Online purchases propel holiday spending surge

CHICAGO – Retailers received a gift from shoppers this season, according to early data on holiday retail sales.

Sales, excluding automobiles, were up 4.9 percent between Nov. 1 and Christmas Eve, the largest year-over-year increase since 2011, according to MasterCard SpendingPulse, which tracks online and in-store spending.

"I think people were a little too negative going into this holiday season," said Sarah Quinlan, senior vice president of Market Insights at MasterCard. "We could see the consumer was more and more confident each month."

Rising retail sales — especially for bigger-ticket durable goods — were a sign consumers were feeling good about the economy and would be more willing to open their wallets, Quinlan said.

"Low unemployment and gains in housing prices and equity prices all give people a sense of security, and I think that gives them a sense of willingness to spend," said Jack Kleinhenz, chief economist at the National Retail Federation.

The first three weeks of November saw significant increases in spending, which MasterCard attributed to retailers' efforts to get shoppers in stores with sales early in the season.

But customers also took advantage of the fact that Christmas fell on a Monday, leaving a full weekend for last-minute shopping.

And even though most families have unwrapped their gifts and emptied their stockings, industry watchers said retailers' cash registers will keep ringing this week.

Chicago-based retail research firm ShopperTrak predicted Tuesday, the day after Christmas, would be the fourth-busiest of the season in stores, with this coming Saturday ranking ninth.

"The week after Christmas is when a lot of people have time off, and they're doing a lot of shopping in addition to returns," Quinlan said. "It's always a very strong week."

About 5 percent of consumers expected to finish buying gifts after Christmas Day, according to the National Retail Federation, which surveyed 7,212 people about their holiday shopping plans between Dec. 4 and Dec. 12.

They aren't just picking up final last-minute stocking stuffers, either, according to a survey by the Deloitte firm. About 17 percent of Chicago shoppers surveyed expected to spend at least a quarter of their holiday budget after Christmas.

Returns and gift cards help drive post-holiday spending, too, Kleinhenz said.

"Retailers want people to come in and redeem gift cards because they often buy more than the value of the card, which helps move merchandise and keeps spending going into January," he said.

While the season is shaping up to be very good for retailers overall, they aren't all sharing equally in consumers' holiday cheer, Quinlan said. Much of the growth MasterCard reported was powered by online shopping, up 18.1 percent compared with the same holiday period in 2016.

Shoppers were willing to open their wallets to spend on items for their homes, Quinlan said. Electronics and appliance sales were up 7.5 percent compared with the 2016 holiday season, and home furniture and furnishings sales grew by 5.1 percent.

Apparel sales, however, had been down until the final week before Christmas, before a last-minute surge brought growth in the low single digits, Quinlan said.