Holiday Retail Sales Got a Boost From Early Promotions and Online Spending — But These Sectors Suffered the Most

Overall retail sales advanced in a holiday season marked by earlier-than-ever promotions and a spike in digital — but some categories appeared to suffer from pandemic-induced shifts in shopping behaviors.

According to a study by Mastercard Spendingpulse, total retail sales increased 3% over the course of the extended 75-day holiday period, running from Oct. 11 through Christmas Eve. (It rose 2.4% during the traditional holiday timeframe starting Nov. 1.) The market intelligence report, which tracked spending trends both online and in stores across all payment types, excluded the sales of gas and automobiles.

“American consumers turned the holiday season on its head, redefining ‘home for the holidays’ in a uniquely 2020 way,” said Steve Sadove, senior advisor for Mastercard and former CEO and chairman of Saks Inc. “They shopped from home for the home, leading to record e-commerce growth, and consumers shopped earlier than ever before.”

Researchers found that e-commerce — accounting for 19.7% of overall retail sales, up from 13.4% in 2019 — improved 49%. Amid the COVID-19 health crisis, safety concerns have forced people of all ages and socioeconomic backgrounds to flock to digital channels instead of brick-and-mortar outposts. Americans also opened up their wallets much earlier than anticipated as the majority of markdowns had begun in mid-October, thanks to Amazon’s delayed Prime Day event.

Over the past few months, shoppers spent not only more time but also more money on their homes: Mastercard reported that the category of furniture and furnishings experienced the strongest growth of any sector, jumping 16.2% in total and 31% online. Home improvement, in addition, was up 14.1%, with e-commerce sales surging 79.7%. Meanwhile, department stores fell 10.2%, while the weakest sectors were apparel and luxury, with respective declines of 19.1% and 21.1% year over year.

What’s more, the familiar scenes of the holidays — think crowded parking lots, lines outside stores and generalized chaos surrounding doorbuster deals — did not play out this year. Mastercard’s study showed that Black Friday sales were down 16.1%, even though it was considered the top spending day of the holiday shopping season.

Last month, the National Retail Federation predicted that holiday sales would rise 3.6% to 5.3%, amounting to between $755.3 billion and $766.7 billion. The trade group suggested that Americans have more disposable money as travel and entertainment costs have been largely sidelined, while renewed hopes for the coronavirus vaccine had prompted spending. However, millions of Americans also contended with unemployment and the expiration of critical jobless benefits.

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