It’s no secret the holiday season is a key sales period for retail, travel, and many other industries, so much so that these sales can make or break a business, large or small. With high inflation and fears of consumers pulling back, there are a lot of unknowns this year.

To that end, Commerce Signals has produced a Holiday Spending Forecast to help companies with scenario planning. They do this through permissioned and anonymized view of consumer spending that includes both Visa and Mastercard, credit and debit for 40 million households.

In this report, Commerce Signals shares its predictions on:

• Discretionary vs. non-discretionary spending
• Black Friday spending in-store & online
• Travel, Retail, Restaurant and more categories

Download this comprehensive report and learn more about these predictions, additional category forecasts, and the methodology. and listen to the podcast with Robin Lewis and Andy Mantis on what to expect this holiday spending season.

DOWNLOAD THE REPORT

Across the United States, prices have been increasing across all industries. In July, inflation stood at 8.5%, down slightly from 9.1% in June -– the highest U.S. inflation seen since 1981. Yet, total consumer credit card spending grew 14.6% in July compared to a year earlier. The strong jobs market and high consumer savings rates during the pandemic have aided consumers spending above inflation.

Find out how recent inflation has impacted consumer spending and predictions of what’s to come. Download this fascinating report, created with Commerce Signals’ transaction data, to learn more about how recent inflation has impacted consumer spending and predicts what’s to come.

The numbers are in, and 2021 consumer holiday spending did not disappoint. In fact, 2021 holiday sales knocked many analysts’ projections out of the water. U.S. consumer spending on credit and debit cards from the week of Thanksgiving through the week of Christmas 2021 was up a mammoth 22 percent according to Commerce Signals Consumer Spend Tracker.

As to be expected, some sectors did better than others. The categories that saw skyrocketing sales during the 2021 holiday season were those that customers missed out on the most during coronavirus shutdowns. Travel, restaurants, apparel, and in-store shopping all saw big jumps, which are detailed below.

The 2021 Holiday Shopping Mindset

There were a lot of warnings being issued before the 2021 holiday season. Supply chain slowdowns were expected to impact the availability of many product categories. Additionally, the postal service was expecting delays after being completely bombarded during the peak of the pandemic in 2020. Everyone from retailers to government officials cautioned customers to buy and send their gifts early, so their family and friends would get them in time for the holiday season.

Consumers were optimistic after the first round of vaccines, when it looked like the world –– and the economy –– was going to return to normal. But the first U.S. case of the omicron variant appeared in the U.S. on December 1^st, which noticeably impacted some categories.

Let’s take a deeper look at our 2021 holiday season sales data, the patterns that emerged and what they mean for future sales.

A Return to Travel

There was definitely pent-up demand for personal travel after enduring 2020 when people were encouraged not to travel or get together with family and friends. The travel sector as a whole saw a +139 percent YoY increase. But it started even hotter, with Black Friday week up 152 percent. In fact, that first week of the holiday season saw consumer travel spending nearly 5 percent above 2019. The omicron news tamped down that acceleration during the rest of December.

While it’s true that many consumers wanted to spend on experiences rather than things, they also wanted to look good while doing it. The apparel sector saw the biggest boom under the retail umbrella. Clothing store and department store purchases were up 29 percent and 26 percent respectively as customers clamored to pick up new ensembles.”

Airlines saw the biggest boost with a +182 percent jump over last year. Hotels were up +123 percent and auto rentals were also up +62 percent YoY. Comparing airline bookings to 2019 shows the clearest impact of renewed consumer travel fears. The week after thanksgiving dropped significantly.

Retail Shopping

While it’s true that many consumers wanted to spend on experiences rather than things, they also wanted to look good while doing it. The apparel sector saw the biggest boom under the retail umbrella. Clothing store and department store purchases were up 29 percent and 26 percent respectively as customers clamored to pick up new ensembles.

Retail as a whole saw a welcome +10.6 percent sales boost YoY. Consumers used some of their savings from a year lived indoors to make more online (+4.2 percent) and instore (+15.4 percent) purchases. The week of Christmas was the busiest time for retail holiday spending with purchases up 25.5 percent.

Thankfully, this spending growth was not entirely due to price inflation. Purchase transactions were up +7.7 percent during the 2021 holiday season. We saw an average ticket boost of +2.8 percent. Interestingly, the average ticket of online purchases (+5.9 percent) exceeded that of in-store purchases (+1.6 percent).

Dining Out

Consumer spending at restaurants and bars was up a very healthy 54.4 percent despite many restaurants struggling to find staffing. On premise dining was up nearly 69 percent with takeout and delivery up 16 percent.

In Summary

When viewing data from the 2021 holiday season, it’s important to keep in mind that the purchasing landscape of the 2021 holiday was an anomaly on multiple levels. From the influx of government money into society, low unemployment, a very low 2020 base year and a return to normal, many factors contributed to drive overall spending up 22 percent. While we are always happy to see strong consumer spending, we can only hope that the exact environment that created the holiday shopping boom won’t be replicated in our lifetimes.

With that said, there’s plenty we can learn from 2021 shopping data. Here’s the full breakdown of weekly YoY growth by category during the holidays.

A Note About the Data in This Article

All data in this article is from Commerce Signals, a Verisk Financial business. With a permissioned and anonymized view of consumer credit and debit card spending behavior, Commerce Signals’ powerful insights, accurate audiences and campaign measurement help eliminate waste and boost marketing ROI. Its solutions are used by some of the largest retailers, direct to consumer and adtech companies in the country.

Commerce Signals is a Robin Report Collaborative Partner.

As with all new approaches, the best innovations in the digital marketplace occur not as a result of reinventing the wheel, but by integrating and retooling existing assets. Things become truly exciting for the merchant in the combination of insights derived from spending behavior with insights derived from transaction analysis—in time as well as virtual space. By including the insights from real-time transaction data, behavioral models of different segments of e-shoppers can help to extrapolate that a device that has clicked on these specific links is likely to make purchases in certain market sectors within a specified period of time. At MasterCard, we are creating a breakthrough for merchants in segmentation by bringing our own enormous anonymized data set to bear on the task of identifying shopper segment behaviors. By applying insights on spending behavior to our partners’ online populations using common geo-demographics, our partners are able to identify online shoppers with a high propensity to spend in a given industry in the next 30 days.

It is becoming increasingly clear amid the rapid growth of ecommerce that merchants need to excel at their online strategy, and soon, if they are going to survive (let alone thrive) in a multichannel environment. Most merchants understand that there is not a single best approach to multichannel operations, and that a store’s online presence must be tailored to its overall brand strategy and business model. What is often missed in the rush to market, though, is that just as no two retailers are exactly the same, so are no two shoppers. And in these times of movement toward multichannel ubiquity, the adage “The Customer is King” doesn’t begin to describe the power and control that shoppers have taken of their shopping experience.

Merchants have long understood that their customers have different shopping and spending patterns— what they buy, how much they spend, what triggers prompt purchases, etc.  In order to plan effectively, retailers think in terms of segments of their customer base. The most forward-looking, seemingly clairvoyant retailers have used intensive segmentation strategies based on comprehensive data and rigorous analysis.

What these segmentation schemes have not taken into account, however, is a different metric: customers not only have different purchasing behaviors, they now have different ways of going digital, as well. It’s a timing issue, in part. Some shoppers are still just getting comfortable with ecommerce; some use ecommerce almost exclusively; and there are many shades of grey in between.  In economic terms, though, what we have found is that a multi-channel buyer at a specific merchant spends 300% more than an exclusive channel buyer with the merchant. In order to capitalize on that increase, an effective multichannel strategy will need to make space for these different kinds of in-store and online behaviors if it is to have any real impact on sales. That strategy could become more powerful when it’s possible to identify transactions taking place on mobile devices.

In addition to multichannel must-haves like foolproof, secure and efficient payment systems and near- instantaneous shipping and home delivery, successful multichannel merchants will need to rethink and supplement their segmentation strategies by adding a new dimension to existing information. There will be, for example, aspirational shoppers who would not dream of buying something without having a chance to see it up close and personal; there will be others who may only rarely set foot in a store; and some who will try things out first and then wait for an online deal before making a purchase.

Savvy marketers can design offers that will appeal to each different behavior, whether it is an emailed invitation to a private in-store trunk sale, an online-only special, or even an app that will allow customers to get targeted promotions when their mobile device signals that they’re near a store. But if those offers are to result in sales, they have to reach the right shoppers—and only the right shoppers, to avoid the very real danger of deal fatigue.

How can all these different segments be reached? If you spend any time online, you’ve already seen some version of this: the ads that appear on your screen seem surprisingly in tune (or oddly just off key) with searches you may have recently made or sites you visited. One way this happens is through the use of “cookies.” A cookie is a small packet of data that is placed by a website on a computer, and can be used to track the sites that the computer subsequently visits. While any site can do an IP address look-up to determine the likely geography, unless you’re Google or a very savvy shopping site neither the cookie nor the website knows very much about the person on the computer—only that this computer looked at a luxury leather goods site.

The cookie, though, will be the reason you may be getting ads for handbags while you read the news online.

This example is obviously oversimplified. There’s actually a hierarchy of cookies that makes for a more complex picture. The 1st party cookie is the cookie “dropped” by cookies.com on its own users. 3rd party cookies are cookies dropped on cookies.com by data companies that have agreements to tag cookies.com users. 1st party cookies are generated from the website itself, and 3rd party cookies originate on a web site other than the one you’re currently looking at. Using cookies, web sites can track if you’ve put something in a shopping cart, if you’ve abandoned the cart or made the sale, and other browsing behavior data. In addition, companies associate attributes like age, ZIP Code and income to specific cookies over time, such as behavior and registration data as those metrics become available.

Given the trend toward smaller and more defined physical store locations and capacity in the face of wildfire ecommerce growth, merchants absolutely need to understand their customers’ online behavior more accurately than ever before. MasterCard works with partners that maintain large third party online populations, to which MasterCard appends insights regarding spending behaviors, in order to glean an understanding of online behavior.

In the new environment of constant and instantaneous connection, customers expect to be able to shop exactly when and how they want.  MasterCard’s innovative approach to segmentation and data analysis, coupled with what our partners are doing in the area of e-shoppers, enable the development of powerful multichannel strategies and incisively targeted marketing, so as to identify shopper segments, not individuals, likely to make purchases in a specific category over a specified period of time. Armed with the new generation of browsing and transaction analysis, merchants will be able to provide these shopper segments with the full multichannel shopping experience.