Despite pressure on household finances, consumer shopping activity contributed to double-digit growth across nearly all retail sectors in May, according to Mastercard SpendingPulse, which measures in-store and online retail revenues across all forms of payment, something that bodes well for the back-to-school season.
SpendingPulse research indicated that in the mid-July through Labor Day back-to-school period, retail sales will grow 7.5% in the United States excluding automotive, over the 2021 timeframe. Mastercard anticipates an 18.3% back-to-school sales increase compared to pre-pandemic 2019, with department stores expected to be a noteworthy winner as the sector continues its recent rebound.
Sales gains are not adjusted for inflation, Mastercard noted.
The SpendingPulse research demonstrated that May sales across total U.S. retail, excluding automotive, increased 10.5% year over year in May, and 21.4% compared to pre-pandemic May 2019. As such it outpaced the year-over-year monthly growth experienced thus far in 2022. In-store sales were a key driver, up 13.7% when compared with pre-pandemic levels.
The resilience and flexibility of the consumer will define the back to school, Mastercard asserted. How they address their desire for fresh styles and new experiences under continued price pressures will tell in back-to-school spending. Retail trends Mastercard sees as being prominent for the 2022 back-to-school season include:
- The In-Store Experience. Shopping for back to school is its own experience and the return to stores should advance sales in physical spaces by 8.2% year over year and 9.9% on a three-year basis.
- Department Stores Continue their Rebound. Following a multi-year decline, department stores have enjoyed 15 consecutive months of sustained growth and look to enjoy 13% year over year and 27.3% three-year sales gains during the back-to-school season.
- Stacked Social Calendars Drive Apparel Growth. Consumers will be making up postponed gatherings, vacations and events such as weddings, lifting apparel sales in-store and online a total of 8.7% year over year and 15.9% on a three-year basis.
“Back-to-school is the second-biggest season for retailers and is often looked at as an early indicator of retail momentum ahead of the traditional holiday season,” said Steve Sadove, Mastercard senior advisor and former Saks CEO and chairman. “While Mastercard SpendingPulse anticipates growth across sectors, retailers will need to find innovative ways to entice shoppers as discretionary spending potentially stretches thin as a result of increasing prices.”