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September 12, 2022

Mastercard Forecasts Cheery Holiday for Retail


The Mastercard SpendingPulse 2022 holiday season forecast calls for a 7.1% year-over-year gain U.S. retail sales, excluding automotive.

Mastercard noted the 2021 holiday season represented a retail resurgence, with sales up 8.5% as pandemic induced pent-up demand, excess savings and supply chain issues prompted shoppers to spend and even stock up early to secure gifts. This year, Mastercard stated, the holidays are on their way to producing yet another positive retail season.

Trends to watch include extended holiday shopping that will pull some consumer spending into October as shoppers hunt for early deals. Key promotional occasions such as Black Friday weekend and Christmas Eve will likely make strong showings. Christmas Eve falls on a Saturday and should get a particular boost from tardy shoppers and those holding out for late bargains.

Inflation will influence holiday shopping, especially the emphasis on bargain hunting, Mastercard pointed out. Deals and discounts, as well as price monitoring and price matching, will attract the attention of consumers looking to stretch their inflation-shrunk dollars.

Although consumers have returned to store shopping, Mastercard expects e-commerce to demonstrate significant growth over the last year, with a 4.2% holiday over holiday advance. Still, brick-and-mortar operations will make a strong pitch to shoppers with seasonal doorbusters, new brick-and-mortar collaborations and discounts, enough so that Mastercard expects physical store sales to gain 7.9% versus the 2021 holiday season.

Despite inflation, consumers getting out of the house more often for work or fun are reassessing personal presentations and might be looking to indulge themselves and others. Mastercard expects holiday sales on apparel to increase 4.6%;  luxury, excluding jewelry, to increase 4.4%; and jewelry to increase 2.2%.

Mastercard anticipates holiday season revenues building on the momentum seen this summer, when U.S. retail sales, excluding automotive, gained 11.7% year over year with online sales up 8.9% compared with the year-earlier. Experiences gained, but furniture and furnishings sales were up 6.7% and home improvement sales gained 3.6% in August despite lodging sales increasing 38.4% and restaurant sales increasing 14.8% in the month.

“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.”

Steve Sadove, senior advisor for Mastercard and former CEO and chairman of Saks Inc. added, “This holiday retail season is bound to be far more promotional than the last. 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.”

Mastercard SpendingPulse measures in-store and online retail sales across all payment forms, the company asserted, but is not adjusted for inflation. Its holiday season assessments extend from November 1 to December 24.

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