Holiday 2017 may show strongest growth since 2010

Dive Brief:

Holiday sales are projected to contribute a 3.6% boost over last season, on par with last year's growth rate, but overall potential is set to surpass 5% year-over-year growth once it’s all tallied, showing the strongest holiday season growth rates since 2010, according to the latest U.S. Retail Holiday Shopping Mid-Season Update from Mastercard SpendingPulse.
Much of the growth is online: E-commerce sales are up 16.3% since November, according to the report, which tracked spending from Nov. 1 through Dec. 9. While Black Friday still accounts for significant dollar volumes, Cyber Week (Nov. 27-Dec. 3) saw higher growth this year, with sales up 5% compared to last year.
In-store traffic and conversions were also up this weekend, according to a Retail Metrics report emailed to Retail Dive. Lines at Kohl’s, TJX and Marshall’s were long, even with multiple registers open, parking lots were near full capacity and significant traffic exited malls. "We must admit Holiday 2017 at the brick-and-mortar level has been stronger than we expected," Retail Metrics president Ken Perkins said in a statement.

Dive Insight:

Early bird shoppers have mostly spent money on electronics, home improvement and jewelry, though all retail categories are growing, including apparel, according to Mastercard's report. Home-related purchases are "way up," according to Mastercard’s report: Not only did home improvement grow 11.6%, but home furniture and furnishings sales were also up 3.5%.

The holiday shopping season has been a healthy one globally too, with similar trends playing out across the Atlantic, according to Mastercard's report. U.K. retail sales rose 3.1% in November, with 12.2% growth in online sales there. Categories like furniture and electronics were among the big winners abroad.

"When we look at holiday spend, it’s easy to see that 2017 will likely be a good year for retailers. Unemployment is at 4.1%, wages are rising, consumers are confident," Mastercard senior vice president of market insights Sarah Quinlan said in a statement. "It is all playing out in the shopping picture this holiday season as retailers and gift recipients would want it to."

Perkins, also noting the unemployment number, agrees. "The American economy is in its best condition since prior to the financial crisis,"he said. "Consumer confidence is at 17-year highs, equity markets are in record territory, housing has posted steady gains for much of the current recovery, and wage growth has been steadily around 3% [or more], according to the Atlanta Fed Wage Tracker over the past 2.5 years. We have seen a handful of retail industry analysts raise calendar fourth quarter earnings projections ahead of the Christmas holiday based on relatively positive results to date. Even lines for pictures with Santa Claus have been longer this year."

Increased visits to physical stores are surprising, he said. "With sharp foot traffic declines in each of the last three years, along with huge share gains accruing to Amazon, we expected a similar rate of decline this year that has simply not materialized," he noted. "That being said, e-commerce transactions and sales continue to experience double-digit growth and put strain on shippers such as DHL and UPS."

Indeed, that could only grow worse as some retailers, including Amazon and Target, have extended their free shipping deadlines for deliveries in time for Christmas.

This story is part of our ongoing coverage of the 2017 holiday shopping season. You can browse our holiday page and sign up for our holiday newsletter for more stories.