Holiday Shopping Trends

By Savyata Mishra and Siddharth Cavale

(Reuters) – 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, indicating healthy household finances.

Spending during the holiday shopping period of Nov. 1 to Dec. 24 rose 3.8% over 2023, according to a Mastercard (NYSE:MA) SpendingPulse report. This surpassed the forecast rise of 3.2% and exceeded last year’s 3.1% increase.

> "The consumer is healthy. Unemployment is low. Wages are increasing. Their personal finances are reflective through the fact that they are shopping," said Steve Sadove, senior adviser to Mastercard and former Saks CEO and chairman. Heading into the holiday season, U.S. retailers described their consumers as "selective," "cautious," and "conservative," focusing on needs-based purchases. Consequently, many retailers cut prices and offered promotions, as noted by Bernstein analysts.

Walmart (NYSE:WMT) announced plans to maintain price reductions through rollbacks, while Target (NYSE:TGT) chose to increase its promotional intensity due to lower customer engagement without promotions. Dollar General (NYSE:DG) anticipated profit pressure from increased promotions in Q4, while Kroger (NYSE:KR) and Five Below (NASDAQ:FIVE) also reduced prices to remain competitive.

Retailers embraced generative AI for customer service and product search enhancements, improving curbside pickup and delivery services to provide a smoother shopping experience.

Though promotion levels remained consistent with last year, the launch of upgraded TVs and laptops, lower prices for lab-grown diamonds, and ongoing demand for athleisure apparel encouraged spending.

Sales in apparel, jewelry, and electronics rose 3.6%, 4%, and 3.7%, respectively, compared to last year, as reported by Mastercard. Online apparel sales surged by 6.7%, compared to a mere 0.7% in physical stores, as shoppers hunted for deals on multiple websites.

Mastercard SpendingPulse tracks in-store and online retail sales across all payment forms, excluding automotive sales and not adjusted for inflation.

Overall, online sales increased at double the rate of in-store sales during the holiday period, reflecting a sustained trend of digital-first shopping. Sadove remarked, "This indicates a shift toward more normalized shopping behaviors."

Despite a shorter-than-usual holiday season, sales remained robust. Although shoppers traditionally wait until the last minute for the best deals, Sadove observed, there was considerable strength at the end, with the last five days accounting for 10% of all holiday spending.

> "We had a very big Super Saturday and Sunday," Sadove remarked, referring to the weekend before Christmas when last-minute shoppers hurried to purchase gifts.