Happy Holiday as Retail Sales Grow More Than Expected

Happy Holiday as Retail Sales Grow More Than Expected

Wednesday, January 06 2016

By Debra Borchardt

Santa Claus finally arrived for retailers as consumers stepped up following a slow start to holiday shopping, at least from the perspective of the just-released MasterCard SpendingPulse report.

The report, which examines sales trends in the U.S. including cash and check transactions, noted that retail sales grew 7.9 percent between Black Friday and Christmas Eve. That figure excludes autos and gas but includes e-commerce sales. Originally, many experts such as Deloitte and the National Retail Federation had forecast that sales would only grow 3.5 percent to 4 percent this holiday.

The report presents a more optimistic view than what retailers and analysts have been reporting – namely heavy markdowns in apparel and outerwear.

“After a slow start, I’m very happy to see that the holiday season was hot for retailers,” said Sarah Quinlan, senior vice president of Market Insights for MasterCard Advisors. “We saw some very promising trends. The double-digit growth in furniture sales, for instance, shows that consumers are willing and able to splurge on big-ticket items. E-commerce’s rise is a solid indication of an empowered and savvy shopper. We’ll be watching to see if this behavior continues into 2016.”

Women’s apparel was a big winner, where sales rose double-digits. The warm weather had delayed purchases to the point that pent-up demand caused sales to jump. Quinlan pointed out that women hadn’t purchased clothes for six months and the promotions were too good to pass up.

 

“Smaller boutique retailers [$50 million in sales or less] have been doing significantly better,” Quinlan said. The complaints of sameness of fashion helped the boutiques that were able to make their female customers feel special. The boutiques also tried to make the shopping trip more experiential, capitalizing on that trend.

Men’s apparel declined, though. Quinlan noted that men’s apparel sales had been pretty good this year, so it wasn’t a surprise to see it drop. “Wardrobes can be worn in and out of work, so people don’t need as many clothes anymore,” Quinlan said.

MasterCard said e-commerce sales grew about 20 percent compared to last year, which could have been the reason Christmas was saved for retailers.

Clearly, people were taking advantage of the ease of online shopping and the promises of free shipping. Amazon said three million people signed up for Amazon Prime membership during the third week of December alone. Membership offers free two-day shipping and more than 200 million items were shipped for free with Prime memberships this holiday season.

Mobile also became a favorite for shoppers as Amazon said nearly 70 percent of its customers used a mobile device this holiday. While some watch companies have struggled to keep up watch sales growth, Amazon said its customers purchased a watch every three seconds over the holiday season.

Women’s bestsellers in Amazon fashion were a Columbia fleece jacket, Skechers women’s slippers and a Rebecca Minkoff Mini Mac Crossbody bag. Bestsellers in Amazon’s men’s fashion included Levi’s, Clark’s desert boots and a Timex watch. Bestsellers in luxury beauty included Stila liquid eyeliner, L’Occitane hand cream and Mario Badescu lotion.

Gas savings also contributed to the holiday spending. MasterCard’s data showed that when gas purchases were included in the shopping report, sales only grew 2.7 percent. When that data was removed, overall retail sales excluding autos and gas rose 4.6 percent from the beginning of November to December.


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