Despite the pandemic and millions of Americans being out of work, Mastercard SpendingPulse reported Saturday that 2020 holiday retail sales rose 3 percent, excluding automotive and gasoline.
That compares to Mastercard’s forecast at the onset of the season of a 2.4 percent gain, and the 2019 holiday gain of 4 percent.
“This shows that the consumer is very resilient and healthy,” Steve Sadove, Mastercard senior adviser and former chairman and chief executive officer of Saks Fifth Avenue, told WWD. “Three percent is very solid growth. Internet sales grew almost 50 percent (49 percent) compared to 2019 and now account for nearly 20 percent (19.7 percent) of retail commerce.”
During the 2019 holiday season, online sales rose about 13.4 percent, Mastercard said.
“Overall the consumer is holding up pretty well,” Sadove added. “Inventories were very much in line, and it was a good season from a margin perspective. Retailers ordered product in March and April in the depths of the pandemic. They didn’t order much, and came into the season clean. I see a lot of empty shelves right now. Margins are going to hold up.”
The costs of fulfilling and shipping orders will dig into profits, Sadove said, but many of the orders were picked up in store or curbside, making the e-commerce activity “relatively efficient.”
Sadove said big box retailers such as Target, Home Depot and Walmart fared the best, and were abetted by technology investment and use of stores as both warehouses and pickup points.
“Clearly, there are retail winners and losers, and categories that are winners and losers,” Sadove said. “American consumers turned the holiday season on its head, redefining ‘home for the holidays’ in a uniquely 2020 way. They shopped from home for the home, leading to record e-commerce growth. And consumers shopped earlier than ever before.”
Mastercard data indicated that furniture and home furnishings retailers saw 16.2 percent growth, with 31 percent online growth; home improvement was up 14.1 percent; department stores saw overall sales decline 10.2 percent, with their online sales up 3.3 percent.
Apparel experienced a decline of 19.1 percent, while electronics and appliances were up 6 percent overall.
Mastercard SpendingPulse measures retail spending trends across all payment types, including cash and checks. Mastercard now defines the holiday season as running from Oct. 11, when Amazon’s Prime Day was held this year and other major retailers launched their own holiday promotions to be competitive, through Dec. 24.
Due to the pandemic, people weren’t spending as much on commuting, traveling and restaurants, enabling them to shop more. Higher-end consumers, Sadove said, have been saving a lot, and benefitted by the stock markets performing well.
“But you have another economy, with millions out of work, and massive food lines,” Sadove said, which would have restrained retail results from potentially higher gains.
Mastercard SpendingPulse defines U.S. retail sales as those at retailers and food services of all sizes. Sales activity within the services sector (for example, travel services such as airlines and lodging) are not included.
In addition, though Black Friday was down 16.1 percent, Thanksgiving weekend through Cyber Monday remained a key time for shoppers, with Black Friday being the top spending day of the 2020 holiday season, Mastercard said.
While Mastercard reported a 3 percent holiday sales gain for retailers, some holiday forecasts issued earlier this year from industry analysts and the National Retail Federation have been as high as 5 to 6 percent.
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