Consumer Behavior

Holiday season sales growth may hit over 7%

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September 14, 2022

The U.S. retail sales this holiday season are expected to grow 7.1%, compared to last year, despite inflation and reported cutback by consumers when it comes to spending.

That's the prime finding of the Mastercard Spending Pulse annual holiday forecast.

"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," Michelle Meyer, U.S. chief economist, Mastercard Economics Institute, said in a press release on the report's prediction. "New job creation, rising wages and lingering savings should have many consumers ready and able to spend."

Last year's holiday season brought a sales growth of over 8.5% and that growth was due to pent up consumer demand given the two years of the COVID-19 pandemic that sent shoppers online.

The report also noted that shoppers were likely to begin buying early this holiday season and on the quest for early season deals.

That may prove to be a boon for Amazon which announced this summer it would hold a second Prime Day sales event sometime this fall.

Yet consumers are also clearly returning to the brick-and-mortar shopping experience, according to the Mastercard study, as in-store retail sales are expected to increase 7.9%, compared to last year. In-store spending has made up more than four out of five retail sales between January of this year and August.

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

"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."