U.S. Shoppers Shunned Larger Purchases This Holiday Season But Sales Still Grow

January 1, 2023

U.S. retail sales grew by 7.6% year-on-year this holiday season according to Mastercard
SpendingPulse. The data covers the period from November 1st through December 24th, so it includes the highly important Black Friday and Cyber Monday trading window.

This increase is 0.5% higher than the 7.1% growth that Mastercard had forecast for this period in September. In this forecast, they had anticipated that consumers would pull purchases earlier in the hunt for deals.

Whilst the increase outperformed expectations, decades-high levels of inflation and rising interest rates are clearly weighing heavily on consumers with the increase being significantly lower than the 8.5% recorded in 2021.

“This holiday retail season looked different than years past,” said Steve Sadove, senior advisor for Mastercard. “Retailers discounted heavily but consumers diversified their holiday spending to accommodate rising prices and an appetite for experiences and festive gatherings post-pandemic.”

Apparel sales saw growth of 4.4% but restaurants saw a bigger increase of 15.1%.

As Mastercard SpendingPulse isn’t adjusted for inflation it is likely that the increases in these sectors have not been driven by just increased volumes but rather by higher prices, inflation in November was adjudged to be running at 7.1%.

The electronics sector has very much gone out of favor with shoppers this holiday season with a 5.3% drop in overall spending. Some of this reduction in electronics spending is linked to continued issues in some supply chains in this sector resulting in the lower availability of certain products.

Jewellery has clearly lost its sparkle with a reduction of 5.4% as consumers shied away from making larger expensive purchases.

The importance of Black Friday to consumers and the desire to find discounts is clear, with sales on this day up 12% year-on-year.

“Inflation altered the way U.S. consumers approached their holiday shopping – from hunting for the best deals to making trade-offs that stretched gift-giving budgets,” said Michelle Meyer, North America Chief Economist, Mastercard Economics Institute. “Consumers and retailers navigated the season well, displaying resilience amid increasing economic pressures.”

Instore retail saw growth of 6.8% whilst online grew by 10.6% and now accounted for 21.6% of total retail sales, up from 20.9% in 2021 and 20.6% in 2020.

The sales data doesn’t include automotive sales, which after tracking below 2021 volumes for much of the year have seen a rebound in recent months. November saw an increase of 11.3% compared to 2021.

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