Mastercard Bullish on Holiday

Commerce Signals — Online purchases for fashion retailers peaked at 95 percent in 2020 and subsequently fell over three years to 47 percent. kasto - stock.adobe.com

Though some retailers saw declines in traffic in August amid rising COVID-19 cases, there’s no letup on bullish expectations for the holiday season.

Apparel, jewelry and luxury should score during the fourth quarter of 2021, compared to 2020 and even compared to 2019 pre-pandemic levels, according to Mastercard.

The Mastercard Spending Pulse reported Wednesday that U.S. retail sales are anticipated to grow 7.4 percent excluding automotive and gas. Consumers are expected to spend online at even higher rates, 7.6 percent higher than last year, while in-store sales are also expected to see a rebound, growing 8.9 percent compared to 2020.

For the November to December 2021 holiday season, apparel sales will jump 45.9 percent, jewelry will jump 59 percent, and luxury will soar 92.5 percent, compared to the 2020 holiday season. Department stores will be up 14.8 percent.

Compared to 2019, Mastercard said holiday apparel sales this year will be up 17 percent; jewelry will be up 52.9 percent; luxury up 55.8 percent, and department store sales will rise 5.2 percent.

“This holiday season will be defined by early shopping, bigger price tags and digital experiences. Over the past two years, retailers have learned a lot about what shoppers want and need, bringing us into an exciting new age of retail resilience,” said Steve Sadove, senior adviser for Mastercard and former chairman and chief executive officer of Saks Inc. “Retailers have been preparing for this moment and will find innovative ways to deliver on what’s bound to be the biggest holiday shopping season yet.”

The Mastercard Spending Pulse measures overall U.S. retail sales across all payment types including cash and check. Mastercard SpendingPulse reports on national retail sales across all payment types in select markets around the world. The findings are based on aggregate sales activity in the Mastercard payments network, coupled with survey-based estimates for certain other payment forms, such as cash and check.

Mastercard did indicate that factors such as future stimulus decisions and COVID-19 challenges could impact sales forecasts.

Three CEOs of multichannel brands told WWD they saw a decline in store traffic in August, which they attributed to COVID-19. But two of the three indicated they didn’t really lose business because those shoppers who did show up in the stores ended up spending enough to make up for the lost traffic, partly because they got better service with fewer customers around.

In terms of store traffic, “June and July were strong. August tapered off, but this month it’s back,” said one CEO of a high-end brand, who noted that people are returning to the cities, schools are back in session, and fall events and social activities are revving up again, encouraging people to get out more, and shop for themselves and their families.

Last week, Jack Schwefel, CEO of Vince Holdings, told WWD: “We’ve got nice momentum in retail and online, though I’m not as optimistic as six or seven weeks ago, before the rise of the Delta variant. But we are holding tough. We are definitely seeing store traffic erosion, but we have been able to drive up average orders, and work more on an individual basis with customers which is what a specialty store should do.”

“At the moment it is difficult to tell how much of an impact the Delta variant is having on retail traffic. While there are clearly audiences that are shifting behaviors as a result, wider surges in the back-to-school season indicate that many are still comfortable with the current retail environment,” Ethan Chernofsky, vice president of marketing at Placer.ai, a company that tracks store traffic, told WWD. “The reality is that some degree of retail impact is likely to continue for months to come, but much of this can be offset by an extended period of pent-up demand and key shopping periods like back-to-school and the holiday season. The key factor though does seem to be regulation, where limitations are put in place, visits are affected.

“Looking at the impact and continuation of the pandemic globally shows that we are still far away from a post-COVID-19 world, and instead are living in an environment defined by living, working and shopping alongside it. This puts an added emphasis on the need for brands to develop multichannel strength to deliver effectively as the impact of the virus continues to ebb and flow.”

In its summer 2021 recap report, Placer.ai. cited “concerns that the rise in COVID-19 cases could impact visits — and the Placer Mall Index showed that may have already been at play by August. After seeing a consistent visit improvement — with visits up in July for indoor and outdoor malls — visits for both categories returned to declines in August. Indoor malls saw visits down 2.5 percent compared to August 2019, while outdoor malls were down an even more significant 4.6 percent.

However, Placer.ai also indicated part of the August decline may have been due to Labor Day, a major sales period, happening four days later this year compared to two years ago, pulling some business out of August.

Placer.ai’s data is from a panel of 30 million mobile devices using AI and machine learning to make estimates on visits to stores, malls and other types of businesses and locations.