Supply chain problems and the Omicron variant didn’t spoil the holiday shopping season. In fact, shoppers turned out in droves.
What’s happening: Despite a sluggish start, US retail sales rose 8.5% year-over-year between Nov. 1 and Dec. 24, according to a new report from Mastercard (MA). An uptick in clothing sales, in particular, helped drive the spending surge.
“Consumers splurged throughout the season, with apparel and department stores experiencing strong growth as shoppers sought to put their best dressed foot forward,” Steve Sadove, senior advisor for Mastercard, said in a statement.
The report, published over the weekend, includes three big takeaways about the state of the retail industry.
Early shopping: US retail sales grew by 0.3% in November, a sharp decline from the previous month and less than economists had predicted. But that data may have looked weak because so many more people shopped in October, when sales jumped 1.8%.
Mastercard found that consumers had no problem pulling out their wallets earlier than usual as they tried to avoid delayed shipments and product shortages and took advantage of special promotions. Between Oct. 11 and Dec. 24, total retail sales rose 8.6% compared to last year.
Foot traffic is up: Labor shortages and fears about shipping delays hung over Black Friday. But it remained the biggest day of the holiday shopping season, Mastercard found. Over Thanksgiving weekend, US retail sales rose 14.1% year-over-year.
Shopping in person played a major role as Americans showed comfort browsing again. In-store sales over Thanksgiving weekend jumped 16.5% compared to 2020. Over the entire holiday period, they rose 8.1% compared to 2020 and 2.4% compared to 2019.
Online shopping grows: Still, e-commerce continues to grab a bigger slice of the pie. Online sales grew 11% compared to the same period last year, despite a mixed Cyber Monday.
Online shopping accounted for 20.9% of total sales over the holidays. That’s an increase from 20.6% in 2020 and 14.6% in 2019.
So why did the all-important holiday season manage to be merry for retailers, despite plenty of curveballs?
In spite rising prices, Americans were eager to spend the extra money they’d pocketed over the course of the pandemic. Stimulus checks and child tax credit payments for tens of millions of families have boosted incomes this year and eased financial strain.
That’s contributed to a gap between how consumers say they feel about the economy and how they’re actually behaving.
A buoyant stock market that lifts confidence and wage increases have also propped up sentiment in the face of inflation anxiety.
Yet economists and investors are closely watching what happens to shopping patterns as pandemic-era savings are used up and lingering inflation forces some families to make tough choices.
A survey by Gallup published in early December found that 45% of American households report that inflation is “causing their family some degree of financial hardship.”
Unsurprisingly, lower-income households are the most affected. Of those earning less than $40,000 a year, 71% said recent price increases have caused hardship. For middle-income households, that figure was 47%. It fell further to 29% for households making $100,000 a year or more.