PURCHASE, N.Y. — U.S. retail sales for the upcoming holiday season are expected to increase 3.7% year-over-year (YOY), according to Mastercard SpendingPulse, which describes the projected increase as a sign of continued consumer resilience.

During the 2022 holiday shopping season, inflationary pricing and pent-up demand, coupled with excess savings and rising wages allowed consumers and retailers to navigate the season well, according to Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment and is not adjusted for inflation. After years of inventory and spending habits being in flux, the 2023 season will bring a broader rebalancing across categories, channels, and sectors in alignment with macroeconomic trends, the company said.

“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.”

Key trends to watch in 2023 include:

• Spreading Cheer Across Channels: While digital shopping habits became the new normal during the pandemic, this season’s shopper is looking to make purchases anytime, anywhere – in-store and online. With this omnichannel approach in mind, consumers are anticipated to shop across channels, with e-commerce expected to increase +6.7%, and in-store sales to increase +2.9% YOY.
• Tech the Halls: Electronics, gadgets and gaming might be at the top of many wish lists this year as AI, immersive experiences and digital workspaces continue to evolve the way we work and play. Further, consumers who purchased new gadgets during the pandemic could be looking to upgrade to the latest model. Electronics are anticipated to increase +6.0% YOY this season.
• Festive Feasting: The Restaurant sector is expected to continue its growth streak, increasing +5.4% YOY and outpacing Grocery growth (+3.9%), as consumers make plans to gather around tables and with loved ones for shared meals, activities, and festivities outside of the home.

“This holiday season, retailers will be vying for consumer dollars. With numerous choices and tightening budgets, you can anticipate shoppers to be increasingly selective and value-focused,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated. “We expect the most effective holiday strategy will be to meet consumers where they are – personalized promotions to in-store experiences will be key in doing so.”

Additional holiday insights are available at the latest blog from the Mastercard Economics Institute on the US consumer: Holiday spending 2023: Meet this year’s holiday shopper. (Total retail sales exclude automotive sales and measure the traditional holiday season defined as running from November 1 through December 24.