.”

Dare said she hopes to have the store fully stocked by mid-November, ahead of Black Friday and Small Business Saturday. Vendors can’t guarantee delivery dates since overseas shipments take about eight weeks and face customs and tariff delays once they reach U.S. ports.

“I would tell people, if you see it now, get it,” she said. “If it does sell out, there's no way we're ever going to get another shipment before the holidays.”

Prices have increased due to tariffs. For example, an item that used to sell for $50 is now going to be $65. “At $50, it was a good deal, but will our customers be willing to pay $65 for it?” she said. “This is such an odd situation.”

MSU's Lim said price increases due to tariffs are based on factors such as the product category and country of origin.

"Some (retailers) may be willing to absorb the cost, the additional cost to gain demand and loyalty, but others may not have sufficient margins to absorb, and so they will have to then pass down to the customers," he said.

Some shoppers have already finished their holiday buying, Dare said, anticipating further price increases, while others are waiting to see what happens. She said some families may focus on one main gift for their children and supplement with a few less-expensive gifts.

“Even if the tariffs ended today, the tariffs have still been paid on the toys that are in the warehouses, so that cost still has to be passed on,” she said. “They wouldn't immediately come down.”

Among the most popular products are Calico Critters and Smiskis, small collectible figurines sold at a handful of stores in Michigan. Genuine Toys limits purchases to two per customer due to high demand, Dare said.

Modern Natural Baby and Kids has already seen an influx of customers for the holiday season, said John Murray. The store carries brands including Jellycat and Sam & Julia.

"It's insane already," he said. "People have already started shopping. That's the crazy part about it. Everybody's kind of afraid that there's not going to be inventory. ... Everybody's worried not that there's not going to be toys, but will the best toys be available."

The store employs 10 people, adding three staff members for the holiday season. "It's going to help us out for the holiday season having the extra help," said Emily Murray.

Larger retailers are also hiring seasonal workers to handle an increase in shoppers. For example, Target is offering additional hours to current employees and hiring seasonal team members across its nearly 2,000 stores and more than 60 supply chain facilities. Amazon said it is creating 250,000 seasonal positions nationwide, including 6,500 jobs in Michigan.

At Genuine Toys, Dare said she's adding two workers to a staff of five.

Catching Fireflies plans to add three to five part-time workers at each of its locations in Berkley, Rochester and Ann Arborm, Michigan, to meet expected holiday demand. The store sells whimsical gifts, including novelty socks, kitchen gadgets and specialty cookbooks.

"Twenty percent of our sales happen in the month of December alone," said owner April McCrumb. "Hanukkah and Christmas definitely play a huge part in our retail success. Once the holidays kick in, that's when a lot of profit from being in the gift business comes."

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