One of the bright spots during the pandemic has been very strong demand for housing and related items as well as a broad array of consumer goods, particularly luxury brands. In recent months, there was concern that retail might experience a weak Christmas season given the rapid spread of Omicron, high inflation, (6.8% for the year ending in November and widely reported supply chain issues. Well quite the opposite happened. On December 26th, Mastercard announced retail sales data for the period November 1st through December 24th. Overall, retail sales grew 8.5%, the fastest pace in seventeen years. Perhaps most striking is the fact that 2021 sales were 10.7% greater than the pre-pandemic 2019 holiday period. Online sales grew 11% representing 20.9% of total retail sales, up slightly from 20.6% in 2020 and 14.6% in 2019. The strongest individual product categories were clothing whose sales increased 47%, jewelry 32%, and electronics 16%. Even beleaguered department stores experienced a 21% increase over 2020.
I think we can draw several conclusions from these statistics. First, Americans are very resilient and are determined to return to some semblance of their former lives. In particular, they spent lavishly despite high inflation in necessities such as food and gasoline. Additionally, they worked around supply shortages and made do with what was available. Strong retail sales also confirm other data indicating that Americans are generally in good financial shape. All of this bodes well for services and other forms of consumption as the pandemic hopefully recedes. Finally, while e-commerce is a very powerful force, bricks and mortar retail remains very important. Retailers are developing a variety of hybrid operating modes such as buy online, pickup in store. (BOPIS)