Holiday shoppers avoided shopping, favoring online shopping

Retail sales in the U.S. rose 2.4 percent between Nov. 1 and Christmas Eve compared to the same period last year, according to Mastercard SpendingPulse, which tracks online spending and the store with all forms of payment. Online sales grew 47.2% during that time, the firm said. The account excludes gasoline and car sales.

This is lower than the sales growth of 3.6% to 5.2% forecast by the National Retail Federation, an industry group, last month. A more complete picture of holiday spending will emerge in the coming weeks, as the government reports on December retail sales figures and retailers report on financial results.

“It will be modest compared to what we’ve seen in the past,” said Rod Sides, head of retail and distribution practice at consulting firm Deloitte LLP. Sides said sales are likely to increase by a few percentage points, driven by department stores and online stores, as the rise in Covid-19 cases in recent months and new restrictions on public meetings go affect the results. “People who are playing catch up,” he said, continued to play to the beat.

The pandemic produced a season of extreme winner-loser purchases and, in many cases, reduced profits. For traditional retailers, selling online is usually less profitable than selling in stores because logistics and shipping costs increase.

Among those that came out well were large retailers like Amazon.com Inc.,

Walmart Inc.

and Target Corp., with agile e-commerce operations already in place before the pandemic, and selling products such as food, household items, holiday decorations and fitness supplies. Buyers have spent more on brightening up their homes or cooking more during the pandemic. Smaller retailers, who are more dependent on clothing sales or who are already struggling financially before the pandemic, have generally weakened this holiday season.

Between October 11 and Christmas Eve, clothing sales fell 19.1%, according to Mastercard, even as e-commerce sales in the category rose 15.7%. Department store sales fell 10.2%. Furniture and furniture sales rose 16.2% and home improvement sales rose 14.1%, the firm said.

Many shoppers avoided stores, even in the final weeks of the season, when it was harder to order products online in time for Christmas. Between November 1 and December 22, online sales reached $ 171.6 billion, up 32.4% from the same period last year, according to Adobe Analytics. Walking traffic to stores has dropped compared to last year throughout the season, even in recent weeks after many retailers stopped promising that online orders would arrive at Christmas. During the seven days leading up to Christmas Eve, store traffic fell 31.3% compared to last year, according to Sensormatic Solutions, which has cameras and software to track visits to thousands of shopping malls and shopping malls.

Retailers began marketing and holiday promotions in early October this year to reduce in-store overcrowding and ease the burden on the e-commerce supply chain. They also increased sales to fight Amazon’s Prime Day shopping event, which the e-commerce giant moved to in October this year. According to some sales data, buyers started spending earlier in response. Retail sales between Oct. 11 and Dec. 24 grew 3 percent, according to Mastercard.

Some retailers and brands still faced shipping messes due to online crush.

Some customers who had not received any orders from Lego.com earlier this week received a letter from “Santa’s Lego helper,” to give to the kids. “The elves have been working as hard as they can, but they have run out of supplies,” the letter said. “Since we have to get the pieces to the North Pole and the elves have to finish making the set, it might take a little longer.”

The non-mythical reason for the delay is the overburdened U.S. postal service, said Gay Walny, the father of two boys who received Santa’s letter. Walny ordered the Lego sets with Minecraft and Star Wars themes. On December 1st. Lego moved the order to the postal services system five days later, where it has been ever since, according to follow-up updates to Walny’s package.

“We’re actually Jews,” Walny said. “The kids didn’t get the letter either way.” He and his wife bought other Lego games in stores to give to their children in Hanukkah, said the co-owner of a 39-year-old truck parts company that lives in Chicago.

To help parents explain possible delays, Lego has also sent a similar letter in recent years, a Lego spokeswoman said. The company keeps shoppers informed of delays on its website, he said.

The postal service faces pressure on performance, similar to other operators, due to record holiday volume, a spokeswoman said. Added to this is the temporary shortage of employees due to the increase in Covid-19, he said. “We are accepting all the volume that is presented to us, which adds to our challenges,” he said.

The postal service is under pressure because it handles more overflows from United Parcel Service Inc.

and FedEx Corp.

, which limit the volume of packages they accept on their systems. After several weeks of rising delays at all three companies, on-time delivery rates improved the week of Dec. 13-19, according to ShipMatrix, a software vendor that analyzes shipping data. “Despite this marked improvement on the finish line, more than a million online orders still run the risk of not being delivered on Christmas Day, but many of these items are Covid-19-related home purchases and not holiday gifts, ”the firm said.

Retail profits could have a success of the rise online, executives and consultants said.

“We’re seeing a huge negative trend in profitability,” due to e-commerce growth this season, said Sonia Lapinsky, general manager of retail practice at AlixPartners, a consultancy. “Those who are doing well this year started investing in e-commerce years ago (the Walmarts, the Targets) and had the money to fix it,” he said. “Now the others are just fighting.”

Retailers reduce costs, including reducing the hours of work available to store employees, especially at small and medium-sized retailers. “Seasonal traders who hire seasonally do not occur every fall in the face of the holiday season,” said a spokeswoman for Ultimate Kronos Group, which supplies human and human resources programming technology primarily to small and medium-sized retailers. traditional and other companies. This year, the number of retail shifts worked fell 0.7% between mid-October and the week before Christmas, according to the group. The week before Christmas, traders had 12% fewer shifts worked compared to last year.

“There are simply fewer changes to go through,” the spokeswoman said.

Write to Sarah Nassauer to [email protected]