Breaking Down 2017 Holiday Spending
Stockings over the fireplace weren’t the only things being filled to the top this holiday season — so were the pockets of retailers all over the country. First Data’s recent analysis of retail spending showed that consumers were out shopping in full force as overall holiday spending grew 6.2 percent year-over-year, the largest increase in four years. By analyzing credit and debit spending at nearly 1.3 million merchant locations in the U.S., we found that whether Americans were buying online or in-store, on electronics or apparel, consumers were actively spending during the 2017 holiday season.
Electonics and Appliances Stand Out
Electronics and appliances, along with building materials, were the highest growth categories this season, boasting year-over-year growth rates of 8.3 percent and 6.9 percent, respectively.
Consumers weren’t just investing in new home theaters or kitchen remodels, however; other retail categories saw gains overall as well. Our data showed that retail spending was up 5.4 percent, a solid increase from last year’s growth rate of 3.6 percent. Additionally, e-commerce gained steam, accounting for 29 percent of all transactions, compared to 26 percent in 2016.
A Time to Rebuild
In Houston and other locales in the Southwest, while many shoppers were picking up gifts, some hit the stores as they replaced and repaired. The Southwest led all regions in spending, perhaps signaling a halo effect of hurricane recovery. Spending patterns showed that people in areas impacted by hurricanes were rebuilding.
Among the 10 largest U.S. cities, Houston ranked No. 1 in terms of overall spending growth, coming in at 10.9 percent. In Houston, building materials sales growth was up 31 percent and furniture sales jumped 22 percent, indicating shoppers’ appetites for home improvement spending. Additionally, Houston also led in brick-and-mortar retail sales growth, with a 15.7 percent gain.
While every single region experienced growth in retail spending, the Southwest and New England grew the fastest, at 5.7 percent and 5.5 percent, respectively. At the other end of the spectrum, the Mid-Atlantic region posted growth of only 0.7 percent.
Online Options Preferred
This holiday season marked the highest share of spend for e-commerce transactions to date, as more consumers opted to stay home while doing their holiday shopping. The average ticket size for retail brick-and-mortar transactions was $68.57, compared to $103.49 for e-commerce. While e-commerce fell slightly from $105.73 in 2016, this change — coupled with nearly 13 percent growth in transaction volume — suggests that more people are using online channels to purchase less expensive, everyday items than in prior years.
No matter what you sell or how or where you sell it, one thing is for certain: increased holiday spending helped retailers all over the country ring in a happy new year. Now that the holiday season is over, it’s crucial for all retailers to learn from the latest consumer spending trends to help position both their in-store and digital strategies in 2018. Armed with a better idea of what consumers are buying and what channels they’re using, brands can be ready to meet demand as we enter another evolving year for commerce in 2018.
Glenn Fodor is senior vice president, head of information and analytics solutions at First Data, a provider of credit card processing and payment solutions for merchants.
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