U.S. retail sales, excluding automotive, are expected to increase 7.1 percent year-over-year this holiday season, according to the Mastercard SpendingPulse annual holiday forecast.

Mastercard SpendingPulse measures in-store and online retail sales across all forms of payment and is not adjusted for inflation.

“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.”

Mastercard said the 2021 holiday season was resurgent for retailers, up +8.5 percent, as pandemic-induced pent-up demand, excess savings and supply chain issues sent shoppers stocking their carts to secure gifts. The holidays are expected to be another joyous retail season this year. 

Key trends include:

  • Extended holiday shopping: With holiday shopping forecasted to begin early again this year, some of the season’s retail growth will pull forward in October as consumers look for early deals. Key promotional days, including Black Friday, are also expected to return strongly, with Christmas Eve, which falls on a Saturday.
  • ‘Tis the season of savings: As inflation impacts consumer spending, sales will be in full force this holiday season as consumers look to stretch their money and get the most bang for their buck. E-commerce is forecasted to increase despite growth last year, up +4.2 percent YOY/ +69.2 percent YO3Y, as the channel remains a convenient way for consumers to check prices in real-time.
  • In-store experiences draw shoppers to stores: From the return of holiday doorbusters to brick-and-mortar collaborations, retailers aim to boost holiday enjoyment by driving consumers into stores. In-store retail sales are expected to be up +7.9 percent YOY/ +10.4 percent YO3Y. While e-commerce has grown recently, in-store spending accounted for more than 4/ 5 of retail sales from January through August 2022.
  • Fashion-forward gifting: Following nearly two years of loungewear and athleisure, consumers have revamped wardrobes to include social events and platforms. Apparel (+4.6 percent YOY/ +25.3 percent YO3Y) and Luxury (+4.4 percent YOY/ +29.6 percent YO3Y) are considered holiday gift categories.

“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 able to clear past merchandise and accurately forecast inventory needs will be the best positioned for growth.”

Mastercard SpendingPulse August Actuals

The holiday season builds on the momentum this summer, with U.S. retail sales, excluding automotive, in August up +11.7 percent year-over-year and +20.4 percent compared to 2019. Online sales in August grew +8.9 percent and +100.2 percent, respectively, compared to the same periods. Experiential sectors, including Restaurants, Airlines and Lodging, saw double-digit growth.