Holiday shoppers opened their wallets at the last minute in search of good deals on online platforms, making significant purchases in apparel, electronics and jewelry, in a sign that household finances remain healthy.
Spending during the holiday shopping period of Nov. 1 to Dec. 24 rose 3.8% over 2023, said a Mastercard SpendingPulse report, compared to a previously forecast rise of 3.2% and topping the 3.1% increase during the same period last year.
“The consumer is healthy. Unemployment is low. Wages are increasing. Their personal finances are reflective through the fact that they are shopping,” Steve Sadove, senior adviser to Mastercard and former Saks CEO and chairman, told Reuters.
Heading into the holiday season, many US retailers described their consumers as “selective,” “cautious” and “conservative,” and making “needs-based” purchases. As a result, many doubled down on cutting prices and offering promotions, Bernstein analysts said earlier this month.
Walmart, for example, said it would continue to bring down prices through rollbacks, while rival Target said it would increase its promotional intensity as shoppers were not as engaging without promotions.
Dollar General said it expects profits to be pressured from increased promotions in the fourth quarter, while Kroger and Five Below also said they had to reduce prices to be competitive.
Retailers experimented with generative AI for customer service and product search and tried to improve curbside pick-up and delivery services as they jostled to offer a smooth shopping experience.
While the level of promotions remained consistent with last year, Sadove noted, the introduction of upgraded TVs and laptops, the growing acceptance and lower prices of lab-grown diamonds and the ongoing demand for athleisure apparel all encouraged shoppers to open their wallets.
This drove sales in the apparel, jewelry and electronics categories up 3.6%, 4% and 3.7%, respectively over last year, according to Mastercard.
Online sales of apparel, in particular, grew a healthy 6.7%, compared to 0.7% in stores, as shoppers scoured for deals on multiple websites.
Mastercard SpendingPulse measures in-store and online retail sales across all forms of payment. The data excludes automotive sales and is not adjusted for inflation.
