Expecting a Cheery Holiday Season, though U.S. Retailers Might See Less Green on Black Friday

#SpendingPulse Insights into Holiday Retail Sales

The holidays are officially upon us, and MasterCard SpendingPulse is bearing good tides of a healthy spending season. With gas prices remaining low and consumer optimism high, MasterCard SpendingPulse anticipates U.S. retail sales growth of 4.0% for the holiday period compared to 2014.

So, what are the big spending trends to watch heading into the holiday season?

The Consumer Continues to Spend with Confidence. Three-quarters of respondents in a recent MasterCard survey said they are as confident or more this year than last year, and the majority plan to pay for their holiday spending with money they have on hand, instead of through long-term borrowing. MasterCard SpendingPulse also reveals that consumers are increasingly spending on experiences, with record spend on travel and restaurants in 2015.

Armchair Shoppers Remain Just a Fraction of Sales. While 80% of global purchases are now informed by a digital device and 60% of consumers report doing more research online than in the past, according to the recentRetail CMO’s Guide to the Omnishopper, eCommerce still represents just a slice of overall retail sales.

However, more shopping happens online during the holidays than the rest of the year.

During the 2014 holiday period, nearly 8% of sales occurred online, compared to 6.3% for the full year. Consumers are more likely to buy certain products online, though; roughly half of electronics and appliances sales and a quarter of apparel sales are through eCommerce. Online purchases of apparel grew 11.8% last holiday season compared to 2013, while in-store sales were essentially flat.

Black Friday Spending Still Dominates.Black Friday remains the biggest spending day of the holiday season, according to MasterCard SpendingPulse, but its dominance has waned in recent years as more retailers open up or extend their hours on Thanksgiving Day. Black Friday sales were down 1.6% last year compared to 2013. When looking at Thursday through Sunday of Thanksgiving weekend, however, sales were up 0.9%. Thanksgiving drove some of that with sales up 3.3%.

“Dueling discount days are causing consumers to diversify when they spend, but retailers have seen their strategies pay off,” says Sarah Quinlan, SVP, Market Insights for MasterCard Advisors. “Bigger question marks surround eCommerce, which remains relatively low except for certain categories. We’re also seeing consumers putting their money where their mouth is—literally—as consumers put more of their discretionary dollars toward eating out.”

The Great Procrastinator Keeps Retailers on their Toes Until the Very End. Consumers who finish their holiday shopping in October might just be an urban legend, according to SpendingPulse. The Saturday before Christmas remains one of the top shopping days of the holidays and is consistently the biggest shopping day in December.

METHODOLOGY

MasterCard SpendingPulse: SpendingPulse™ reports on national U.S. retail sales across all payments types. The findings are based on aggregate sales activity in the MasterCard payments network, coupled with survey‐based estimates for certain other payment forms, such as cash and check. In addition to the United States, SpendingPulse is available in select markets around the world.

MasterCard Road to Recovery 2015 Update: This is the latest in a series of reports focused on how consumers are using credit and debit in the U.S. Designed to help financial institutions understand changing habits and devise strategies to adapt, the “Ending with Spending” issue offers a special focus on findings from a September 2015 online survey of 2,000 U.S. consumers about their plans for holiday spending.

The Retail CMO’s Guide to the Omnishopper: The Retail CMO’s Guide to the Omnishopper blends insights from MasterCard transaction-based insights with a proprietary survey of omnishoppers conducted in nine markets: Brazil, China, Germany, Hong Kong, Indonesia, Poland, UAE, U.S. and U.K. The online survey of 11,337 people was conducted July 2015.