Holiday retail sales in the United States have exceeded expectations this year, with shoppers chasing discounts on apparel, gadgets, and more. According to Mastercard SpendingPulse data, retail sales from 1 November to 24 December grew by 3.8% compared to the same period last year. This growth reflects consumer resilience, bolstered by experts attributing it to a strong labour market and increased household wealth. Online shopping has been a key driver, spiking by 6.7%, while in-person retail also posted moderate gains of 2.9%.
This season’s retail activity reveals fascinating insights into consumer behaviour, with some categories like electronics and jewellery enjoying standout growth. Here’s what you need to know about this year’s holiday spending trends and how shoppers balanced value with indulgence.
Shoppers Focused on Value this Season
Discounts and deals played a central role in driving holiday retail activity. “The holiday shopping season revealed a consumer who is willing and able to spend but driven by a search for value,” said Michelle Meyer, Chief Economist at the Mastercard Economics Institute. Buyers remained cautious, seeking bargains without eliminating discretionary spending altogether.
Retailers catered to this demand with appealing promotions, particularly for popular categories such as apparel, electronics, personal care products, and sporting goods. Price drops or minimal increases in these categories helped sustain spending levels despite broader economic challenges.
The National Retail Federation echoed Mastercard’s sentiment, forecasting an increase in sales fuelled by enhanced promotional campaigns, thus creating significant buzz during key shopping holidays like Black Friday and Cyber Monday.
Online Shopping Takes the Lead
Consumers increasingly turned to e-commerce platforms this season, reflecting a long-term trend favouring online shopping. Data from Mastercard shows online retail sales surged by 6.7%, outpacing a modest 2.9% growth for in-store purchases. Adobe Analytics revealed a record $41.1 billion spent online between Thanksgiving and Cyber Monday. Black Friday and Cyber Monday alone accounted for significant chunks, with $10.8 billion and $13.3 billion spent respectively.
Digital channels offered shoppers unparalleled convenience and access to aggressive deals. Platforms such as Amazon, eBay, Temu, and TikTok Shop were among the clear winners, with affluent consumers conducting the bulk of their holiday shopping online.
Electronics and Apparel Drive Sales
Consumers enjoyed deeper discounts on electronics this season, with the category witnessing a strong 3.7% growth. Items such as smartwatches, gaming consoles like PlayStation 5, and home appliances saw renewed interest. Higher earners particularly focused on durable goods like laptops and cell phones, increasing their spending in anticipation of future price hikes.
Apparel also saw solid growth, registering a 3.6% increase as consumers purchased sweaters, seasonal outfits, and accessories. Data suggests that promotions in this category attracted cautious shoppers searching for affordable yet fashionable gift options.
Dining and Jewellery Shine this Holiday Season
Interestingly, consumer habits weren’t limited to gifting retail goods. Dining out saw a notable rise, with restaurant spending increasing by 6.3%. This signals a willingness among consumers to prioritise social gatherings and culinary experiences even in a tighter economy.
Jewellery emerged as another strong performer, rebounding from a decline last year to post a 4% growth rate this holiday season. Luxury brands like Cartier and Tiffany benefited significantly, but affordable jewellery brands also capitalised on millennial and Gen Z buyers becoming frequent shoppers. According to Mastercard, shoppers under 45 accounted for 44% of jewellery transactions, up from 38% the year prior.
Shoppers Bypass Big-Box Retailers
Despite robust overall performance, some U.S. retailers struggled with evolving customer preferences and tighter budgets. Traditional players like The Container Store and Party City filed for bankruptcy, while Big Lots announced plans to close hundreds of stores. Many department stores have struggled to compete with retailers like Walmart and Amazon, which boast advanced logistics and supply operations.
Discount retailers such as dollar stores gained traction, with a 7% spending increase during Black Friday to Cyber Monday. Meanwhile, Walmart enjoyed traffic from wealthier households looking for cost savings on high-ticket items.
Jewellery’s Young, Brand-Savvy Audience
Younger demographics provided a fresh boost to holiday jewellery sales. Millennials and Gen Z represented nearly half (44%) of all jewellery transactions, marking a significant rise from 2022’s 38%. Retailers’ efforts to appeal to these age groups bore fruit, as both luxury and affordable brands saw sales climb.
Well-known names such as Cartier and Tiffany stood out in the luxury sector, but millennial-focused, budget-friendly jewellery brands also benefited from this demand surge.
Future Implications for U.S. Retail
Overall, holiday retail sales surpassed forecasts, underscoring consumer willingness to spend strategically rather than abandon their habits. Innovations in promotions and e-commerce have contributed significantly, showing how retailers increasingly rely on digital channels to meet changing shopping behaviours. However, the strain on traditional retailers highlights the ongoing need to adapt to an increasingly digitised and competitive retail landscape.
While economic uncertainty continues to loom, the strength of the labour market and consumer resilience lies at the core of the current retail surge. Retailers who adapt quickly to these trends—focusing on hybrid shopping experiences and competitive pricing—are likely to emerge stronger in the year ahead.
Learnings from This Holiday Season
This season reaffirms the importance of understanding consumer needs and being agile in addressing those demands. Promotions that speak to value-focused shoppers while catering to younger, digital-savvy customers have demonstrated their effectiveness.
Retailers and brands must remain vigilant to competing pressures and consumer expectations for convenience and affordability. From evolving e-commerce strategies to maintaining supply chain efficiencies, achieving a balance between innovation and operational agility will shape the next wave of winners in U.S. retail.
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