SACRAMENTO, the United States -- Holiday shopping, long anchored by Black Friday, has traditionally been a cornerstone of the retail sector, accounting for up to 40 percent of annual fourth-quarter sales.

But this year, retailers entered the season locked in what analysts call a game of "discount chicken." Retailers are waiting for consumers to spend, while consumers are holding out for deeper price cuts, Rob Garf, head of strategy and insights at Cordial, a marketing platform, told Quartz on Friday.

Consumers soured on the current economy and their prospects for the future, with worries growing over the ability to find a job, according to a Conference Board survey released earlier this week. The Consumer Confidence Index for November fell to 88.7 from 95.5, its lowest reading since April. Economists surveyed by Dow Jones had expected 93.2.

Only 20 percent of US consumers plan to use Black Friday as their main starting point for holiday shopping, according to Cordial. Fifty-nine percent began earlier, and 22 percent will shop afterward or at the last minute, signaling a shift away from the traditional shopping surge. The event has also become clouded by mistrust. Shoppers increasingly cite false discounts, AI-driven price manipulation and empty storefronts as reasons to sit out the day.

A survey by Lightspeed Commerce found that 84 percent of consumers believe retailers raise prices ahead of Black Friday to exaggerate markdowns. A WalletHub review of 3,100 items showed that 36 percent of Black Friday offers produced no savings, while nearly 10 percent were more expensive than before the season. AI-powered pricing engines, which can display different base prices to different customers, have made it harder to detect those practices.

Regulators have begun to respond. Canada's Competition Bureau issued warnings this week against artificially inflating regular prices to create steeper discounts -- a practice that remains widespread in the United States.

But increasingly, it is consumers who are conducting their own policing. On Reddit, one user tracking 50 deals wrote, "It's a scam. Most were either priced the same as months earlier or temporarily inflated in October to justify the 'discount.'" Another post gained traction after showing a TV advertised at $536 -- supposedly marked down from $860 -- even though it sold for $485 in August.

The clash between retailer AI and consumer AI is reshaping Black Friday dynamics, too. Retailers are deploying AI to maximize profit through dynamic pricing and personalization, while consumers increasingly rely on AI to identify authentic deals. The result, analysts say, is a stalemate.

Deloitte's 2025 holiday retail survey found that 33 percent of shoppers plan to use generative AI for purchases, up from 16 percent last year. Among Gen Z, that number rises to 43 percent. More than half of AI users rely on the tools to evaluate discounts and compare prices.

OpenAI's shopping research feature, launched on Nov. 24, is designed to determine whether promotions are genuine. But as AI merchandising tools now control an estimated 30 to 40 percent of digital revenue during peak periods, two shoppers searching for the same item may receive entirely different results, reflecting spending patterns and price sensitivity.

Economic pressure is also weighing on retailers. Tariffs on imported goods climbed from 2.4 percent at the start of 2025 to 17.9 percent by late October, according to Yale's Budget Lab. "Santa Claus is going to show up, kids are not going to be too disappointed," Marshal Cohen, chief retail adviser for market research firm Circana, told The San Diego Tribune on Friday. "But don't look for the tree to be overflowing with boxes underneath."

Upstream Brands, which sells on Amazon and other platforms, typically earns up to 35 percent of annual revenue during the holiday season. This year, tariffs have forced the company to pull back on discounts.

Dan Peskorse, who runs Upstream Brands, attributed the decision to tariffs, saying that he has tried to mitigate the impact by raising prices and absorbing some import costs. Still, the only option left to protect profits is to remove discounts.

According to Deloitte, shoppers plan to spend an average of $622 during the Black Friday-Cyber Monday period, down 4 percent from last year -- the first decline in four years. Seventy-seven percent expect prices to rise overall, while 57 percent anticipate economic weakening.

Meanwhile, AI-generated scams are proliferating. NordVPN reported a 620 percent surge in phishing emails and a 250 percent increase in fake e-commerce sites. Those sites use AI to mimic major retailers and produce convincing fake reviews.