Online spending during the holidays may increase 6.7% year-over-year (YOY), according to Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment and is not adjusted for inflation.
It expects in-store sales to increase +2.9% YOY, for a total US retail increase of 3.7% during the holiday season (November 1 through December 24), it said in a press release on Tuesday.
“While the consumer of holidays past may have been a consumer trying to find footing in a rapidly shifting economy, the consumer of holidays present has taken their power back,” said Michelle Meyer, U.S. Chief Economist, Mastercard Economics Institute. “We expect these individuals to impressively navigate the holiday season, making choices and trade-offs that best suit their lifestyles.”
In an accompanying blog post, Mastercard Economics Institute provided additional context on holiday spending 2023. “With the 6% inflation of holiday 2022 moving further into the past, the landscape looks different in 2023,” it said. “Inflation has dropped by almost half to below 4% over the past year, setting an expectation for shoppers that it will continue to drop.”
The shopper of holidays present is still spending on experiences, although in a more measured way than during the 2022 holiday season, it said.
But it won’t just be about experiences this season. “With price discounting for goods underway, we expect shoppers to be enticed by those promotions. We think this could be a driver specifically for electronics where we may be entering a new replacement cycle for certain items, especially with technological advancements.”
Returns are a reality of holiday shopping, and Mastercard summed up the pros and cons of generous return policies: “The shoppers of holidays present know they can return items for free and easily, which changes how much they buy. Liberal return policies give the shopper more power and freedom but are more difficult for retailers to manage. Unfortunately, this leads to retailers struggling with high return rates.”
