- Holiday sales at retailers increase 2.4 percent for traditional period, 3 percent for extended shopping period
- E-commerce sees major surge and makes up about one-fifth of sales
- Retailers focusing on home goods benefit, while department stores and clothing retailers see decline
Holiday shoppers helped drive healthy growth in retail sales during the traditional pre-Christmas period. However, sales fell short of a projection by a major retail trade group, and performance varied considerably by sector.
According to Mastercard SpendingPulse, which tracks in-store and online purchases via credit card and excludes auto and gas sales, retail sales from Nov. 1 to Dec. 24 were up 2.4 percent compared to 2019. The tracker also took retailers’ encouragement for shoppers to start early into consideration, finding a 3 percent increase in sales for the period between Oct. 1 and Dec. 24.
In the midst of the COVID-19 pandemic, online sales continued to dominate. E-commerce represented about one-fifth of holiday shopping, up from 13 percent in 2019.
While in-person shopping has declined during the pandemic, big box stores others with strong e-commerce platforms have been among the beneficiaries. Stores that specialize in areas that have grown in popularity during the pandemic, such as furniture and furnishings, have also seen robust growth. Smaller retailers, especially those focusing on clothing and luxury goods, have seen the greatest slump in sales.
Department store sales were down about 10 percent from the previous year. However, sales could pick up in the new year as consumers make use of gift cards received during the holidays. Retailers have also tended to purchase lower stocks of inventory, meaning their profits won’t be adversely affected by the need to offer year-end discounts.
The initial report on holiday spending is a more optimistic sign following a decline in retail sales in November. Going into the holiday shopping season, there were expectations that greater savings rates, less spending on areas like travel, and a desire to cap a tumultuous year with a major holiday celebration would offset the effects of higher unemployment.
The holiday spending report falls short of a forecast by the National Retail Federation. In November, the trade group said it expected holiday sales to grow by 3.6 percent to 5.2 percent.
