Mastercard Reports 3.8% Holiday Sales Surge: eCommerce and Value Deals Drive Record Gains

Mastercard has reported a significant 3.8% increase in U.S. retail sales excluding automotive from November 1 through December 24, marking a strong holiday shopping season. The credit-card company's preliminary Mastercard SpendingPulse data shows that consumers were driven by a search for value, responding to promotions during key shopping periods and filling their baskets in the run-up to December 24. The last five days of the holiday season accounted for 10% of all holiday spending, indicating a surge in last-minute shopping.

eCommerce Leads the Way

The shift towards e-commerce was evident during the holiday season, with online retail sales growing 6.7% year-over-year, outpacing the 2.9% increase in in-store sales. This trend was particularly notable in the Apparel sector, which saw a 6.7% growth in online purchases compared to last year. Consumers increasingly preferred digital-first shopping, with e-commerce, curbside pick-up, and delivery being top-of-mind for the festive season.

Value-driven Promotions Drive Sales

Consumers were motivated by deals and responded to retailers' promotions, leading to a 3.8% increase in overall retail sales compared to 2023. Major retailers like Walmart, Target, and Amazon.com ramped up promotions and value messaging to attract customers, with the shorter holiday season prompting last-minute shopping. Retailers managed across both in-store and e-commerce platforms to capture attention throughout the season, with Walmart and Amazon.com seeing record-breaking sales on Black Friday and Cyber Monday.

AI and Improved Shopping Experience

Retailers relied on generative AI customer service and search features to make it easier for shoppers to find deals on websites and mobile apps, further enhancing the e-commerce experience. They also improved their curbside pick-up and delivery services to ensure a smoother shopping experience, contributing to the overall sales growth.

Experiences and Gift Items in Demand

Consumers showed strong preferences for experiences like dining out, with restaurant spending growth up 6.3% compared to last year. Shopping on gift items was also higher than last year, boosting demand for apparel, jewelry, and electronics, with each category rising 3.6%, 4.0%, and 3.7%, respectively. This indicates that consumers were not only looking for value in their purchases but also willing to spend on experiences and gifts, provided they found good deals.

Digital-savvy Shopping Cities

While many Americans shopped online for the holidays, some cities embraced e-commerce more than others. Cities like Tampa (10.6%) and Phoenix (10.0%) led with double-digit growth, followed by Minneapolis (8.9%), Dallas (8.4%), Charlotte (7.9%), Orlando (7.8%), and Houston (7.6%) coming in well above the national total for e-commerce sales compared to 2023.

Investment Opportunities

The strong holiday sales performance, driven by e-commerce and value deals, presents investment opportunities in companies that cater to these trends. Retailers with robust online platforms, AI-driven customer service, and improved shopping experiences may continue to see growth in the coming year. Additionally, companies in the restaurant and electronics sectors may benefit from increased consumer spending on experiences and gift items.

In conclusion, Mastercard's 3.8% holiday sales surge highlights the growing importance of e-commerce and value-driven promotions in today's retail landscape. As consumers continue to seek value and convenience, retailers and investors alike should focus on these trends to capitalize on future growth opportunities.