Visa reports shift in holiday shopping habits
Visa USA has reported on what it sees as the 'most significant milestones' of the 2006 holiday shopping season, revealing a shift in consumers' general spending habits.
According to Wayne Best, senior vice president of business and economic analysis for Visa USA, the 2006 holiday shopping period was not as fast-paced as many industry experts had predicted, but was still "very respectable".
In particular, electronics and non-traditional shopping categories (such as drugstores and home furnishing stores) were the clear winners, as they experienced increased growth right throughout the season.
Retail winners Retail categories that experienced the strongest year-over-year sales increases during the holiday shopping season (from 1st November to 31st December 2006) included drugstores and pharmacies, electronics stores, home furnishing stores, and restaurants.
As Visa had predicted at the beginning of December 2006, the busiest shopping day (in terms of the use of Visa payment cards) at retailers during the 2006 holiday shopping season was 23rd December, followed by 22nd and 24th December (in that order).
Four consumer spending trends Based on an analysis of spending on Visa-branded credit, debit and prepaid cards during the 2006 holiday shopping period, Best identified four major trends that affected sales totals:
- Cautious consumers Even though the US job market has been healthy, with wages and salaries showing solid growth, shoppers appeared to be distracted by the unstable housing market. A big source of spending in recent years has been from home-equity refinancing, which allowed shoppers to gain cash from inflating home values. But refinancing has dropped sharply as interest rates increased, creating a much more cautious consumer in 2006.
- Retailers to gain more from gift-card redemptions Over the first few months of the year, you can expect to see retailers enticing consumers to redeem their gift cards, as merchants seek to extend the traditional holiday shopping season well into the new year. But consumers will be looking for discounts and other incentives to use the gift cards they received over the holidays, and will continue to do so throughout January.
- More cross-selling Drugstores and supermarkets appeared to experience stronger sales during the 2006 holiday season by selling products that are not typically associated with those categories. For example, the sale of products such as flat-screen televisions, personal entertainment devices, and toys is one possible reason why these performed better than other segments.
- Surge in fuel prices squeezes consumer spending Although fuel costs fell in late 2006, the national average price per gallon of petrol (gas) was still higher in December than it was one year before. As a result, Best suggests, if consumers are spending more to fill up their tank, they are probably spending less at the shopping mall.
On the peak shopping day, 23rd December 2006, the VisaNet payment network in the US cleared and settled a record US$9.8 billion in transactions.