As shoppers favor small indulgences over big splurges, the rising “treat economy” can help retailers capture loyalty and margin this holiday season.
Consumer prices have jumped more than 24% since February 2020, from groceries to gas, forcing many consumers to rethink how and where they spend. Over one-third of Americans have delayed, downgraded, or canceled major purchase plans for homes and cars this year.
It’s clear that shoppers are replacing big splurges and luxury items with the “treat economy”: small indulgences that feel good without the guilt. A Bank of America report found that 57% of Gen Z buy themselves a “small treat” at least once a week, from mini lip balms to $30 Labubu blind boxes, whether it’s a reward for staying on budget or a quick dopamine lift after a stressful day.
With the holiday season approaching, retailers can expect this trend of consumers moving away from extravagant shopping to continue. Between gifting, self-gifting, and last-minute impulse buys, the appetite for affordable luxuries is expected to persist, making this the ideal time for retailers to capture consumer demand.
Why the treat economy is booming
At its core, the treat economy is powered by three psychological drivers:
- Reward: A small indulgence feels earned after a long workday, a stressful news cycle, or sticking to a budget elsewhere. 94% of consumers say they have a snack as a reward or treat.
- Control: When prices rise across the board, buying one little thing can feel like reclaiming agency.
- Mood: Some treats are all about the dopamine hit, whether it’s the sugary rush of premium chocolate, the sensory hit of a new lip gloss, or the fizz of a sparkling drink.
How retailers can tap into the treat economy this holiday season
With gifting and self-gifting colliding with the emotional tug of the holidays, these buying behaviors will likely spike in Q4. Experts have already predicted that the average planned holiday spend per person is $1,552, 5.3% less than in 2024. Gift budgets, in particular, are expected to shrink by 11%, and for Gen Z, the drop is even steeper at 23%.
This means that retailers who focus on little treats are more than ever positioned to capture both margin and loyalty. Here are three ways to turn small luxuries into big wins this holiday season.
Make impulse irresistible at every touchpoint
Impulse isn’t accidental; it’s engineered. 54% of holiday shoppers make impulsive purchases, with the highest rates among Gen Z (70%) and Millennials (65%). Holiday impulse thrives on scarcity and seasonality — a limited-edition flavor or festive design can turn a casual browse into a must-have.
For brands selling on platforms like Walmart, Amazon, and Target, lean into the mechanics that drive visibility: bid on seasonal search terms like “stocking stuffer” or “Secret Santa,” activate sponsored product ads around high-traffic categories, and ensure your items are tagged into the right holiday storefronts and “gift under $20” hubs where impulse buying is highest.
Behind the scenes, analytics and automation tools can help retailers monitor which SKUs perform in high-traffic placements and flag when performance starts to slip. Agentic AI tools can analyze dozens of signals (such as search trends, competitor activity, and conversion patterns), automatically adjust bids, and update content so that the right products surface at the right time without manual intervention.
Reframe value, not just price
In an era of inflation fatigue, messaging focusing solely on “cheap” risks devalues the product experience. Instead, lean into language that reframes value as emotional payoff: “affordable indulgence,” “a little moment of joy,” or “premium feel without the premium price tag.”
This is especially powerful in gifting, where perceived effort often outweighs actual spending. An artisanal chocolate bar with a story behind it can feel more intentional than a bottle of mid-shelf wine. The effect multiplies when the product itself is designed for gifting.
Mini sets, sampler boxes, and deluxe trial sizes de-risk the purchase by lowering both the price point and the commitment, making these formats ideal for Secret Santa exchanges, hostess gifts, or stocking stuffers.
Multiply the moments, not just the margin
Large carts are built one little treat at a time, but the real unlock is when shoppers buy in multiples — one for a friend, one for a coworker, one for themselves.
Retailers can encourage larger basket sizes while preserving the illusion of thrift by planning SKUs that are easy to grab in bundles, like multipacks of candles or curated “buy one for me, one for them” offers.
Planning for this at scale often requires demand-forecasting tools to spot when and why a product is trending — a keyword surge, a competitor promotion, or a content gap — and recommend the right adjustments to capture that lift before it’s gone.
This holiday season, rethink the shopping basket
Treat culture offers a powerful lens for understanding what today’s consumers want: joy in small doses, meaning without excess.
For retailers, it’s also a strategic opportunity. By analyzing the emotions and behaviors driving these purchases and utilizing AI tools that dynamically adjust pricing, promotions, and placement in real time, brands can boost basket size and frequency without holding their breath for big-ticket wins that may not come.
