US consumers preferred restaurants and grocery stores to jewelry and electronics as they spent money during the holiday season. according to preliminary insights from Mastercard SpendingPulse, U.S. retail sales.
Spending on electronics was down 0.4% this year and jewelry slipped by 2%. Meanwhile, restaurant spending increased by 7.8% and grocery was up by 2.1%.
These spend categories coincide with JLL research, according to James Cook, Americas Director of Research, Retail. “We’ve been watching shoppers pull back on certain categories in favor of others since the beginning of the year,” Cook tells GlobeSt.com. “Our JLL 2023 Holiday Shopping Survey Report predicted that seasonal spending would grow most in the food and experiences categories.”
The pulse excludes automotive and travel services. Overall, consumers increased spending by +3.1% year over year this holiday season from Nov. 1 through Dec. 24. The pulse includes online and in-store purchases with all forms of payment.
National Retail Federation and ICSC, among others, predicted a record holiday shopping season.
MasterCard also reported that online retail sales increased +6.3% year over year while in-store sales were up +2.2% year over year. “Spending online is increasing at a faster pace than in-store, therefore taking a growing slice of the retail pie, but shopping in-store still makes up a considerably larger portion of total retail spending,” it said. Reading between the lines, what these numbers show is that brick and mortar retail is a battle tested warrior, says Mark Sigal, CEO of Datex Property Solutions. “The online vs. offline numbers are emblematic of a greater truth that retail is increasingly becoming omni-channel, all to better serve a consumer that is mobile and who likes their optionality,” he said.
But some say that these numbers – or rather, the story they purport to tell – may be deceptive given the elevated inflation that dogged consumers throughout the year. “Yes, spending is up year over year, but costs of goods are higher, so this data can be misleading,” Will McDonough, Chairman and Founder of Corestone Capital, tells GlobeSt.com. “People bought fewer things, but those things cost more this year than last, and so on a ‘notional’ basis, spending was in fact, down.”
It would also be prudent not to assume that the higher spending during the holiday season will translate into more robust retail sales next year, McDonough added. “People are tightening their bootstraps for a tough 2024 with high costs of debt, high levels of debt, and high costs of goods, setting up for a scary first half of the year.”
Consumers are still reeling from the sticker shock of rising prices this year, says Joseph S. Latina II, SIOR, Managing Principal LMT Commercial Realty, LLC./CORFAC International. They may have spent more over the holiday season because the easing inflation and job growth gave them confidence. “Unfortunately, they may not necessarily be purchasing more things, just spending more on the things that they purchase.”
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