Photographer: Christopher Dilts / Bloomberg
Photographer: Christopher Dilts / Bloomberg
Holiday season sales in the US exceeded low expectations for the pandemic year as online shopping boomed.
Total retail sales were up 3% over the extended 75-day holiday period, versus a forecast of 2.4%, according to Mastercard SpendingPulse, which tracks online and in-store retail across all payment methods. The number is much better than the 3.5% decline recorded in 2008, the last US recession.
“It’s a very healthy number,” given the challenges of the coronavirus pandemic, said Steve Sadove, senior advisor for Mastercard and former CEO of Saks Inc., said in an interview. “That shows me that the US consumer is very resilient.”
Online sales are up a whopping 49% from a year ago, according to the Mastercard report. E-commerce now accounts for one in five dollars spent, against about 13% of total retail spend in 2019.
This year, Mastercard has measured spend over an extended holiday period, from October 11 to December 24, as many retailers started the sales season early to disperse the crowds. In the traditional holiday period from early November to Christmas Eve, sales grew by 2.4%, according to the report.
Home-related categories that have been outperforming during the pandemic, as consumers spend on their homes, saw the strongest growth. Furniture and furnishings were up 16% and home improvement products were up 14% compared to a year ago. The weakest sectors were apparel and luxury, down 19% and 21% respectively.
Department store performance lagged due to shoppers’ reluctance to visit shopping centers. Total retail sales in department stores declined 10% during the extended season, with modest online spending growth of 3%.
In the future, retailers should pay attention to the sale of gift cards, one bright spot this year, which is only recorded when they are redeemed. Expect fewer year-end promotions for shoppers as retailers have built low inventory this year. That will benefit their profit margins, Sadove said.