The news: US retail sales (excluding automotive) grew 7.6% year over year (YoY) from November 1 to Christmas Eve, per Mastercard SpendingPulse—which measures in-store and online retail sales including fuel, grocery, and restaurants. The numbers are not adjusted, which suggests spending slightly outpaced inflation.

• While that’s a far cry from the 15.4% YoY increase in the final two months of last year, it was markedly higher than the 3.9% sales growth in 2019.
• That said, the results reflect a complicated picture in which consumers adjusted their spending patterns due to inflation and pent-up demand for pre-pandemic activities like dining out. For example, spending on restaurants rose 15.1% YoY during the period, while apparel sales rose just 4.4% and electronics sales fell 5.3%.

Shifting spending patterns: There are several ways that this holiday season was different from years past.

• The season started earlier than ever. Several retailers, including Amazon and Walmart, launched high-profile sales in October that pulled the start of the holiday shopping season into mid-October. While those events may not have delivered blockbuster results, they let retailers clear inventory and helped drive a 7.2% YoY increase in sales across October and November, per US Commerce Department data.
• Discounts were steep. While the holiday season is typically a good time for consumers to score deals, many retailers slashed prices across the board this year. Prices fell 3.2% in November month over month, per Adobe’s Digital Price Index, thanks to aggressive discounting in categories like electronics.
• Consumers were extremely value-conscious. With inflation eating into consumers’ spending power, shoppers were thrifty and less likely to spend big on pricey items. Costco CEO Craig Jelinek said sales of expensive items such as jewelry and high-end TVs had slowed earlier this month.
• Ecommerce kept gaining share. Online sales accounted for 21.6% of total retail sales, up from 20.9% in 2021 and 20.6% in 2020, per Mastercard.
• Economic uncertainty drove many to alternative payment methods. Orders placed with buy now, pay later (BNPL) services grew 85% during Cyber Week, and BNPL revenues increased 88% compared with the week prior, according to Adobe.

A complicated picture: Several economic indicators suggested US households headed into the holiday season in a good position to spend. US consumer paychecks ticked up, gas prices fell, and inflation eased more than expected in November.

• But there were also signs of concern. For example, the personal saving rate, the portion of after-tax income that consumers don’t spend, in October fell to its lowest level since 2008 before ticking up slightly in November.

The big takeaway: Pulling the holiday season earlier than ever had some clear benefits—it let retailers like Amazon and Walmart capture sales while also smoothing out the flood of holiday purchases that typically requires companies like UPS and FedEx to boost their delivery capacity. However, there are clear signs that the headwinds retailers faced are unlikely to recede anytime soon.

This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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