Mastercard SpendingPulse: U.S. Retail Sales Grew 3.8% This Holiday Season; Online Sales Surge 6.7% YOY

Mastercard SpendingPulse has released its preliminary insights for the 2024 holiday shopping season, revealing a 3.8% year-over-year increase in total U.S. retail sales, excluding automotive. This growth was driven by a strong online presence, with e-commerce sales rising 6.7% compared to the same period last year. The findings highlight the continued shift in consumer behavior towards digital shopping and the importance of retailers' omnichannel strategies.

Key Trends and Insights

1. Early Shopping and Omnichannel Preferences: The holiday shopping season has expanded, with events like Amazon Prime Day in October encouraging consumers to start their shopping earlier. This shift in consumer behavior has led to a more spread-out spending pattern, with the last five days of the holiday season accounting for only 10% of all holiday spending. Consumers increasingly preferred digital-first shopping, with e-commerce sales growing 6.7% year-over-year, while in-store sales increased 2.9%. The Apparel sector, for instance, showed a strong lead in e-commerce sales, with 6.7% growth for online purchases compared to last year.
2. Promotions and Discounts Drive Online Sales: Retailers' early promotions and deep discounts on major shopping days, such as Black Friday and Cyber Monday, attracted consumers and boosted online sales. Clear percentage discounts across all products were the most preferred type of deal during November 2023 sales events, cited by 60% of US consumers. Other popular deals included steep discounts on selected items (58%), deals with free/reduced shipping costs (48%), and bundle deals like buy one get one free (45%).
3. Impact on Supply Chain and Inventory Management: The shift in consumer behavior towards online shopping has significantly impacted the retail industry's supply chain and inventory management strategies. Retailers have improved their inventory clearance through sales, reducing the inventory-to-sales ratio to 1.17 in 2023. The expanding role of the store, with consumers preferring to buy digitally and pick up or return items in-store, has led retailers to dedicate more space for returns and focus on seamless mobile app performance.
4. Buy Now, Pay Later (BNPL) Adoption: The increase in online retail sales has contributed to the adoption and usage of buy now, pay later (BNPL) services among consumers. According to Adobe Analytics, Cyber Monday 2023 was BNPL's biggest day ever, with holiday shoppers using BNPL to purchase $940 million worth of online orders. In total, consumers spent $16.6 billion via BNPL in the months of November and December 2023.

Looking Ahead

As the holiday shopping season continues to evolve, retailers must adapt to the changing consumer landscape. By embracing omnichannel strategies, offering early promotions and discounts, and optimizing supply chain and inventory management, retailers can capture their share of the holiday sales pie. The continued growth of online sales and the adoption of BNPL services indicate that consumers are seeking convenience, flexibility, and value in their shopping experiences.

*Excluding automotive