Vacation buyers steered clear of stores and preferred to buy online

According to Mastercard SpendingPulse, US retail sales are up 2.4% between November 1 and Christmas Eve compared to the same period last year, which tracks online and in-store spend with all forms of payment. Online sales grew 47.2% during that time, the company said. The count does not include sales of gas and cars.

That’s less than the sales growth of 3.6% to 5.2% that the National Retail Federation, an industry group, predicted last month. A more complete picture of holiday spending will emerge in the coming weeks as the government reports retail sales figures and retailers report financial results in December.

“It’s modest compared to what we’ve seen in the past,” said Rod Sides, head of retail and distribution practice at consulting firm Deloitte LLP. Mr. Sides said sales are likely to rise a few percentage points, boosted by big-box and online retailers, as an increase in the number of Covid-19 cases in recent months and new restrictions on public gatherings weighed on the results. “The people playing catch-up,” he said in the retail industry, “kept playing catch-up.”

The pandemic created a Christmas shopping season of extreme winners and losers, and profits diminished in many cases. For traditional retailers, online sales are generally less profitable than retail sales, as shipping and logistics costs increase.

Among those doing well were major retailers such as Amazon.com Inc.,

Walmart Inc.

and Target Corp., which has flexible e-commerce operations in place before the pandemic, selling products such as food, household goods, holiday decorations and fitness equipment. Shoppers spent more to brighten up their homes or to cook more during the pandemic. Smaller retailers, who rely more on the sale of clothes or who were already struggling financially before the pandemic, have generally weakened these holidays.

Between October 11 and Christmas Eve, apparel sales fell 19.1%, while e-commerce sales for this category were up 15.7%, according to Mastercard. Sales in department stores fell by 10.2%. Furniture and furnishings sales were up 16.2% and home improvement sales were up 14.1%, the company said.

Many shoppers avoided stores, even in the last weeks of the season, when it became more difficult to order products online in time for Christmas. According to Adobe Analytics, online sales were $ 171.6 billion between November 1 and December 22, an increase of 32.4% from the same period last year. Visitor numbers to stores have decreased throughout the season compared to last year, even in recent weeks after many retailers stopped promising that online orders would arrive by Christmas. According to Sensormatic Solutions, in the seven days leading up to Christmas Eve, retail traffic is down 31.3% compared to last year, which has cameras and software to track visits to thousands of shopping centers and malls.

Retailers started holiday marketing and promotions in early October this year to reduce crowds in stores and ease the burden on the e-commerce supply chain. They also increased sales due to the Amazon Prime Day shopping event, which the ecommerce giant moved to October this year. According to some sales data, shoppers have started spending earlier in response. Retail sales were up 3% between Oct. 11 and Dec. 24, according to Mastercard.

Some retailers and brands were still dealing with shipping growls due to the online crush.

Some customers who had not received an order from Lego.com earlier this week received a letter from “Santa’s Lego helper” to give to children instead. “The elves have worked as hard as possible, but they are out of stock,” read the letter. “Since we have to bring the pieces all the way to the North Pole, and then the elves have to finish making your set, it may take a little longer.”

The non-mythical reason for the delay is the overloaded US Postal Service, said Gai Walny, a father of two who received the Santa letter. Walny ordered Minecraft and Star Wars Lego sets on December 1. Lego moved the order to the postal system five days later, where it has remained ever since, according to the tracking updates from Mr. Walny on the package.

“We are actually Jewish,” said Mr. Walny. “The children didn’t get the letter anyway.” He and his wife bought other Lego sets from stores to give to their children at Hanukkah, said the 39-year-old co-owner of a Chicago-based truck parts company.

To help parents explain possible delays, Lego has also sent a similar letter in recent years, a Lego spokeswoman said. The company is keeping shoppers informed of delays on its website, she said.

The postal service, as with other carriers, is under pressure because of the record number of vacation days, said a spokeswoman. That’s exacerbated by a shortage of temporary staff due to the Covid-19 spike, she said. “We accept all the volume that is offered to us, which adds to our challenges,” she said.

The Postal Service is under pressure because it absorbs more overflow from United Parcel Service Inc.

and FedEx Corp.

, which limit the number of packages they accept into their systems. After several weeks of increasing delays at all three carriers, on-time delivery speeds improved in the week of December 13 through December 19, according to ShipMatrix, a software provider that analyzes shipping data. “Despite such a marked improvement in the latter leg, more than a million online orders are still at risk of not being delivered on Christmas Day, but many of these items are Covid-19 related household purchases and not Christmas gifts”, the company said.

Retailers’ profits could take a hit from the online wave, executives and consultants said.

“We are seeing a huge negative trend in profitability,” due to the growth of e-commerce this season, said Sonia Lapinsky, a general manager in retail at AlixPartners, a consulting firm. “Those who are doing well this year started investing in e-commerce years ago – the Walmarts, the Targets – and they had the money to do it,” she said. “Now the others are just scrambling.”

Retailers are reducing costs, including reducing available work hours for store employees, especially at small and medium retailers. “The seasonal recruiting of retailers starting each fall in the run-up to the holidays did not occur this year,” said a spokeswoman for Ultimate Kronos Group, which provides workforce planning and human resources technology to primarily small and medium-sized businesses. traditional retailers and other businesses. According to the group, the number of retail teams worked this year fell by 0.7% between mid-October and the week before Christmas. In the week before Christmas, retailers worked 12% less in shifts than last year.

“There are simply fewer shifts to run,” said the spokeswoman.

Write to Sarah Nassauer at [email protected]