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Holiday Retail Season “Bound to Be Far More Promotional Than the Last”

Retailers will aim to drive in-store sales with holiday doorbusters, according to new analysis from Mastercard.

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(PRESS RELEASE) PURCHASE, NY – This holiday season, U.S. retail sales excluding automotive are expected to increase 7.1% year over year, according to the Mastercard SpendingPulse annual holiday forecast. Mastercard SpendingPulse measures in-store and online retail sales across all forms of payment. It is not adjusted for inflation. The holiday forecast, along with a look at key economic trends shaping the season, can be downloaded from the Mastercard Economics Institute here.

“This holiday season, consumers may find themselves looking for ways to navigate the inflationary environment – from searching for deals to making trade-offs that allow for extra room in their gift-giving budgets,” said Michelle Meyer, U.S. Chief Economist, Mastercard Economics Institute. “New job creation, rising wages and lingering savings should have many consumers ready and able to spend.”

Holiday Retail Season “Bound to Be Far More Promotional Than the Last”

The 2021 holiday season was resurgent for retailers (up +8.5%) as pandemic-induced pent-up demand, excess savings and supply chain issues sent shoppers stocking their carts to secure gifts. This year, the holidays are expected to shape up to be yet another positive retail season. Key trends to watch, include:

  • Extended holiday shopping: With holiday shopping slated to begin early again this year, some of the season’s retail growth is expected to be pulled forward in October as consumers hunt for early deals. Key promotional days like Black Friday weekend are also expected to make a strong return along with Christmas Eve, which falls on a Saturday, slated to be among the biggest days for retailers and last-minute shoppers. To understand how holiday shopping is shifting, check out the extended 75-day holiday forecast here.
  • ‘Tis the season of savings: As inflation impacts consumer wallets, bargain hunting is expected to be in full force this holiday season. From deals and discounts to price monitoring and price matching, consumers are looking to stretch their dollars and get the most bang for their buck. E-commerce is anticipated to increase despite significant growth last year, up +4.2% YOY/ +69.2% YO3Y, as the channel remains a convenient way for consumers to check prices in real time.
  • In-store experiences draw shoppers to stores: From the return of holiday doorbusters to new brick-and-mortar collaborations, retailers are aiming to boost holiday spirits by driving consumers into stores. In-store retail sales are expected to be up +7.9% YOY/ +10.4% YO3Y. While e-commerce has seen marked growth in recent years, in-store spending made up more than 4/5 of retail sales from January through August 2022.
  • Fashion-forward gifting: Following nearly two years of loungewear and athleisure, consumers may be adding revamped wardrobes to their wish lists as social events and platforms have many dressing to impress. Apparel (+4.6% YOY/ +25.3% YO3Y) and Luxury (+4.4% YOY/ +29.6% YO3Y) are expected to be hot holiday gift sectors, sending consumers into the new year in style.

“This holiday retail season is bound to be far more promotional than the last,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated. “Easing supply chain issues coupled with the rapid shift in consumer spending trends and over-ordering inventory have left retailers in an interesting position ahead of the holidays. Retailers that were able to clear past merchandise and accurately forecast inventory needs will be the best positioned for growth.

Holiday Retail Season “Bound to Be Far More Promotional Than the Last”

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