Consumers are spending more this holiday season than they have in years, according to the 2017 Mastercard SpendingPulse report. MasterCard expects U.S. spending to be 5% more than the 2016 holiday cycle, making this holiday one of the best for retailers in more than a decade.
The most recent holiday shopping update evaluated spending from Nov. 1 through Dec. 9 and found consumers spent 3.6% more than a year ago.
“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. It is all playing out in the shopping picture this holiday season as retailers and gift recipients would want it to,” said Sarah Quinlan, senior vice president of market insights at Mastercard.
Online sales are up 16.3% since November, according to SpendingPulse. 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.
Early season promotions by retailers have paid off, according to Quinlan, as the first three weeks of November posted significant sales gains over a year ago. She said early bird shoppers were spending on electronics, home improvement and jewelry, though all categories saw growth, including apparel. Quinlan said home improvement sales are up 11.6% and home furnishings rose 3.6% over last year.
Loop Commerce, which offers GiftNow digital gifting service for dozens of retailers from Target to Macy’s, recently said apparel sales are having a stellar year for men and women. Men’s apparel, women’s handbags and women’s apparel were the top three digital gifts purchased by consumers between Black Friday and Dec. 9. Loop Commerce reports men’s apparel sales rose 19% in the survey period, while handbag sales and women’s apparel sales increased 17% and 15%, respectively, from a year ago.
Customer Growth Partners recently raised its 2017 holiday spending forecast to 5.6%, up from 4.3% previously. The update was based on data gleaned from the November Department of Commerce report.
“Accelerating rapidly after several years of tepid growth, holiday spending is seeing its best performance in years, with widespread gains both in stores and online, and across both value and upmarket formats,” CGP president Craig Johnson noted in a release.
Johnson said for the first time in years growing spending momentum is evident across all demographics, not just among upper-income families. He said the biggest driver of retail spending is growth in real disposable income.
“We’re seeing solid job growth in both services and manufacturing, record stock markets, low inflation, and at least moderate wage growth, so all the ingredients are in place for a sustained rebound in consumer spending — which accounts for 70% of GDP,” Johnson said.
He adds that if the December sales pace continues, 2017 will be the biggest growth year for retailers since 2005, when sales rose 6.1%. CGP raised the total holiday spend projection to $671 billion, up from $663 billion originally forecast in October. Johnson said if the forecast holds it will represent a 5.6% year-over-year increase in total sales.
“Holiday 2017 is poised to turn out better than many expected – and may well be a lot better,” Johnson said. “After years in hibernation, consumers are finally flexing their spending muscles. Now, the cash registers are ringing – giving retailers, despite years in the doldrums, some real holiday cheer, to cheer about.”