Outside of influencing a boost in e-commerce sales, the Covid-19 pandemic hasn’t exactly been kind to the overall industry’s growth, and it appears that trend has continued throughout the holiday season. Retail sales excluding automotive and gasoline increased 3 percent during the expanded holiday season, according to Mastercard SpendingPulse. The number represents a slight dip from the 3.4 percent growth seen in the 2019 holiday.
When accounting for purchases from Oct. 11 through Dec. 24 across all payment types, the Mastercard report noted that online sales grew 49 percent year over year, with e-commerce accounting for 19.7 percent of overall retail sales—up from approximately 13.4 percent in 2019. Including gas, retail sales went up a paltry 1.2 percent.
Overall, the 3 percent sales boost outperformed the 2.4 percent expectation given by Mastercard in October, and significantly outpaced the projected online sales growth of 34.6 percent.
Through the holiday period, apparel sales declined 19.1 percent year over year, while sales at department stores fell 10.2 percent. E-commerce sales in both categories remained relatively low compared to retail on the whole, with online apparel seeing a 15.7 percent jump and department stores only budging at a light 3.3 percent growth rate.
Consumer spending on apparel and footwear continued its fall as the holiday season kicked further into gear, dropping a seasonally adjusted 4.9 percent in November to $414.27 billion from $435.36 billion in October, the Bureau of Economic Analysis (BEA) reported in its Personal Income & Outlays report.
But Mastercard notes that the worst performance across retail this holiday actually went to luxury (excluding jewelry), which endured a 21.1 percent drop as shoppers sought to rein in high-end spending—e-commerce numbers were not tracked.
Conversely, home furniture and furnishings experienced the strongest growth of any sector compared to 2019, up 16.2 percent, with 31 percent growth online.
As predicted by many including Mastercard, the increase in October sales slowed down the year-over-year sales growth across the traditional holiday period starting in November. From Nov. 1 to Dec. 24, sales saw increases of 2.4 percent excluding auto and gasoline, while e-commerce sales still saw a healthy boost of 47.2 percent. Once again, these numbers outperformed total sales growth expectations of 1.8 percent and e-commerce growth projections of 32.9 percent.
However, the initial online projections align more with data recently reported by Adobe Analytics, which reported 32.4 percent growth to $171.6 billion between Nov. 1 and Dec. 22.
The October push has been a common theme among holiday 2020 reports, although Mastercard’s numbers are below the 3.6 percent to 5.2 percent holiday sales growth predicted by the National Retail Federation (NRF). NRF said that while retail sales in November grew 8.8 percent year over year, sales actually declined 0.3 percent month-over-month despite the inclusion of Black Friday and Cyber Monday. With Amazon’s shift of Prime Day to October and the rest of retail’s top competitors staging their own sales during the month, shoppers were keen to spend earlier than usual.
The recently released Deloitte December Spending Pulse supported much of the Mastercard and NRF data, indicating that consumer spending increased 4 percent year over year in October and 1 percent year over year in November.
While spending increased, the number of overall transactions throughout the early part of the holiday season decreased, according to the Deloitte analysis. October saw transactions decline 4 percent, with average transaction value (ATV) rising 9 percent, while November saw transactions fall 6 percent but ATV grow 7 percent.
Mastercard said that Black Friday spending was down 16.1 percent, yet remained the top spending day of the 2020 holiday season, further illustrating just how dispersed overall consumer buying behavior was. Cyber Monday actually ranked only fifth on the top shopping days, coming in behind Saturday, Nov. 28, Saturday, Dec. 12 and Friday, Dec. 11. Similarly, Deloitte reported that retail spend declined 18 percent year-over-year on Black Friday but climbed 2 percent across all channels on Cyber Monday.
Online retail essentially kept total sales afloat throughout those days, with jumps on Black Friday and Cyber Monday reaching 19 percent and 15 percent respectively. Brick-and-mortar retail spend during the two days declined 31 percent and 8 percent respectively, Deloitte said.
Foot traffic to stores has fallen compared with last year throughout the season, even in recent weeks after many retailers stopped promising online orders would arrive by Christmas. During the seven days leading up to Dec. 24, store traffic fell 31.3 percent compared with last year, according to Sensormatic Solutions.
A more complete picture of holiday spending will emerge in the coming weeks as the U.S. government reports December retail sales figures and retailers report financial results.
Deloitte’s InSightIQ analysis team partnered with Affinity Solutions Inc. to collect the October and November data. The Mastercard findings are based on aggregate sales activity in the company’s payments network, coupled with survey-based estimates for certain other payment forms, such as cash and check.
Mastercard SpendingPulse defines U.S. retail sales as sales at retailers and food services merchants of all sizes. Sales activity within the services sector (for example, travel services such as airlines and lodging) are not included.