Mastercard: Retail sales heat up in August, look good for holidays

In-store and online U.S. retail sales climbed in August, and the holiday forecast is cheery despite inflation.

According to MasterCard Spending Pulse, which measures in-store and online retail sales across all forms of payment, U.S. retail sales excluding automotive in August 2022 were up 11.7% year-over-year and 20.4% compared to 2019. Online sales in August grew +8.9% and +100.2%, respectively, compared to the same periods.

According to MasterCard Spending Pulse analysis, experiential retail sectors in particular, including restaurants, airlines and lodging, saw strong double-digit growth. This followed overall strong retail sales performance in July 2022.

Holiday sales look happy for retailers
The Mastercard SpendingPulse annual holiday forecast indicates that during the upcoming 2022 holiday season, U.S. retail sales excluding automotive are expected to increase 7.1% year over year. This follows 8.5% annual growth Mastercard SpendingPulse recorded during the 2021 holiday season.

“This holiday season, consumers may find themselves looking for ways to navigate the inflationary environment – from searching for deals to making trade-offs that allow for extra room in their gift-giving budgets,” said Michelle Meyer, U.S. chief economist, Mastercard Economics Institute. “New job creation, rising wages and lingering savings should have many consumers ready and able to spend.”

According to the analysis, key 2022 holiday sales trends to watch include:

• Extended holiday shopping: Some of the season’s retail growth is expected to be pulled forward in October (Mastercard SpendingPulse analyzes the holiday season as officially occurring from Nov. 1- Dec. 24) as consumers hunt for early deals. Key promotional days like Black Friday weekend are also expected to make a strong return, along with Christmas Eve, which falls on a Saturday this year and is expected to be among the biggest days for retailers and last-minute shoppers.
• Season of savings: Consumers are looking to stretch their dollars in the face of inflation. E-commerce is anticipated to increase despite significant growth in the 2021 holiday season, as the channel remains a convenient way for consumers to check prices in real time.

• In-store experiences draw shoppers to stores: In-store retail sales are expected to be up +7.9% year-over-year. While e-commerce has seen marked growth in recent years, in-store spending made up more than 80% of retail sales from January through August 2022.

• Fashion-forward gifting: Apparel (+4.6% year-over-year) and luxury (+4.4% year-over-year) are expected to be hot holiday gift sectors.

“This holiday retail season is bound to be far more promotional than the last,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Inc. “Easing supply chain issues coupled with the rapid shift in consumer spending trends and over-ordering inventory have left retailers in an interesting position ahead of the holidays. Retailers that were able to clear past merchandise and accurately forecast inventory needs will be the best positioned for growth.”

Mastercard SpendingPulse findings are based on aggregate sales activity in the Mastercard payments network, coupled with survey-based estimates for certain other payment forms, such as cash and check.