Holiday Sales Rise Despite Shortened Season
2min read Holiday retail sales in the U.S. during the 2023 shopping season outperformed expectations, overcoming a shorter calendar period and inflationary pressures.
According to Mastercard SpendingPulse, total spending from November 1 to December 24 increased by 3.8% compared to 2023. This exceeded the previously forecasted 3.2% growth and surpassed last year's 3.1% rise, showcasing the resilience of U.S. consumers and the adaptability of retailers.
Online Shopping Dominates Growth
The most significant contributor to the holiday sales boost was the remarkable growth in online shopping, which climbed 6.7% year-over-year. In contrast, in-store sales saw a comparatively modest increase of 2.9%. This continued digital shift highlights the growing consumer preference for the convenience and flexibility offered by online platforms.
Apparel, jewelry, and electronics were key product categories driving sales, with growth rates of 3.6%, 4%, and 3.7%, respectively. Within apparel, online sales surged by 6.7%, far surpassing the 0.2% growth in brick-and-mortar stores. These trends underscore the appeal of online shopping for its broader selection, ease of price comparison, and frequent discounts.
Last-Minute Shopping and Promotional Strategies
Despite the 2023 holiday shopping season being compressed into 27 days—five fewer than last year—the retail sector demonstrated notable resilience. The final five days of the season alone accounted for 10% of all holiday spending, according to Steve Sadove, senior advisor to Mastercard and former Saks CEO. This late surge in activity reflects the strength of strategic promotions and last-minute deals designed to capture hesitant shoppers.
Retailers responded to cautious consumer behavior driven by inflation with aggressive promotional campaigns. Walmart and Target, for example, increased advertising on platforms like TikTok, Peacock, and Hulu, leveraging these channels to promote membership programs offering perks like quick delivery and Buy Online, Pickup In Store (BOPIS). These efforts paid off, with Salesforce estimating that BOPIS orders nearly doubled during the weekend before Christmas, making up 40% of all online orders for participating retailers.
Delivery services also reported robust performance, with FedEx experiencing stronger-than-expected holiday delivery volumes in the final week of the season.
Consumer Preferences Shape Retail Landscape
Consumers' inclination toward online shopping was influenced by convenience, broader choices, and better discounts. Aireale Hobbs, a 40-year-old resident of Huntsville, Alabama, highlighted these advantages in an interview with Reuters. Hobbs opted to purchase Christmas pajamas, Stanley drinkware, and toys for her family through digital channels. She noted that mobile app discounts further incentivized her decision, saying, "I bought some things from Target and saved money using their app."
Retailers also benefited from increased interest in technology and lifestyle products. High demand for tech gadgets like laptops and TVs, growing acceptance of lab-grown diamonds, and continued popularity of athleisure apparel contributed to a successful season.
Economic Stability Supports Spending
Despite inflationary concerns, the U.S. retail sector was buoyed by low unemployment and rising wages, which gave consumers the confidence to spend. While promotional intensity remained comparable to 2022, these economic factors helped maintain purchasing power.
However, the season did not see uniform enthusiasm across all metrics. According to Tyler Richey, co-editor at Sevens Report Research, bitcoin-related spending—tied to the cryptocurrency's recent volatility—had minimal influence on the holiday season.
Conclusion
The 2023 holiday retail season highlights the adaptability of retailers and the resilience of U.S. consumers. Strong online sales, effective promotional strategies, and stable economic conditions contributed to the 3.8% spending increase despite a shorter calendar period and inflationary headwinds. Moving forward, continued innovation in digital shopping experiences and targeted promotions will be essential for sustaining this momentum.