Holiday retail sales in the U.S. outpaced forecasts this year, driven by last-minute bargain hunters and a sharp rise in online shopping, according to Mastercard’s SpendingPulse report. Total holiday sales between Nov. 1 and Dec. 24 increased by 3.8% year-over-year, surpassing the predicted 3.2% growth and last year’s 3.1% increase.
Key Insights from Holiday Spending
Online Shopping Outpaces In-Store Growth
- Online sales rose by 6.7% compared to last year, far exceeding the 2.9% growth in in-store purchases.
- Services like “buy online, pick up in-store (BOPIS)” and free delivery options played a significant role in attracting shoppers.
- Salesforce estimated that BOPIS orders doubled during the weekend before Christmas, accounting for nearly 40% of all online orders.
Michael Schulman, a retail expert at Running Point Capital Advisors, noted that the shortened holiday season—27 days between Thanksgiving and Christmas, five fewer than last year—likely incentivized more online shopping.
Strategic Promotions and Consumer Strength
Despite inflationary pressures, retailers displayed disciplined promotional strategies:
- Retailers like Walmart, Target, and Dollar Tree avoided deep discounts while increasing targeted advertising on platforms like TikTok, Peacock, and Hulu.
- Promotions remained at similar levels to 2023, but strong consumer spending bolstered sales, said Steve Sadove, senior adviser to Mastercard.
Sales in key categories saw robust growth:
- Apparel: Up 3.6% overall, with 6.7% growth online.
- Jewelry: Increased by 4%.
- Electronics: Rose 3.7%.
Changing Consumer Behavior
Holiday shoppers were described as “selective,” “cautious,” and focused on “needs-based” purchases, according to retail executives.
Aireale Hobbs, a 40-year-old from Huntsville, Alabama, exemplified these trends. Hobbs, who began her shopping on Black Friday, turned to online platforms for convenience, better deals, and app-based discounts.
“I got some things from Target that were discounted when using the app,” she said, noting the appeal of options like curbside pickup.
Broader Economic Trends
The surge in holiday sales reflects underlying economic resilience:
- Low unemployment and higher wages supported consumer spending.
- Categories like athleisure, laptops, and TVs with new technology attracted buyers, while the growing popularity of lab-grown diamonds also drove sales.
Retailers managed to avoid “panicked promotions,” which helped maintain profit margins. Sadove attributed this to real consumer strength, bolstered by stable personal finances.
Retailers Look Ahead
With holiday sales exceeding expectations, retailers are optimistic about 2024. Strategies like balancing in-store and online experiences, leveraging tech-driven marketing, and maintaining disciplined promotions will likely remain pivotal as they adapt to evolving consumer preferences.
