Weak Corrugated Box Sales Signal Disappointing Holiday Season for Retailers

Market Analysis | November 7, 2025

After tracking packaging markets for 15 years, I've learned that corrugated box shipments rarely lie. They're the canary in the retail coal mine—an unglamorous but brutally honest indicator of what's really happening in the American economy. And right now, that canary is looking decidedly unwell.

The Numbers Don't Match the Narrative

Last Friday's data from the Fibre Box Association revealed something that should make every retail analyst pause: U.S. corrugated box shipments in Q3 2025 fell to their lowest third-quarter level since 2015. This isn't a slight dip—we're talking about a decade-low during what should be the critical pre-holiday ramp-up period.

October is typically when box orders surge as retailers prepare for the holiday rush. This year? Most box manufacturers reported orders as "flat or below normal levels." Packaging Corporation of America's president put it bluntly: "We're not getting a lot of lift from the economy."

Yet paradoxically, nearly every major retail forecast is calling for record holiday sales exceeding $1 trillion. The National Retail Federation projects 3.7-4.2% growth. Forrester sees 4.4% gains. Visa Business Insights forecasts 4.6% increases.

Here's what 15 years of market analysis has taught me: When the box data diverges this sharply from the headline forecasts, somebody's wrong. And it's usually not the boxes.

The Inflation Illusion

The disconnect becomes clearer when you strip away the nominal growth and look at what's actually moving. Multiple forecasts openly acknowledge that inflation—not volume—is driving the majority of 2025's "growth."

EY-Parthenon's analysis is particularly revealing: they project 2.5% nominal growth but explicitly state it will come "almost entirely from higher pricing with little to no growth in sales volume." Visa's forecast shows a 4.6% nominal increase but just 2.2% real spending growth after adjusting for inflation. That 2.4 percentage point gap? That's the inflation premium retailers are hoping consumers will swallow.

Translation: Retailers are planning to sell roughly the same number of items as last year, just at higher prices. And here's the uncomfortable truth—you need boxes for volume, not revenue.

When Smurfit Westrock reported an 8.7% drop in North American box volumes in Q3, their stock plunged 12% to its lowest price since IPO. When International Paper's CEO announced expectations for a 1-1.5% annual decline in box shipments, citing "trade uncertainty, soft consumer sentiment, and weak housing," the market paid attention. These aren't minor players making excuses—these are industry giants with visibility across the entire retail supply chain.

The Bifurcation Economy in Full Display

Every consumer survey reveals the same uncomfortable reality: We're operating in a bifurcated economy where the top 20% of income earners are masking profound weakness among everyone else.

PwC's Holiday Outlook shows 84% of consumers expect to cut back over the next six months, with Gen Z planning to slash holiday budgets by 23%. Deloitte's survey—now in its 40th year—reveals the most negative economic outlook since they began tracking sentiment in 1997, with 77% expecting higher prices and 57% anticipating economic weakness.

But here's what keeps retail executives up at night: High-income consumers generate revenue, but mass-market consumers generate volume. You can sell one $500 luxury item or five $100 mainstream products—both hit the same revenue number, but they require vastly different box counts.

The box data suggests retailers are betting heavily on the luxury cohort while the volume game deteriorates. That's a fragile strategy built on the continued strength of asset prices and employment among affluent households.

What Manufacturing Data Is Screaming

The ISM Manufacturing PMI has been in contraction territory for eight consecutive months as of October 2025. Food manufacturing—a critical driver of packaging demand—remains well below its long-term growth trend after the stagnation of 2023-24. Consumer confidence hit five-month lows heading into the holiday season.

These aren't abstract indicators. When food processors aren't growing, when durable goods manufacturing is contracting, when consumer confidence is falling—those translate directly into fewer boxes being ordered, filled, and shipped.

The structural challenges run deeper than cyclical weakness. E-commerce retailers have aggressively shifted toward non-corrugated fulfillment methods: mailers, poly bags, in-store pickup. The ratio of box shipments to economic activity, even when including e-commerce, has fallen to 10% below its long-term performance. We're not just seeing a temporary slowdown; we're witnessing a permanent demand destruction in certain segments.

The October Test That Failed

For packaging professionals, October 2025 will be remembered as the month that confirmed everyone's worst fears. This is when we should have seen the surge—the panic buying, the inventory building, the just-in-case orders that define pre-holiday logistics. Instead, we got flat to declining volume.

If retailers truly believed in the robust holiday forecasts they're publishing, October box orders should have been robust. They weren't. And that tells you everything about the confidence gap between public guidance and private behavior.

What This Means for Retail Strategy

Having analyzed hundreds of holiday seasons, here's my read on what's really happening:

The Premium Play: Luxury and premium retailers may actually have a solid season. High-income consumers are still spending, their balance sheets remain strong, and they're less price-sensitive. If you're operating in this segment, cautious optimism is warranted.

The Value Squeeze: Mass-market retailers are walking into a buzzsaw. They're fighting for share among increasingly price-sensitive consumers while dealing with margin pressure from tariffs, wage inflation, and promotional intensity. The box data suggests many are simply not ordering enough inventory because they know the volume isn't there.

The Inventory Gamble: Smart retailers are running leaner inventories, pushing closer to just-in-time fulfillment, and relying on rapid replenishment rather than pre-season building. This explains some of the box weakness—but not all of it. Even accounting for improved supply chain efficiency, the numbers are too soft.

The February Reckoning: If I'm right about this disconnect, we'll know by February 2026. Either retailers will post better-than-expected results and prove the box data was an anomaly, or we'll see widespread earnings misses and inventory charges. I'm betting on the latter.

The Tariff Time Bomb

Lost in the current analysis is the looming impact of expanded tariffs. Multiple box manufacturers cited "ongoing tariff issues" as a drag on business, but the full effect of 2025's trade policies hasn't yet materialized in consumer prices or retail strategies.

When tariffs fully flow through to retail pricing in 2026—and they will—it will hit the already-struggling mass market even harder. Premium consumers may absorb it, but middle-income households are tapped out. The box recession could easily become a broader retail recession.

A Contrarian Conclusion

After 15 years of analyzing packaging markets, I've learned to trust the unglamorous indicators. Boxes don't have investor relations departments spinning narratives. They simply reflect physical reality: goods being produced, stored, and shipped.

The corrugated box market is telling us that Holiday 2025 will likely disappoint consensus expectations. Not catastrophically—we're not calling for a recession—but enough to miss the optimistic forecasts by 100-150 basis points. Real volume growth will be closer to flat or slightly negative, with any nominal gains driven entirely by inflation.

For retail executives: Cut your inventory targets by 10-15% from plan. Focus on high-velocity SKUs. Build flexibility into your supply chain. This is not the year to take big bets on trend-driven inventory.

For investors: Be skeptical of retailers guiding to strong holiday performance, especially in mass-market segments. The box data suggests a rougher ride than management teams are telegraphing.

For the industry: We need to recalibrate our forecasting models for the new normal of bifurcated consumption, structural e-commerce shifts, and permanent efficiency gains in packaging. The old correlations between GDP growth, retail sales, and box shipments have fundamentally changed.

The corrugated box market isn't sexy. It doesn't make headlines. But it's been a reliable oracle for decades. And right now, it's warning us that the holiday magic may be more accounting than reality.

Views expressed are my own and based on 15 years of market research across packaging, logistics, and retail sectors. Past performance is not indicative of future results.

What's your take? Are we reading too much into the box data, or is the retail industry heading for a reality check?