Holiday sales increased a record 4.9% this year, according to the latest Mastercard SpendingPulse report released Tuesday. It’s the largest year-over-year increase since 2011 and an indication of solid consumer confidence. E-commerce sales soared 18.1% over last year thanks in part to a late-season surge, according to the report, which details holiday sales from Nov. 1 through Dec. 24 across all payment types.
Shoppers appear to be focused on their homes and on ways to make spending time at home more enjoyable, according to the report’s breakdown of category sales this season. Electronics and appliances sales rose 7.5% (the most in 10 years), and home furnishings and home improvement sales each rose 5.1%, as did home improvement. Despite many closings in recent quarters, sales rose moderately for specialty apparel and department stores.
Retailers’ early season promotions paid off, kicking up significant sales jumps in the first three weeks of November, according to the MasterCard report, but late sales surges contributed to the good season for retailers. Dec. 23, also known as Super Saturday, was second only to Black Friday in terms of single-day spending, particularly in certain categories, like jewelry, where saw sales rose 5.9%.
Early reports suggest the holiday season was a banner year for retailers, ushering in vigorous sales activity even in categories, like apparel, that have been struggling for several quarters now. Shoppers are flush with confidence, as unemployment has ebbed and the housing market has remained solid, making consumers bold in their purchases.
December sales were buoyed by the 3.2% growth in gross domestic product in the third quarter, on top of 3.1% growth in the second quarter; consumer confidence going into the month was at a 17-year high, noted Retail Metrics president Ken Perkins in a note emailed to Retail Dive. Equity markets have hit all-time highs throughout the holiday season, and existing home sales in November hit a decade high even as home prices are gaining, he said.
That's showing up in retailer's reports, Perkins noted: Urban Outfitters Dec. 11 filed a 10Q report with the Securities and Exchange Commission that its fourth quarter same-store sales so far were up mid to single digits; American Eagle Outfitters commented that its quarterly-to-date same-store sales through most of November were similarly running up mid-single digits; retail company PVH, which runs the Tommy Hilfiger and Calvin Klein brands, noted a strong start to Holiday shopping season; and the Texas Retailers Association, with four sales left before Christmas Day, reported 11% sales growth year over year, according to Perkins's report.
But there are some clouds on the horizon, he warned. Household debt rose 0.9% in the third quarter, for example, with auto and credit card delinquencies rising, and the savings rate has declined to the low 3% range.
Other research found that consumer confidence continued to edge down this month, with most of the decline among lower-income households, according to the University of Michigan's December Survey of Consumers report. Overall, however, the average this year was the highest since 2000, (the long expansions of the 1960's and 1990's were the only periods with significantly higher confidence). Strength in consumer confidence was offset by a slight increase in uncertainty about future economic prospects, including some anxiety about tax reform, according to Surveys of Consumers Chief Economist Richard Curtin.
"Most consumers will know more about the revised tax code when the new paycheck withholding amounts take effect in early 2018," Curtin said in a statement. "While the mostly small gains in take-home pay may not spark an uptick in optimism, those gains would act to dampen any renewed pessimism. Overall, the data indicate that real personal consumption expenditures will expand by 2.6% in 2018."