All the numbers aren’t in yet, but it appears that the 2011 end-of-year holiday shopping season was a vast improvement for merchants over those of the most recent past. U.S. shoppers weren’t afraid to burn some plastic in their quest for the perfect gift and, as a result, credit card processing went into overdrive in November and December.
After a November retail sales report that showed year-over-year spending had increased by 4.5 percent, the National Retail Federation revised its earlier holiday sales forecast upward by a full point and predicted an increase of 3.8 percent over 2010, with expectations that sales would hit a record $469.1 billion.
Very preliminary statistics for the 2011 holiday shopping season seem to bear that out. The Wall Street Journal reported just days after Christmas that U.S. retail sales had grown by about 3.5 percent over last year. E-tailers – a category that includes brick-and-mortar retailers with websites and mobile apps as well as online merchants – performed particularly well. ComScore, a market research organization, reports that from Nov. 1 through Dec. 26, consumers spent $35.3 billion online, up 15 percent from 2010.
Many of those purchases were made with credit cards, which are making a comeback after several years in decline as consumers, caught up in recessionary uncertainties, switched to debit cards and cash for their purchases. But this year spending on credit cards jumped 7 percent in November and continued up in the first half of December, according to one major payments processor. Signature debit cards showed a more modest increase of 3.4 percent.
The revival is being attributed to several factors, including a flood of incentives from the issuing banks, which are pushing credit cards after new legislation made them a bigger profit center than debit cards. This renewed focus has prompted banks to increase rewards offers for credit cards even as they slash or eliminate rewards debit card programs.
Some observers believe that recession-weary consumers are ready to start spending again, and even indulge themselves after several years of deprivation. One indicator of this is an uptick in discretionary spending on restaurants and travel compared to a year ago – purchases that are more likely to be made on credit cards than with cash.
This new spending trend by consumers is great news for the merchants and businesses that serve them. This is especially true when shoppers pay with credit cards because studies have shown that cardholders are likely to spend more on upscale merchandise and services than their cash counterparts.
How far into 2012 this new willingness to buy will extend is anyone’s guess at this point, but it should put the “happy” back in Happy New Year for many businesses.
To learn more about credit card spending, contact Merchant Express. Merchant Express offers credit card processing and
http://www.merchantexpress.com/ecom_internet_merchant_account.htm”>merchant accounts to small and medium-sized businesses.