The retail race to Christmas has already begun
While most Americans are still celebrating summer barbecues, shipping containers packed with toys, electronics and decorations are already arriving at U.S. ports. iStock photo
While most Americans are focused on summer vacations, backyard barbecues and staying cool in the heat, retailers are already thinking about Christmas.
Long before holiday music and festive displays fill stores and shopping malls, a complex global supply chain is quietly setting the stage for the year’s most important shopping season. Containers packed with toys, electronics and decorations are already arriving at U.S. ports, signaling cautious optimism for the 2026 holiday season.
Import volumes at major ports such as Los Angeles and Long Beach have surged compared with a year ago, suggesting retailers are stocking shelves in anticipation of healthy consumer demand. At the same time, companies are determined not to repeat the costly inventory mistakes of 2022 and 2023. The result is a delicate balancing act between meeting shopper demand and avoiding warehouses full of unsold merchandise.
Adding a layer of complexity this year is the growing influence of artificial intelligence. Retailers are increasingly relying on AI-powered forecasting tools to predict consumer behavior, manage inventory and navigate uncertainty created by tariffs, geopolitical tensions and fluctuating transportation costs. For many industry observers, this holiday season could serve as the first true test of whether AI can outperform traditional forecasting methods at scale.
To help make sense of these trends and explain what retailers are seeing behind the scenes, ASU News spoke with Hitendra Chaturvedi, professor of practice and supply chain expert at Arizona State University’s W. P. Carey School of Business.
From the significance of summer shipping data to the growing role of artificial intelligence and the economic forces shaping holiday spending, Chaturvedi offers insights into what may be the most closely watched retail season in years.
Note: Answers have been edited for length and/or clarity.
Question: Is the holiday season already underway for retailers?
Answer: Absolutely. Consumers may be thinking about summer vacations, but retailers are already planning for Christmas. Holiday merchandise is moving through ports, purchase orders are being finalized, and distribution networks are being readied months before the first holiday decorations appear in stores.
The data suggests retailers are cautiously optimistic, but not overly exuberant. The Port of Los Angeles reported loaded imports up 26% year over year in May, while the Port of Long Beach reported imports up roughly 40% year over year, indicating retailers are continuing to bring merchandise into the country. At the same time, according to the National Retail Federation, retail sales are growing roughly 7% year over year, while retail inventories are growing only about 3%. In other words, retailers are increasing inventory, but not nearly as fast as sales. That tells us they expect consumers to spend, but they remain disciplined after the costly inventory mistakes of 2022 and 2023. For retailers, Christmas starts at the ports, not the mall. The containers arriving today will determine what is on store shelves four months from now.
Q: What role is AI playing with retailers this holiday season?
A: Retailers are facing a level of uncertainty they have not seen in years. Tariffs, geopolitical tensions and volatile transportation costs are forcing companies to rethink inventory strategies. When it comes to tariffs, the evidence is showing a “cautious pull-forward.” The Port of Los Angeles said April cargo was the second-best April on record, with strong import demand despite uncertainty around tariffs and trade policy. When import growth is strong in the middle of tariff noise, that usually means retailers are locking in merchandise earlier than they otherwise would.
At the same time, AI has become one of the most important forecasting tools in retail. This holiday season may serve as the first true stress test of AI-driven forecasting, pricing and inventory planning at scale.
There is not a clean public survey that isolates AI for forecasting only, but the closest retail survey says 45% of respondents are investing in AI for the supply chain, 82% expect their supply chain AI investment to increase next year, and 48% say AI has already improved forecasting and predictive analytics. NVIDIA’s survey found that demand forecasting is the top planned supply chain-AI use case, while Microsoft reports that AI-driven demand forecasting can improve forecast accuracy by as much as 10 percentage points.
This holiday season may be the first large-scale test of whether AI can forecast consumer demand better than traditional planning methods. Increasingly, the competition is not Walmart versus Target — it’s Walmart’s AI versus Target’s AI.
Q: Who is really driving holiday spending?
A: The biggest holiday shopping story may be the rise of the K-shaped economy. Higher-income households have benefited from gains in stocks, home values and wages, while many lower- and middle-income households continue to face pressure from inflation, higher borrowing costs and growing debt. The New York Fed says the top 1% real net worth grew by roughly 30%, while lower- and middle-income households have seen much smaller gains.
According to BLS (Bureau of Labor Statistics) data, households in the highest income quintile spend more than four times as much annually as those in the lowest quintile. That means holiday spending is increasingly being driven by affluent consumers, while many others are becoming more price-sensitive and dependent on discounts and financing options.
This holiday season may be a tale of two consumers: one shopping with stock market gains and home equity, the other relying on coupons, credit cards and buy now, pay later options.
Q: How much pressure are inflation, gas prices and credit card debt putting on holiday shoppers?
A: Consumers are heading into the holiday season under increasing financial pressure. Americans currently hold approximately $1.25 trillion in credit card debt, while total household debt has reached a record $18.8 trillion, according to the New York Fed. More concerning, 4.8% of all household debt is now delinquent, and the share of credit card balances that are more than 90 days past due has climbed above 13%, approaching levels not seen since the aftermath of the 2008 financial crisis.
Higher fuel costs are adding to the strain. U.S. gasoline prices are currently about a dollar per gallon higher than a year ago, which translates to roughly $476 in additional annual fuel costs for a typical two-vehicle household. That's money that might otherwise be available for gifts, travel and other holiday spending.
The challenge for retailers is that the Federal Reserve expects inflation to remain elevated and interest rates to stay higher for longer. The question this holiday season is not whether consumers will spend, but whether they are spending from income or borrowing from the future.
Q: What is the most important number nobody is watching right now?
A: Most people think the holiday season is determined by the orders retailers place in June. The most important signal comes in August and September, when retailers decide whether to replenish inventory. June orders reflect forecasts and expectations; replenishment orders reflect actual demand.
After the inventory mistakes of 2022 and 2023, retailers shifted from “forecast high, buy high” to “forecast lean, replenish fast.” If retailers aggressively reorder despite tariffs, inflation, fuel prices and consumer debt concerns, it is one of the clearest signals that holiday demand is stronger than expected.
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