Yahoo Finance's Kristin Myers and Steve Sadove, Mastercard senior adviser, discuss a Mastercard SpendingPulse survey that reveals U.S. holiday retail sales are expected to grow 2.4% season.
KRISTIN MYERS: Well, let's talk consumer spending. Because even without a stimulus, US consumers, their spending did increase by 1.4% last month. So let's track the-- check the outlook for retail sales now with Steve Sadove, Mastercard's Senior Advisor and former Chairman and CEO at Saks. Steve, thank you so much for joining us today. So--
STEVE SADOVE: Happy to.
KRISTIN MYERS: Mastercard, I saw, released the holiday spending forecast. Just to run through some of those numbers with everyone at home-- retail sales, during the holiday kickoff week-- that was October 11-- that spending grew by 8.3% compared to 2019. And e-commerce sales-- this is according to your guys' report-- increasing by 66.5%. That is incredible numbers to me, especially at this time of pandemic. Stimulus has run out. Wondering if you think that those levels of growth are going to be increasing or staying steady throughout this holiday season.
STEVE SADOVE: Well, the Mastercard's SpendingPulse forecast is really encouraging for the holiday season, calling for a plus 2.4% growth year-on-year. Now think back, it's only eight months ago we were looking at minus 13% year-on-year with the consumer. And you've seen a gradual improvement. So you saw mid-single digit declines during the summer. It turned positive in the last month. And now you're seeing growth year-on-year.
I think that the kickoff to the season-- and I look at that week as being the kickoff-- you had Prime Day, you had a lot of the big-box retailers starting this season off, because this is going to be an extended season. It's going to be a very different season than we've ever seen. Traffic in the malls isn't going to be the same.
So it's going to be an online season. You saw it in the plus 66-- some percent. E-commerce growth, the forecast is going to be in the 30-- minimally, 30, 40% growth in e-commerce. E-commerce is going to represent as much as 20% of all of retail during this holiday season. Now remember, 20% is a big number, but it still means 80% of commerce is going to be done in a store. So it's going to be omnichannel. It's going to be a buy online, pick up in store-- it's going to be the way the consumer wants it.
But the encouraging notion is the consumer shopping. And the numbers in October indicate that, and I feel pretty good when I look at a plus 2.4%. I would never have expected that back in March, that we would see year-on-year growth in the consumer.
KRISTIN MYERS: So Steve, I'm wondering, as you just mentioned, right, shopping in stores is not going to be the same. Most folks are frank-- I know I've done it, my Amazon spending has definitely increased over the last couple of months. As you mentioned, we had Prime Day just a couple of days ago. Do you think that folks are shopping, perhaps, a little bit earlier now, that their holiday shopping is going to be done, you know, well before the 25th and the 24th of December? That folks are going to say, hey, Thanksgiving is here and I'm all done, placed all my orders online and I'm ready to go.
STEVE SADOVE: I think it's going to be earlier. I think it's going to be over an extended period of time. I wouldn't expect a huge rush on the Black Friday. There'll be traffic in the stores, absolutely, but I think it will be over an extended period. There are concerns about shipping late in the season, of overwhelming that, so there are going to be consumers who are going to be saying, I've got to get that gifts done. Even online, earlier than they did last year. So I would expect there's always going to be a rush at the end. But I would expect that you're going to see much more of it earlier.
I also think that you're going to see promotions being done quite differently. Inventories came into the season very much in line for most of the retailers. So you're going to see promotions. You always see promotions, but I don't believe this is going to be the panic promotion environment. Let's say that, like you saw in the recession of '08, where it all hit at once, and you saw massive promotions. I don't think that that you're going to see that, it's going to be much more in line. But it will be earlier, it'll be extended. And it'll be much more paced out, but it'll be omnichannel, and that means online and in the stores.
KRISTIN MYERS: I have to ask, since you're, you know, at Mastercard-- we still have millions of folks still on unemployment, I mean, so as much as we want to paint a nice rosy picture, frankly, people are still struggling. Do you think that a lot of this holiday spending is going to be financed, perhaps, by debt, by credit cards?
STEVE SADOVE: You know, right now the consumer has been saving quite a bit. The savings rate has gone up. The consumer had-- even though unemployment is very high, consumer stimulus checks have stopped, you know, in terms of, uh, largely have stopped right now, but people's expenditures are different-- they're not traveling as much, they're at home, their commuting expenses are lower. So it's a different profile of spending.
Do I believe that they're going to be doing some more debt financing? It could very well happen over time. I think that stimulus check, some point in time, is going to be necessary to stimulate the consumer, but that's a personal point of view. But I think that we're going to have a very healthy environment over the next several months.
KRISTIN MYERS: Steve, I wanted to pick up on something that you had been saying just a moment ago about sales and the panic sales that we had seen just a couple of months ago. If you are a retailer, and you're saying, look, the growth numbers are good, there is a lot of room for optimism out there in this holiday season with these shoppers-- is it going to be about the sales? Or is it going to be-- are the winners going to be some of those companies, those stores that are like, listen, we've become far more nimble, we're becoming far more innovative, and we're going to do some of what you're talking about. Buy online, pick up in store, we're going to be utilizing our brick-and-mortar in the best way to essentially enhance that online shopping experience.
STEVE SADOVE: I think it's going to be a combination. The winners who have been winning, the big-box retailers that are convenient-- one-stop shopping, they're contactless, buy online, pick up in store. The Home Depots, the Lowe's, the Best Buys of the world, the Walmart, Targets-- those have continued to do well and they'll thrive.
But there's another phenomena, which is shopping local. The consumer wants to stay close to home. The Mastercard data would tell you that you're seeing consumers wanting to stay in their own community. They're not traveling as much. And I think you're going to see the local stores doing well also. But it's going to be a-- it's going to be those retailers that are able to provide that seamless experience or that are the small, local, easy to get in and out of.
Malls, I think, are going to have a tougher time. Certain categories of apparel are going to have a harder time. People aren't dressing up, as an example. Athleisure continues to do extremely well. So it's those at home, the home improvement-- you've seen that over the last eight months. It's going to continue. And that's what you're going to be looking at during this season.