Black Friday is still a month out, but holiday shopping season is well underway in warehouses

and retailer boardrooms across the U.S. from Marketplace. I'm Subri Beneshore in for David

Bruncaccio. Retailers are getting ready for the most important time of their year, holiday

shopping season. They have got a lot to deal with.

Tariffs, of course, but also an economy that is split between high income and low-income shoppers.

Marketplaces Carla Javier reports.

The consumer to watch is the cautious one, says Gregory Daco, chief economist at EY.

We think consumers will be more conservative, more judicious when it comes to how many gifts

they purchase.

He and a colleague released a new holiday retail forecast based on income growth, prices,

interest rates, and consumer confidence.

They expect sales to grow, modestly, by 2.5%.

That will largely reflect an increase in prices rather than an increase in volumes.

Analyst Arun Sundaram at CFRA Research is a bit more optimistic, especially about sales volume,

based on how back-to-school season went this year. Certainly prices played a role in it as well,

but also volumes or unit sales

were strong. He says retailers are adapting to bring in value-focused customers. At Target, for

example, Sundaram says there will be more entry-level pricing. Things like $20 clothing,

you know, anything really that people buy as gifts. Especially affordable store brands. And while tariffs make it harder for retailers to offer

steep discounts, he says Costco and Walmart will use loyalty data and AI to deliver personalized

deals. And that allows them to protect their margins while still appearing competitive on

prices. Which Sundaram says could result in a good holiday season, even if not a great one.

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