Santa Claus has come to town.
And to your mall. And to your phone, computer, tablet and email.
It’s too soon to fully capture holiday retail sales through the end of the year. But a wave of post-Christmas data puts the industry on track to meet record-breaking expectations.
On Wednesday, MasterCard SpendingPulse – which tracks retail spending trends – said holiday sales had seen the strongest growth in the past six years, surging 5.1 percent to more than $850 billion. Meanwhile, Amazon touted strong sales on millions of Amazon Devices, and broad use of the company’s free holiday shipping perks.
“In sales terms, this has definitely been a very strong holiday – one of the best since 1999,” said Neil Saunders, managing director of research firm GlobalData Retail. “Momentum in the consumer economy, confident shoppers and more discipline from retailers have all helped to boost spending.”
MasterCard SpendingPulse reported on holiday shopping from Nov. 1 through Dec. 24. Cold and wet weather posed some issues during Black Friday and the run-up to Christmas, but shoppers still managed to open their wallets. Apparel saw a growth rate of 7.9 percent compared to last year, according to the report.
Department stores, though, finished the season with a 1.3 percent decline from 2017, in part due to store closings. Still, online sales growth for department stores climbed 10.2 percent.
Amazon reported record-breaking sales of its own. In the U.S., more than one billion items shipped for free over the holidays with Prime. Even the company’s free two-hour delivery through Prime Now saved shoppers in a pinch: the last Prime Now delivery on Christmas Eve was made at 11:30 p.m. in Berkeley, California. The shipment included a LEGO Super Heroes Captain America Building Kit, a Hallmark card, Greek yogurt and shampoo.
(Amazon founder and chief executive Jeffrey Bezos also owns The Washington Post.)
Amazon also reported that more than 50 percent of items sold in the company’s stores this holiday season came from small and medium-sized businesses.
(Lest you think Amazon only tracked your package and shipping data, think again. According to the retail giant, Alexa set more than 100 million timers over the holidays. Eggnog and Moscow Mules were the most-requested drinks on Alexa, and the No. 1 holiday song was “All I Want for Christmas is You” by Mariah Carey.)
Retailers know that to position themselves for strong sales, they have to meet customers wherever they’re looking to buy, Saunders said. Stores with a strong brick-and-mortar presence, along with easy online shopping options, hooked consumers who went searching for both.
Even with the encouraging early sales figures, Saunders said he’s keeping an eye on profit numbers. Retailers are facing a “toxic mix of rising costs,” Saunders said, with higher labor and tariff costs weighing on their bottom lines.
“The main question now is can retailers keep this performance going as we move into 2019?” Saunders said. “Investors are very nervous about the prospects which is why retail stocks have taken a bit of a beating.”
The National Retail Federation expects sales in November and December to increase between 4.3 and 4.8 percent over 2017, reaching up to $720.89 billion. That forecast compares with an average annual increase of 3.9 percent over the past five years. (Labor Day handed the industry a running start: Americans spent a record $2 billion online then alone.)
November retail sales increased 5 percent over last year, according to NRF, putting holiday spending on track to meet the organization’s overall forecast. Strong consumer confidence was one driver, said Katherine Cullen, NRF’s director of industry and consumer insight – and will be important to watch given recent volatility in the stock market, Cullen said.
“Next year, besides the stock market, there’s also tariffs,” Cullen said. “There are some things that may start to impact consumer confidence, and we are keeping an eye on that.”
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