US retailers got a present this Christmas: their highest holiday sales in years

Sales were good this holiday, Mastercard says.
Sales were good this holiday, Mastercard says.
Image: Adam Hunger/AP Images for Target
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American retailers had a tough time in 2017. The year saw widespread store closures, while companies were trying to maintain their footing as the way Americans shop continued to shift underneath them.

But the holiday season has brought them some welcome news—so far. The early indications are that sales grew at their highest level in years.

Between Nov. 1 and Dec. 24 (Christmas Eve), holiday retail sales, excluding automotive, rose 4.9% versus the same period last year, according to Mastercard SpendingPulse. It marks the largest year-over-year increase Mastercard has tracked since 2011.

Their data is based on an aggregate of all the sales activity in Mastercard’s own payment network, combined with survey-based estimates for payment forms it doesn’t track directly, such as cash and check. Retail sales figures are often revised later as a more thorough analysis is completed, though Mastercard’s rely on sales they’re tracking almost immediately themselves, makng them a solid barometer for the market.

Compared to the numbers Mastercard has recorded over the past several years, 2017 saw a notable pickup in sales growth. As the Wall Street Journal reported (paywall), the company said holiday sales grew 6.8% in 2011, before dipping substantially and falling to a low of 2.4% in 2014. But since then, growth has been gradually rising again.

Sarah Quinlan, senior vice president of market insights at Mastercard, called the 2017 results a “big win” for retailers, who are adjusting to changing consumer behavior. “The strong U.S. economy was a contributing factor, but we also have to recognize that retailers who tried new strategies to engage holiday shoppers were the beneficiaries of this sales increase,” she said in a statement.

This year, US shoppers spent eagerly on electronics and appliances, which saw sales rise 7.5%, the category’s strongest performance of the last decade. Home improvement and furniture spending also saw a healthy increase.

Clothing stores and department stores saw “moderate gains,” Mastercard said, which was actually a good sign. Shoppers tend to do most of their buying at these retailers in-store, but the spate of store closures over 2017 made that more difficult.

Unsurprisingly, more holiday shopping moved online this season; e-commerce sales grew 18.1% versus last year.

Mastercard also said that heavy early promotions, starting at the beginning of November, were one driver of the strong 2017 sales. Retailers would undoubtedly prefer to run fewer promotions and do more full-price selling, but that wish looks less likely to come true as shoppers get used to buying at a discount and Amazon keeps pressure on prices. Which means that big price cuts starting early in the season are likely to appear in 2018, too.