US Holiday Sales Expected to Increase 3% with Emphasis on Promotions, Forecasts Mastercard

U.S. retail sales are projected to increase by 3.2% during the holiday season, as retailers aim to attract budget-conscious shoppers amid a shorter shopping window this year, according to a forecast released on Thursday.

In comparison, retail sales saw a rise of 3.1% between November 1 and December 24 of 2023, as reported by the Mastercard Economics Institute. Their SpendingPulse data tracks both in-store and online sales across various payment methods, excluding automotive sales.

This year’s holiday shopping is particularly significant as consumers are expected to be selective in their spending habits. Major retailers, including Walmart, Target, and Amazon, as well as international companies like Shein and Temu, are anticipated to implement substantial discounts and promotions. The report noted, “Inflation is easing, and consumers are increasingly demanding promotions and discounts. Such incentives are no longer optional; they have become essential.”

The limited timeframe for shopping—only 27 days between Thanksgiving and Christmas—may prompt retailers to begin their promotional strategies earlier in the season. A separate forecast from Deloitte indicated that U.S. holiday sales will likely experience their slowest growth in six years.

Key figures reveal that online sales are expected to see a 7.1% increase this holiday season compared to last year. Spending on high-value electronics, such as televisions and laptops, may rise by 6.7%, driven by lower borrowing costs, reduced prices, and a need to replace older devices acquired during the pandemic. Recently, electronics retailer Best Buy announced plans to kick off its holiday sale for members at the end of the month.

As the holiday season approaches, the Federal Reserve recently initiated a series of anticipated interest rate cuts, beginning with a notable reduction of 50 basis points. This move is expected to alleviate some financial strains consumers have faced over the past two and a half years while the central bank tackled high inflation.

Despite these challenges, consumer spending has demonstrated resilience, with U.S. retail sales unexpectedly increasing in August due to strong online purchases. Government data indicates that the labor market is likely to continue delivering steady wage growth, which supports both consumer spending and the broader economy.