Holiday sales rose at the fastest pace in 17 years, even as shoppers grappled with higher prices, product shortages and a raging new COVID-19 variant in the last few weeks of the season.
Mastercard Spending Pulse, which tracks all kinds of payments including cash and debit cards, reported Sunday that holiday sales had risen 8.5 percent from a year ago. That is the highest single-year increase since 2004. The credit card company had expected only a 7.4 percent increase.
The study found that holiday sales were up 10.7 percent compared with the pre-pandemic 2019 holiday period, and holiday e-commerce sales made up 20.9 percent of total retail sales this year as consumers continued to enjoy the ease of browsing and buying from the comfort of their homes as COVID continues to spread.
Online sales over the November 1 through December 24 period also grew 11 percent over the same time last year, the study showed, and in-store commerce jumped 8.1 percent.
‘Shoppers were eager to secure their gifts ahead of the retail rush, with conversations surrounding supply chain and labor supply issues sending consumers online and to stores in droves,’ senior advisor for Mastercard Steve Sadove said in a statement.
Holiday sales grew risen 8.5 percent from a year ago, according to a new study from Mastercard Spending Pulse. A woman is seen here viewing ornaments for sale at the Urbanspace Union Square Holiday Market in New York on December 12
The study found that holiday sales were up 10.7 percent compared with the pre-pandemic 2019 holiday period and in-store sales were up 8.1 percent. Shoppers are seen here carrying bags across Mission Street in San Francisco
The results, which covered shopping done between November 1 through December 24, were fueled mainly by purchases of clothing and jewelry.
By category, clothing purchases rose 47 percent, jewelry rose 32 percent and electronics rose 16 percent.
‘I feel really good about how the season played out,’ said Sadove. ‘When people feel a little bit uncomfortable, you’ll see a little bit of a pickup in online and a little bit of a slowdown in store performance.’
The increases come despite COVID related supply-chain issues as ships worth of products remained stalled off the US borders and COVID cases increasing to over 4,000 during the Omicron surge.
A broader picture of the holiday shopping season will be revealed next month when the National Retail Federation, the nation´s largest retail trade group, comes out with its combined two-month results in mid-January.
The results will be based on an analysis of the November and December sales figures from the Commerce Department. Analysts will also be dissecting the fourth-quarter financial results from different retailers that are slated to be released in February.
Overall, analysts expected a strong holiday season, fueled by early shopping that started back in October in anticipation of a product shortage. Consumers were also determined to celebrate the holidays after a muted one a year ago.
A woman stopped to look at batteries at a Target in Glenview Illinois on December 16
People walked at a shopping mall in Santa Anita, California, as in-store commerce jumped 8.1 percent from last year
Still, November saw a slowdown in retail sales, in part because of the early shopping. And omicron, which has fast become the dominant version of the virus in the United States, has now spoiled holiday plans for many Americans who have had to cancel gatherings last minute.
The National Retail Federation said early in December that holiday sales were on track to beat its already record-breaking forecasts for an increase of 8.5 percent to 10.5 percent compared to one year ago.
Holiday sales had increased 8.2 percent in 2020 when shoppers, locked down during the early part of the pandemic, splurged on pajamas and home goods, mostly online.
The group expects that online and other non-store sales, which are included in the total, will increase between 11 percent and 15 percent. The numbers exclude automobile dealers, gasoline stations and restaurants.
Holiday sales have averaged gains of 4.4 percent over the past five years, according to the group.
Jewelry was among the most popular present this year, with sales rising 32 percent over last year. Customers are seen here exiting the Cartier jewelry store on Fifth Avenue in New York
People waited outside a Pandora store near Times Square in the cold on Christmas Eve
The update from the NRF was delivered in early December, right before Omicron became a bigger threat in the U.S. and started to disrupt businesses from Broadway theaters to restaurants.
But overall store traffic hasn’t taken a plunge, though some stores are reporting dips in big city locations.
For the week that ended December 18, store traffic was up nearly 20 percent from a year earlier, though it was down 23 percent from the same week in the pre-pandemic year of 2019, according to Sensormatic Solutions.
Peter McCall, Sensormatic´s senior manager of retail consulting, noted shoppers are still going to retail stores but are now favoring open-air shopping centers and outlet malls more than enclosed shopping centers.
Retail sales have continued to rise in an economic environment that has hamstrung some retailers. Many have had to sharply increase pay to find and keep workers, increasing their cost of doing business. They also scrambled to fill shelves with major U.S. ports still backed up.
At the same time, Americans proved their resilience in different ways. They paid more across the board for necessities like food and gas, putting pressure on holiday shoppers’ budgets. In fact, consumer prices rose 5.7 percent over the past year, the fastest pace in 39 years, as a surge in inflation confronts Americans with the holiday shopping season under way.
The November increase, announced Thursday by the Commerce Department, followed a 5.1 percent rise for the 12 months ending in October, continuing a string of annual price increases that have been above the 2 percent inflation target set by the Federal Reserve.
Americans also learned to adjust to product shortages, turning to alternatives if their top choices were not available, or looking at other venues like eBay to find their top brands.
Though big box retailers like Target and Walmart promised stocked shelves for the holiday, supply constraints appear to be stubborn elsewhere. Target CEO Brian Cornell recently told The Associated Press he believes that it will take several years for supply chain clogs to be cleared.