Looking deeper into strong holiday sales

Print Friendly, PDF & Email

Results from the recently concluded holiday selling season give the nation’s merchants some reason to celebrate. Retail sales rose 4.9% from November 1 through Christmas Eve, the biggest yearly gain since 2011, according to “Mastercard SpendingPulse.” The report, which combines purchasing activity in the Mastercard network and survey-based estimates for other forms of payment, including cash and checks, concludes that it was a solid year for the industry as a whole.

There were, however, noteworthy disparities, with some categories, including consumer electronics, appliances, jewelry, home furnishings and home improvement, overperforming. Moreover, merchants that invested early on in promotions and other strategies designed to engage consumers did particularly well, Mastercard notes.

Of even greater significance, the report reveals that the gap between growth in e-commerce and traditional forms of retailing was, once again, considerable. Online shopping volume surged 18.1% during the holiday period, more than three times the overall increase.

The success of Amazon and other pure-play e-commerce companies is perhaps the biggest, but far from the only, factor that should make brick-and-mortar retailers stop and reflect, even as they take satisfaction in stronger than expected holiday sales.

“Since day one we have obsessed over what we believe our customers care about — incredible deals and low prices, fast and free shipping, and a wide selection of top products — and we continue to provide all three, all the time,” says Jeff Wilke, Amazon’s chief executive officer for worldwide consumer.

The company’s ability to consistently make that vision a reality, coupled with its seemingly limitless appetite for broadening the scope of its business, will keep up the pressure on rivals in the new year and beyond. If Amazon finally makes its much anticipated debut in the prescription pharmaceutical sector, one more category that has long been a mass market staple will be influenced by the actions of a powerful new player.

Competition from other quarters is certain to continue to intensify as well. The jockeying among retailers in food and beverages is a prime example: The debut of hard discount grocer Lidl in the United States last year triggered a big investment in its store base by arch rival Aldi; Amazon provided more evidence of its determination to be a major force in the field with its $13.7 billion acquisition of Whole Foods Market; and the nation’s biggest food retailers, Walmart and Kroger, continued to expand omnichannel options for their customers. At the same time, many other companies across the retail spectrum, including drug , dollar and convenience stores, vied for a share of food and beverage sales.

The battle for the hearts and minds of consumers is evident, if not always with quite so much intensity, in merchandise category after merchandise category. The heightened level of competition from newcomers as well as long-time rivals leaves retailers little time to gloat about recent accomplishments. They should understand that, driven largely by advances in digital technology, the business is changing at an unprecedented rate, and anyone wedded to old ways of doing things is likely to be left behind. The best mass market retailers — Walmart, Albertsons Cos. and Hy-Vee among them, as stories elsewhere in this issue demonstrate — know they have to work harder than ever to keep up with shoppers as they make the transition to the omnichannel future.



Comments are closed.