Monday, January 30, 2023

Holiday retail sales increased 3%, driven by online shoppers

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Holiday season in the United States sales exceed low expectations for the year of the pandemic as online shopping increased.

Total retail sales rose 3% over the extended 75-day holiday period, from a forecast of 2.4%, according to MasterCard SpendingPulse, which tracks online and in-store retail sales for all payment methods. The number is much better than the 3.5% drop recorded in 2008, the last US recession.

“That’s a very healthy number” given the challenges of the coronavirus pandemic, Steve Sadove, senior advisor to Mastercard and former chief executive of Saks, said in an interview. “It shows me that the American consumer is very resilient.”

Online sales are up 49% from a year ago, according to Mastercardreport. E-commerce now accounts for one in five dollars spent, up from around 13% of total retail spending in 2019.

This year, Mastercard measured spending over an extended holiday period, October 11 to December 24, as many retailers started the sales season early to disperse the crowds. During the traditional holiday period from early November to Christmas Eve, sales rose 2.4%, according to the report.

Categories related to the house, which wereoutperformingthroughout the pandemic, as consumers splurge on their homes, have seen the strongest growth. Furniture and furnishings increased 16% and home improvement products by 14% compared to a year ago. The weakest sectors were clothing and luxury goods, with a decrease of 19% and 21% respectively.

Department store performance still lagging behind due to shoppers’ reluctance to visit malls. Total retail sales to department stores fell 10% in the extended season, with modest online spending growth of 3%.

Going forward, retailers should monitor sales of gift cards, a light point this year, which will only be registered when traded. For shoppers, expect fewer year-end promotions as retailers have racked up low inventory this year. This will benefit their profit margins, Sadove said.

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