Deal-seeking shoppers powered holiday ecommerce sales to record high

The news: Shoppers spent big over the holiday season, especially online. Deep discounts, growing optimism, and the desire to get ahead of potential 2025 price increases loosened consumers’ purse strings, contributing to healthy sales growth for the last two months of 2024.

• US online sales rose 8.7% YoY to a record $241.1 billion, per Adobe—close to our projection for 9.0% ecommerce growth.
• Salesforce reported a more sober 4% YoY increase in ecommerce sales to $282 billion, helped by an uptick in mcommerce as well as surging sales on social platforms like TikTok Shop.

Total holiday retail sales between November 1 and December 24 increased 3.8% YoY, per Mastercard SpendingPulse data. Excluding autos, in-store sales rose 2.9% YoY, compared with a more robust 6.7% jump in ecommerce sales.

Behind the numbers: Retailers went into the season knowing they had to offer great value to appeal to price-conscious shoppers. While discounts were largely in line with last year’s levels, consumers responded enthusiastically: For every 1% decline in price, demand increased by 1.03% compared with 2023, per Adobe.

Lower prices also encouraged purchases of bigger-ticket items across categories. The share of units sold for the most expensive products in the sporting goods, electronics, and appliances categories increased by 54% YoY, 48% YoY, and 35% YoY, respectively.

In addition, the desire to avoid tariff-related price hikes in 2025 contributed to consumers’ eagerness to spend.

• Over 1 in 5 consumers believe that now is a good time for major purchases, per the University of Michigan’s December consumer sentiment survey. That’s a sharp increase from 10% in November.
• Nearly one-third of shoppers said they would spend more over the holiday season, with 39% citing the fear of rising prices due to tariffs as the primary reason for doing so, per a CreditCards.com survey.
• In addition to fueling big-ticket purchases for cars and appliances, uncertainty about the future is driving some consumers to stock up on items like toilet paper, nonperishable groceries, cosmetics, and home goods.

GenAI worms its way into the shopping journey: Generative AI (genAI) played a larger role in holiday shopping this year, whether buyers knew it or not.

• AI-powered product recommendations, targeted offers, and customer service support influenced $229 billion of global online holiday sales, according to Salesforce.
• Traffic to retail sites from genAI chatbots grew 1,300% YoY, per Adobe.
• Still, the number of buyers using chatbots as shopping assistants remains modest at best, and most consumers are ignorant about how retailers are using genAI to enhance their experience.
• 71% of US online shoppers surveyed by Bain said they were unaware of using genAI when shopping online, despite many having transacted recently with retailers that offer such tools.

Our take: 2024’s robust holiday performance capped off a year during which retail spending was remarkably resilient, despite consumers’ doom and gloom about the economy.

While tailwinds such as easing inflation could drive shoppers to spend more confidently in 2025, that depends highly on the scope of the Trump administration’s tariff plans. A tariff on Mexican imports, for example, would cause grocery prices to spike and likely push consumers to further cut discretionary spending.

Still, we expect retail sales in 2025 to rise 2.9%, a slight acceleration from last year’s 2.8% increase.

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