Overall Holiday Season Retail Grows 3.6%

"Overall, sales came in just above the lower end of the range we were expecting, maintaining the slower, modest growth we've been seeing throughout the year," noted Michael McNamara, vice president of research and analysis for MasterCard Advisors. He added, "Most industry observers had adjusted their sights down, but anyone who was looking for this holiday season to kick-start a new wave of growth would find these numbers falling short of expectation."

SpendingPulse analyzed the Electronics, Specialty (Apparel), eCommerce and Luxury sectors. All categories experienced a surge in growth on Black Friday, a lag in the middle of the season, and a rally to the finish line. Here are the highlights:

Apparel

Apparel was generally a lagging category. Overall specialty apparel was up 1.4% on a seasonally adjusted basis. As the SpendingPulse mid-season report posted only a .5% year over year increase for this category, the season wrap number of 1.4% could be viewed as something of a recovery.

Women's apparel was down 2.4% year over year. Commented Mr. McNamara, "The 12 days before Christmas significantly helped this sector. Although it finished in low negative territory, we actually saw a sizeable recovery over its mid-season fall of 5.7% over 2006."

Men's apparel was up 2.3%, moderating the 4.5% gain it posted mid-season, and footwear was up 6%.

Electronics

Electronics sales had opened the season with a surge of 15% growth on Black Friday. By mid-season, consumer spending on electronics was showing only a 5.8% gain over the same period in 2006, and by the end of the season, overall growth on a seasonally adjusted basis was a very moderate 2.7%. It should be noted, however, that the SpendingPulse view of the electronics sector is broad, encompassing a product-mix of large appliances as well as consumer electronics such as cameras, gaming software and hardware and televisions. Observed Mr. McNamara, "It's very likely that when you extract big appliances, that the consumer electronics sector provided a higher level of growth than we see in our view of this category."

eCommerce

eCommerce was the strongest category, easily outperforming all other categories covered by the SpendingPulse report. This channel had a very strong start to the season, posting growth in the 30% range on Black Friday. On Monday, November 26, online sales grew at 40%. December 4 was the first of a series of record breaking days, followed by December 11, 12 and 13, the latter posting the biggest single daily volume. The season finished showing an overall year over year growth rate of 22.4%.

Luxury

Another area of strength was the luxury category encompassing, high-end department stores, apparel, leather goods and restaurants. Luxury goods ex-jewelry posted a 7.1% rate of growth over 2006, tempering a little from its mid-season gain of 10.8%. Noted Mr. McNamara, "We see this as a strong continuation of a trend we've reported throughout the year in the luxury sector."

Influence of Gasoline Prices and Severe Weather are Factors

Gasoline prices during the 2007 holiday shopping period ranged between 30% and 35% higher than the same period in 2006. SpendingPulse data suggests that the high cost of gasoline could have eaten into other spending, while severe weather in many regions of the country, coupled with high gasoline prices, could have helped energize eCommerce sales. Commented Mr. McNamara, "Disruptive weather events can potentially prevent consumers reaching brick and mortar locations, and particularly as many of these storms fell between Thursday and the weekend, there's a strong likelihood that purchasing activity was tempered because of them." These events include an ice storm in the Midwest in early December, a series of storms that impacted the Mid-Atlantic and New England region, which had snowiest winter in 30 years, and flooding in the Northwest.

About SpendingPulse

SpendingPulse, MasterCard Advisors. A macro-economic indicator, SpendingPulse reports on national retail sales and is based on aggregate sales activity in the MasterCard payments network, coupled with estimates for all other payment forms, including cash and check. MasterCard SpendingPulse does not represent MasterCard financial performance. SpendingPulse is provided by MasterCard Advisors, the professional services arm of MasterCard Worldwide.