NEW YORK — Robust holiday shopping from before Thanksgiving through Christmas has raised hopes for continued strength in the retail sector.
According to Mastercard SpendingPulse, holiday sales increased 5.1% to more than $850 billion — the strongest growth in six years. And online shopping jumped 19.1%, with Amazon reporting record-breaking results.
“While we recognize the growing anxiety among investors, we believe retail’s strong fundamentals will carry into 2019 and beyond,” said National Retail Federation president and chief executive officer Matthew Shay. “There are certainly headwinds, particularly the threat of an escalating trade war with China, which economists rate as the top economic risk for 2019. Companies will also likely have to contend with rising interest rates, the fading fiscal stimulus and other factors.”
But there is also cause for optimism, said Shay, citing economists’ forecast that the economy will grow at around 2% in 2019 and 2020. Unemployment will stay low, “supporting continued consumer confidence and retail sales,” he commented. “In short, the markets will do what they do, but retailers will do what they do: stay laser-focused on delivering results for their customers, employees and investors.”
Steve Sadove, senior advisor for Mastercard and former chairman and CEO of Saks Inc., said, “From shopping aisles to online carts, consumer confidence translated into holiday cheer for retail. By combining the right inventory with the right mix of online versus in-store, many retailers were able to give consumers what they wanted via the right shopping channels.”
The Mastercard report detailed holiday shopping from November 1 through December 24. Key findings indicate that despite weather challenges, this was a winning holiday season for retail overall; however, the story was different category by category.
Total apparel had a strong season with a growth rate of 7.9% compared to 2017, recording its best growth rate since 2010. The segment built on strong momentum that started during the back-to-school season and accelerated through fall right up to Christmas.
Home improvement spending continued to surge across the U.S., with purchases during the holiday season up 9%. This trend started before the holiday season and helped the sector power through to a strong finish.
Department stores finished the season with a 1.3% decline from 2017. This followed two years with growth below 2%, some of which can be attributed to store closings. However, the online sales growth for department stores indicated a more positive story, with growth of 10.2%.
Electronics and appliances were down 0.7%. The home furniture and furnishings category grew 2.3%.
Poor weather did pose an issue during some prime time shopping periods. This included cold weather on Black Friday morning on the East Coast and wet weather conditions the weekend of December 15 to December 16, on both the East and West Coasts. Conditions were also less than ideal on Friday, December 21, in the East, with storms that impacted the final run of the season.
In the e-commerce sector, Amazon reported it had more items ordered worldwide than ever. Customers shopped at record levels across multiple categories. Best-selling products included the Echo Dot; L.O.L. Surprise! Glam Glitter Series Doll; and fashion items from Carhartt.