Holiday Shoppers Undeterred By Price Increases, Supply Shortages as Sales Rise

Despite supply chain and inflation woes, holiday shopping in 2021 rose at its fastest pace in 17 years.

Mastercard SpendingPulse tracked various kinds of payments, including cash and debit cards, from November 1 to December 24. On Sunday, it reported that holiday sales had risen 8.5 percent from last year, just a little under their project increase of 8.8 percent.

Clothing sales rose 47 percent, while jewelry saw a 32 percent increase. While online shopping experienced an 11 percent increase from 2020, department store shopping increased 21 percent. Overall, this holiday shopping season appeared to be a good one, given concerns about rising prices, the Omicron coronavirus variant and unpredictable supply chains.

"I feel really good about how the season played out," Mastercard senior adviser Steve Sadove said. "When people feel a little bit uncomfortable, you'll see a little bit of a pickup in online and a little bit of a slowdown in store performance.''

The numbers are preliminary results. The National Retail Federation will release its two-month results around the middle of January.

NYC Shoppers
Retail sales rose 8.5 percent during the 2021 holiday season, the largest increase in 17 years. Above, shoppers at the Brookfield Place indoor mall on December 27, 2021, in New York City. Photo by Scott Heins/Getty Images

Consumers were also determined to celebrate the holidays after a muted one a year ago. Still, November saw a slowdown in retail sales, in part because of the early shopping. And omicron, which has fast become the dominant version of the virus in the United States, has now spoiled holiday plans for many Americans who have had to cancel gatherings last minute.

The National Retail Federation said early in December that holiday sales were on track to beat its already record-breaking forecasts for an increase of 8.5 percent to 10.5 percent compared to the year-ago period. Holiday sales increased 8.2 percent in 2020 when shoppers, locked down during the early part of the pandemic, splurged on pajamas and home goods, mostly online.

The group expects that online and other non-store sales, which are included in the total, will increase between 11 percent and 15 percent. The numbers exclude automobile dealers, gasoline stations and restaurants. Holiday sales have averaged gains of 4.4 percent over the past five years, according to the group.

The update from the NRF was delivered in early December, right before omicron became a bigger threat in the U.S. and started to disrupt businesses from Broadway theaters to restaurants. But overall store traffic hasn't taken a plunge, though some stores are reporting dips in big city locations.

For the week that ended December 18, store traffic was up nearly 20 percent from a year earlier, though down 23 percent from the same week in the pre-pandemic year of 2019, according to Sensormatic Solutions. Peter McCall, Sensormatic's senior manager of retail consulting, noted shoppers are still going to retail stores but are now favoring open-air shopping centers and outlet malls more than enclosed shopping centers.

Retail sales have continued to rise in an economic environment that has hamstrung some retailers. Many have had to sharply increase pay to find and keep workers, increasing their cost of doing business. They also scrambled to fill shelves with major U.S. ports still backed up.

At the same time, Americans proved their resilience in different ways. They paid more across the board for necessities like food and gas, putting pressure on holiday shoppers' budgets. In fact, consumer prices rose 5.7 percent over the past year, the fastest pace in 39 years, as a surge in inflation confronts Americans with the holiday shopping season under way. The November increase, announced Thursday by the Commerce Department, followed a 5.1 percent rise for the 12 months ending in October, continuing a string of annual price increases that have been above the 2 percent inflation target set by the Federal Reserve.

Americans also learned to adjust to product shortages, turning to alternatives if their top choices were not available, or looking at other venues like eBay to find their top brands.

Though big box retailers like Target and Walmart promised stocked shelves for the holiday, supply constraints appear to be stubborn elsewhere. Target CEO Brian Cornell recently told the Associated Press he believes that it will take several years for supply chain clogs to be cleared.

The Associated Press contributed to this report.

Target Black Friday
Holiday sales rose at the fastest pace in 17 years, even as shoppers grappled with higher prices, product shortages and COVID-19 in the last few weeks of the season, according to Mastercard SpendingPulse. Above, a shopper looks at televisions during a Black Friday sale at a Target on November 26, 2021, in Indianapolis. AP Photo/Darron Cummings, File