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Back-to-School to Spur 7.5% Growth in Retail Sales: Mastercard Forecast

Department stores in particular should benefit.

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(PRESS RELEASE) While inflation is impacting retail sectors and households in a myriad of ways, continued consumer demand contributed to double-digit growth across nearly all retail sectors in May. This is according to Mastercard SpendingPulse™, which measures in-store and online retail sales across all forms of payment, not adjusted for inflation. As we look ahead to the critical mid-July through Labor Day back-to-school period, U.S. retail sales are expected to grow 7.5% excluding automotive compared to 2021. Sales are anticipated to be up 18.3% compared to pre-pandemic 2019, with Department Stores expected to be a noteworthy winner as the sector continues its recent rebound.

“Back-to-school is the second biggest season for retailers and is often looked at as an early indicator of retail momentum ahead of the traditional holiday season,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated. “While Mastercard SpendingPulse anticipates growth across sectors, retailers will need to find innovative ways to entice shoppers as discretionary spending potentially stretches thin as a result of increasing prices.”

Back-to-School to Spur 7.5% Growth in Retail Sales: Mastercard Forecast

This back-to-school season will be defined by the resilience and flexibility of the consumer. Ultimately, we’ll watch to see how they balance their desire for fresh styles and new experiences with continued price pressures. Anticipated retail trends for the 2022 back-to-school season include:

  • The In-Store Experience: Shopping for back-to-school becomes an experience of its own. From needing to try on new sizes to wanting to browse the latest fashions in person, the return to stores is expected to grow 8.2% YOY / 9.9% YO3Y this season.
  • Department Stores Continue their Rebound: Following a multi-year decline, department stores have made their way into the spotlight after 15 consecutive months of sustained growth.
  • Serving as a one stop shop with a range of options for the whole family at a variety of price points, the back-to-school season is anticipated to drive the Department Store sector up 13% YOY / 27.3% YO3Y.
  • Stacked Social Calendars Drive Apparel Growth: More gatherings require more looks. With weddings, events and vacations lined up for the foreseeable future, the demand for apparel both in-store and online sees no signs of slowing, forecasted to be up 8.7% YOY / 15.9% YO3Y.

May retail sales growth

According to Mastercard SpendingPulse, total U.S. retail sales excluding automotive increased 10.5% year-over-year in May, and 21.4% compared to pre-pandemic May 2019. This is outpacing YOY monthly growth experienced thus far in 2022. In-store sales were a key driver, up 13.7% compared to pre-pandemic levels.

“The continued retail sales momentum in May aligns with the sustained growth rates we’ve seen so far this year,” said Michelle Meyer, U.S. chief economist, Mastercard Economics Institute. “The consumer has been resilient, spending on goods and increasingly services as the economy continues to rebalance. That said, headwinds have become stronger – including gains in prices for necessities like gas and food, as well as higher interest rates.”

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Back-to-School to Spur 7.5% Growth in Retail Sales: Mastercard Forecast

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