Online sales drove the strongest U.S. holiday retail sales growth since 2012, according to one early report, adding on to what has already been a record-setting holiday shopping season that some economists attribute to strong consumer fundamentals, low gas prices and favorable weather conditions.
According to Mastercard SpendingPulse, an analytics solution for retailers, holiday retail sales between Nov. 1 and Dec. 24 amounted to more than $850 billion, a 5.1% year-over-year rise and the strongest annual growth in six years.
On top of the impressive top-line number, several retail segments fared very well through Christmas Eve.
According to the Mastercard report, online sales during the holiday season rose by 19.1% over the same period in 2017. Adobe Analytics, meanwhile, said a record $110.6 billion was spent online between Nov. 1 and Dec. 19, which marked a $16.7 billion, or 17.8%, year-over-year increase.
Amazon.com Inc. said Dec. 26 that 2018 was a "record-breaking" holiday season with more items ordered through the site than ever before, although the e-commerce giant did not report exact figures.
Meanwhile, sales at home improvement stores rose by 9.0% year over year, while apparel sales — still riding the tailwinds from a strong early fall sales season — rose by 7.9% year over year during the holiday season, according to Mastercard, which tracked retail spending of all types, including by cash and check.
"By combining the right inventory with the right mix of online versus in-store, many retailers were able to give consumers what they wanted via the right shopping channels," Mastercard Senior Adviser Steve Sadove said in a news release.
The report did note, however, that sales of electronics and appliances were down by 0.7%, while sales at department stores fell 1.3% year over year.
Evan Gold, executive vice president of global partnerships and alliances for Planalytics, a weather analytics firm, said that favorable weather likely provided retailers a strong push during the final weekend ahead of Christmas for last-minute shoppers.
Gold said that the more than 5% annual rise was on the upper end of expectations, but "not a huge shocker."
"There wasn't a lot of what we would call traffic-limiting events," Gold said in an interview. "Traffic in stores was good in the final holiday shopping weekend. There was nothing, especially in the major markets, to prohibit people from coming into the store."
Charlie O'Shea, lead retail analyst for Moody's, said larger, well-capitalized retailers like Walmart Inc., Amazon, Target Corp. and Costco Wholesale Corp. likely fared well.
"This holiday was set up very favorably for retail," O'Shea said in an interview, adding that Moody's still projects a 5% to 6% annual holiday sales increase for 2018. "Tailwinds including high employment, low fuel prices and the positive impact of reduced taxes all provided momentum for the consumer."
Like O'Shea, IHS Markit Associate Director of U.S. macro and consumer economics James Bohnaker attributed much of the holiday success to lower gas prices, which he said reduces the cost of taking additional shopping trips to retail stores.
A dampening stock market during the week leading up to Christmas likely only had a limited impact on spending, Bohnaker said in an interview, due mainly to strong consumer fundamentals overshadowing those losses.
"Still, the volatility likely rattled some upper-income households who have a greater share of their incomes stored in financial assets," Bohnaker said.
The most recent figures reinforce economists' earlier projections of a record-setting holiday shopping season, despite retail suffering well-documented recent bankruptcies of major sellers, including Toys R Us and Sears Holdings Corp.
Mastercard previously reported that a record-setting $23 billion was spent on Black Friday, while U.S. consumers spent a record $7.9 billion online on Cyber Monday, according to Adobe.
The National Retail Federation also projects that 51% of consumers will shop the week of Dec. 26-Jan. 1, with 27% redeeming gift cards and another 17% returning or exchanging unwanted gifts.
Though many firms and groups have yet to release their final holiday sales figures, several economists have told S&P Global Market Intelligence they expect strong sales to continue into the first quarter of 2019, due in part to strong consumer fundamentals, including greater take-home pay and strong consumer confidence.