PURCHASE, N.Y.—A new forecast for the upcoming holiday season foresees muted spending but also includes a suggested strategy for capturing consumer and member spend.
While it’s still months away, the new forecast for the 2023 holiday season—defined as Nov. 1-Dec. 24—predicts retail sales will increase 3.7.% year over year. The prediction, based on MasterCard SpendingPulse data, excludes automotive sales.
The anticipated growth in retail in the U.S. reinforces continued consumer resilience, Mastercard said.
Mastercard SpendingPulse measures in-store and online retail sales across all forms of payment and is not adjusted for inflation.
‘Broader Rebalancing’
“Looking back at the 2022 holiday shopping season, inflationary pricing and pent-up demand, coupled with excess savings and rising wages allowed consumers and retailers to navigate the season well,” the company said. “After years of inventory and spending habits being in flux, the 2023 season will bring a broader rebalancing across categories, channels, and sectors in alignment with macroeconomic trends.”
Added Michelle Meyer, U.S. chief economist with the Mastercard Economics Institute, “While the consumer of holidays past may have been a consumer trying to find footing in a rapidly shifting economy, the consumer of holidays present has taken their power back. We expect these individuals to impressively navigate the holiday season, making choices and trade-offs that best suit their lifestyles.”
Trends to Watch
According to Mastercard, trends to watch in 2023:
- Spreading Cheer Across Channels. “While digital shopping habits became the new normal during the pandemic, this season’s shopper is looking to make purchases anytime, anywhere – in-store and online. With this omnichannel approach in mind, consumers are anticipated to shop across channels, with e-commerce expected to increase +6.7%, and in-store sales to increase +2.9% YOY,” Mastercard said.
- Tech the Halls. “Electronics, gadgets and gaming might be at the top of many wish lists this year as AI, immersive experiences and digital workspaces continue to evolve the way we work and play,” Mastercard stated. “Further, consumers who purchased new gadgets during the pandemic could be looking to upgrade to the latest model. Electronics are anticipated to increase +6.0% YOY this season.”
- Festive Feasting. The Restaurant sector is expected to continue its growth streak, increasing +5.4% YOY, outpacing Grocery growth (+3.9%), as consumers make plans to gather around tables and with loved ones for shared meals, activities, and festivities outside of the home, according to the forecast.
‘Most Effective Strategy’
“This holiday season, retailers will be vying for consumer dollars. With numerous choices and tightening budgets, you can anticipate shoppers to be increasingly selective and value-focused,” said Steve Sadove, senior advisor for Mastercard and former CEO and chairman of Saks Incorporated. “We expect the most effective holiday strategy will be to meet consumers where they are – personalized promotions to in-store experiences will be key in doing so.”
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