Holiday shoppers opened their wallets at the last minute in search of bargains on online platforms, making bulk purchases of apparel, electronics, jewelry and more, demonstrating the health of their household finances.
According to a report from Mastercard Spending Pulse, spending during the holiday shopping period from November 1 to December 24 will increase by 3.8% compared to 2023, compared with the previously expected 3.2% increase and a year-on-year increase. This exceeded the 3.1% increase.
“Consumers are healthy. Unemployment is low. Wages are increasing. Their personal financial health is reflected in the fact that they're shopping,” said John Sachs, a senior advisor at Mastercard and a director at Sachs & Co. Steve Sadove, former CEO and chairman, told Reuters.
Heading into the holiday season, many U.S. retailers say consumers are being “selective,” “cautious,” “conservative,” and “needs-based” in their shopping. As a result, many companies have stepped up their efforts to offer discounts and promotions, Bernstein analysts said earlier this month.
For example, Walmart said it would continue lowering prices through the rollback, while rival Target said it would increase the intensity of its promotions because without them they would be less attractive to shoppers.
Dollar General said it expects profits to be squeezed in the fourth quarter by increased promotions, while Kroger and Five Below also said they needed to lower prices to remain competitive.
Retailers experimented with generative AI for customer service and product search, and worked to improve curbside pickup and delivery services to provide a frictionless shopping experience.
Although the level of promotions remained the same as last year, the introduction of upgraded televisions and laptops, greater acceptance and lower prices for lab-grown diamonds, and continued demand for athleisure apparel have all helped shoppers' wallets. Sadobe pointed out that it is now open.
According to Mastercard, sales in its apparel, jewelry, and electronics divisions increased by 3.6%, 4%, and 3.7%, respectively, from a year ago.
Online sales, especially for apparel, grew at a healthy 6.7%, compared to 0.7% for in-store sales, as shoppers searched for great deals on multiple websites.
Mastercard SpendingPulse measures in-store and online retail sales across all payment formats. This data does not include car sales and is not adjusted for inflation.
