Christmas 2026 at retail is looking much more price-sensitive than holiday seasons from years past.

The challenges are mounting with lower consumer confidence and rising prices in food, fuel, housing and health care.

Target and Kohl’s both aim to keep the shopping experience simple, convenient and filled with more items priced $5, $10, $15 and $20. Executives don’t say prices for gifts will be lower than last year, or that markdowns will be steeper. But they do say there’s more being offered at the low end of the price spectrum, knowing Americans are getting pinched by inflation. Value continues to be the catchphrase, with retailers saying they’re doing a better job at communicating the inherent worth of their products. They’re also beefing up conveniences and services like speedy delivery; buy-now, pay-later options and AI agents that provide help finding and purchasing gifts.

Several retail authorities and organizations have predicted that holiday retail sales in the U.S. will be up around 4 to 5 percent, but the season could end up at or just above flat when considering the impact of inflation.

“Value plays an important role all year, especially during the holiday season. And yes, of course, that means incredible pricing,” said Michael Fiddelke, Target’s chief executive officer, at the retailer’s holiday presentation Tuesday afternoon in Manhattan’s Chelsea neighborhood. “Thirty-five bucks for that throw over there is an incredible deal.”

At the Kohl’s holiday presentation Wednesday morning, Arianne Parisi, chief customer officer overseeing marketing and digital, said: “We’re thinking first and foremost, value. Next, experience. Third, gifting and then finally, convenience. We have really focused this year on clarity, making sure that value cuts through and that our pricing is really clear because that construct, when there’s so much going on, can get easily confusing. So it’s bigger, broader messages and then it’s items at a price point.”

Ryan Waymire, Kohl’s chief merchandising officer, added: “Value and really clarifying value is critical as a strategy. You’re going to see a lot more percent-off messages. You’re going to see a big focus on $5, $10, $15 and $20 gifts and we’re really excited that 75 percent of our gifts are under $15.”

He said toys represent a double-digit growth area. “With Lego, we will have over 1,000 sets. We are going to be culturally relevant with (brands) like KPop Demon Hunters, and we’ll be all over the squishy trend.” He said more than 50 percent of Kohl’s gifting assortment is “net new” this year.

With Sephora at Kohl’s, there will be an expanded fragrance presentation, over 400 gift sets including about 40 specific to Sephora and more than 2,000 prestige items under $30, including $25-and-under Sephora Collection gift sets. Kohl’s said brand arrivals are happening across all beauty categories, such as Khloé Kardashian, Givenchy, Crown Affair and Topicals, as well as expansions from Kayali and Jo Malone.

On the ready-to-wear front, the retailer is emphasizing faux fur, shine, fabric texture, denim, athleisure, activewear and the “cozy” trend, which largely calls for fleece, blankets, pajamas and soft sweaters.

Regarding Black Friday and Cyber Monday, “We’re focusing on top brands, top items and clear value,” said Waymire. “You will see a huge 50-percent-off message that’s really clear.”

Through the year, Kohl’s has been re-merchandising to simplify its fashion presentation with fewer brands and greater depth of key items. For holiday, there will be new head-to-toe mannequin displays and streamlined presentations across Nike, Levi’s and Kohl’s private brands like LC Lauren Conrad, Sonoma Goods for Life, Nine West, SO, Little Co. by Lauren Conrad, Simply Vera Vera Wang and Apt. 9. Shoppers will find “festive” partywear, “cozy” sweaters and active fleece from FLX, Tek Gear and Nike, along with collections from Disney and The Grinch. Other key brands for gifts are Shark, Ninja and Keurig, as well as exclusive lines from Martha Stewart and Bobby Flay.

Adding conveniences, Kohl’s recently went live with Instacart and DoorDash, and will be live with Uber Eats soon. The Klarna buy-now, pay-later service was introduced last August. Also, Kohl’s has extended its returns policy to offer free in-store returns through Jan. 31, 2027, on items purchased from Oct. 4 to Dec. 30.

At Target, “We’ve been focusing on choices that are bold, that are distinctively Target and that are affordable,” said Cara Sylvester, executive vice president and chief merchandising officer. “The Deal of the Day is back for us.” Beginning Nov. 1, Target offers a different Deal of the Day every day through Dec. 24. Early Black Friday deals will run Nov. 5 to 7, followed by new, limited-time offers each weekend through the holiday season. “We’ve got those big deal moments as we think about Black Friday,” Sylvester said. “As we get into December, we have a whole new wave of newness coming.”

She also said, “The entire back of the store will be transformed into what we’re calling Christmas Morning Magic. Think $3, $5, $10 and $20 killer gifts.”

Target has about 8,000 new gift items for this holiday season, including more than 4,000 exclusive to the store and thousands priced $5 and under.

Among the key times Sylvester sees for holiday: matching pajama sets for the family, priced $10; cashmere sweaters starting at $25; faux-fur accessories starting at $10; scented candles and candy at $5, and $20 beauty advent calendars, which she said are anywhere from $80 to $90 in value.

“We have 170 new baby and baby apparel gifting items, 100 percent of them are exclusive to Target, 90 percent of our assortment is under $20 and 40 percent are under $10. So again, easy, grab-and-go, design-style items,” meaning items with fashion and affordable pricing.

Sylvester said toys are “one of our highest market share businesses. This is an incredible must-win category,” during the holiday season. “We’re introducing over 3,000 new items every year,” including exclusives from Disney and Lego.

Asked if prices are lower than last year, Sylvester responded: “If you think about candles as an example, we didn’t have anything like this at $5 last year. We might have had a beautiful candle for $10. Now we’ve got $5 options, $10 options, $50 options. So I’d say there’s the right range of price points across the board.

“We’re leveraging AI this year in completely new ways, really practical ways, but also really fun ways,” Sylvester said. Target’s AI agent, called Ask Target, is in beta mode on target.com and the Target app. “You can have a conversational conversation with our app around gift ideas.” Earlier this year, Target formed partnerships with ChatGPT and Google Gemini. Additional AI-powered features and a digital holiday kids catalogue offer more ways to discover gifts.

In November, Target plans to launch an “Academy of Giftology” holiday marketing campaign whimsically depicting gifting dilemmas and ways to help shoppers find what they want.