Mastercard Incorporated (NYSE:MA) has provided preliminary insights into consumer spending trends during the 2023 holiday season through its SpendingPulse report. The report, which measures in-store and online retail sales across all payment types, indicates key trends and changes in consumer behavior.
According to the report, U.S. retail sales (excluding automotive) saw a 3.1% improvement during the holiday season, which spanned from November 1 to December 24, compared to the same period in the previous year. However, this growth rate fell short of Mastercard’s earlier holiday season expectation of a 3.7% increase, as stated in September 2023, and the previous year’s growth of 7.6%.
Mastercard management had previously noted that consumers were expected to be selective and value-focused during the 2023 holiday season due to a wide array of choices and budget constraints. Inflationary challenges may have contributed to cautious spending, although favorable employment rates provided some relief. Early personalized promotions by retailers allowed consumers to access the best deals and promotions.
Further insights into retail trends include year-over-year improvements of 6.3% in e-commerce sales and 2.2% in in-store sales during the holiday season. Online retail sales outpaced in-store growth, highlighting the convenience and affordability of online shopping.
In the hospitality sector, restaurant spending increased notably by 7.8% during the holiday season, surpassing Mastercard’s growth expectation of 5.4%. Apparel sales saw a 2.4% year-over-year increase, while grocery item sales, considered essential, continued their growth streak with a 2.1% increase.
However, consumer spending on electronics and jewelry saw declines of 0.4% and 2%, respectively, compared to the corresponding period in the previous year.
The findings from Mastercard’s SpendingPulse take into account aggregate sales activity in the company’s payment network. The increase in U.S. retail sales implies higher transaction volumes processed in Mastercard’s payment network, leading to increased revenues. Mastercard generates revenues from charging fees to customers for offering network-related services and on the gross dollar volume of transactions through MA-branded cards.
Mastercard’s shares have gained 23.6% in the past year, outpacing the industry’s 22.4% increase. The insights from SpendingPulse provide valuable information for assessing consumer behavior and economic trends during the critical holiday shopping season.
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