Consumers ring in holiday spending growth

Preliminary data from Visa and Mastercard indicate healthy consumer spending growth this holiday season. Both companies define the holiday shopping season as Nov. 1 through Dec. 24.

Visa reported overall holiday spend was up 4.8 percent over 2023. Mastercard's preliminary insights put U.S. retail sales growth (excluding automotive) at 3.8 percent compared to the same period last year.

Consumer confidence up

Both data sets measure all forms of payment, including cash and check, not adjusted for inflation.

"This holiday shopping season, we're seeing increasing consumer confidence as people sought out in-store experiences – and went online – to purchase gifts and celebrate the holidays with friends and family," said Wayne Best, chief economist at Visa. "This spending growth demonstrates the adaptability of both consumers and retailers and the overall strength of the economy."

Visa's data shows consumers headed back to brick-and-mortar stores. Out of total retail spend in the United States, 77 percent of payment volume was in stores versus 23 percent online, Visa said. Total retail spending in stores grew at a rate of 4.1percent, compared to 1.6 percent last year.

Online retail spending grew by 7.1 percent, down from 10.34 percent last year, Visa reported, suggesting consumers continue to rely on the convenience and ease of ecommerce during the holiday season.

Here are some additional highlights from Visa:

• Electronics are hot. Growth in sales of electronic gadgets increased to 4.2 percent compared to 2.4 percent last year, indicating consumers turned their attention to their homes this year.

• Sales of clothing and accessories rose 5.0 percent versus 2.4 percent last year.

• Building materials sales increased by 4.7 percent, versus negative 3.9 percent last year, another indication that consumers are turning their attention to the comforts of home.

The most 'valuable' time of year

"The holiday shopping season revealed a consumer who is willing and able to spend but driven by a search for value as can be seen by concentrated ecommerce spending during the biggest promotional periods," said Michelle Meyer, chief economist at Mastercard Economics Institute. "Solid spending during this holiday season underscores the strength we observed from consumers all year, supported by the healthy labor market and household wealth gains."

Here are some key trends for the full holiday season as uncovered by Mastercard SpendingPulse.

• Consumers sought value at every turn, responding to promotions during the November and Black Friday shopping period, and filling their baskets in the run-up to Dec. 24.

• The last five days of the holiday season accounted for 10 percent of all holiday spending.

• Consumer demand for experiences like dining out strengthened during the holiday season, with restaurant spend growth up 6.3 percent compared to last year.

• The season saw an increase in spending growth on goods compared to last year, with apparel (up 3.5 percent), jewelry (4.0 percent), and electronics (3.7 percent) as notable sectors for gift giving.

• Consumers did a lot of "clicking" this year, with ecommerce, curbside pickup and delivery all top of mind. Online sales grew by 6.7 percent year-over-year, whereas in-store sales were up just 2.9 percent. Notably, the apparel sector showed a strong lead in ecommerce sales, with 6.7 percent growth for online sales vis-à-vis 2023.

• Ecommerce was especially popular among consumers in certain cities, where ecommerce sales were well above the national average. In Tampa, online sales were up 10.6 percent, and Phoenix saw a 10.0 percent jump in online sales. Other notable increases included Minneapolis (up 8.9 percent), Dallas (8.4 percent), Charlotte (7.9 percent), Orlando (7.8 percent) and Houston (7.6 percent).

"This holiday season we saw consumers motivated by deals and retailers respond with promotions to meet the demand," said Steve Sadove, Mastercard senior advisor, operating partner at MidOcean Partners and former chairman and CEO of Saks Inc., Mastercard senior advisor, and former chairman and CEO of Saks Inc. "The value-minded consumer showed up to shop at brick-and-mortar stores and ecommerce platforms, with retailers managing across both to capture attention throughout the season."

Fraudsters 'doubling down'

One dark trend amid all this spending is that fraudsters are "doubling down," Visa said. In early December, the card company reported that it blocked nearly double the amount of suspected fraud during the Black Friday to Cyber Monday weekend than it did during the same period last year.

Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.

Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.