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Review of the 2012 Holiday Shopping Season

2012 is over and the holiday shopping season has come and gone – but not according to plan. Hurricane Sandy and the US presidential election delayed the preparations for the holidays, while wary customers in a slowly recovering global economy have not forgotten the hard-learned lessons of thrift and debt reduction.

At the same time, the e-commerce boom continues unabated, which resulted in the following holiday shopping trends in 2012:

  • More than 75% of shoppers were using cash or debit cards to pay for their holiday shopping, avoiding the use of credit cards.
  • 60% of shoppers planned to stick to the same seasonal spending budget they had made in 2011, despite the improved economy, in order to be debt-free at the beginning of 2013.[i]
  • Gift cards made a big comeback, with over 80% of shoppers purchasing at least one.

A Late Start to the Shopping Season

In the midst of a public already focused on the US presidential election, Hurricane Sandy pushed the thought of preparing for the holidays right out of many people’s minds. When Thanksgiving hit on November 22, the public eye was elsewhere. They came for the sales, but since Thanksgiving 2012 fell on the earliest possible date, which effectively afforded holiday shoppers an extra week’s worth of time, they quickly left the stores after Cyber Monday.

In the wake of weak sales, forecasters lowered their predictions for holiday traffic and retailers panicked. This was a blessing in disguise, because by the time the public went back to the stores it was mid-December, and many nervous retailers had already slashed their prices to levels typically reserved for Boxing Day. The numbers increased across the board in terms of total shoppers, but in-store sales failed to even meet an already modest projected increase of 3.3% from 2011, instead showing an increase of only 2.5%.[ii]

The Age of E-commerce

While brick-and-mortar retailers were struggling to get bodies into their stores, online sales were plugging along with the same kind of steadily growing traffic characteristic of the industry. E-commerce sales figures saw a 17% increase on Thanksgiving weekend, the beginning of the holiday shopping season, including Black Friday (November 23) and Cyber Monday (November 26). Highlighting the importance of e-commerce, Cyber Monday was the heaviest shopping day of the year.[iii] Online spending rates also showed a post-Thanksgiving lull, but sales quickly recovered to the point that the second week of December was even more profitable than Thanksgiving weekend, and became the highest-ever week in e-commerce sales.[iv]

Get a prepaid cardIn looking at the trends of the holiday shopping season, we have two predictions for 2013:

  • Now that gift cards are making a strong comeback, people will start getting sick of a having so much plastic in their pocket and the demand will increase for reloadable prepaid cards; and
  • While e-commerce continues to consistently outgrow traditional retail, brick-and-mortar stores will be forced to not only match the prices of their physical competitors, but to play the numbers game against online stores as well, which have the advantage of significantly lower overhead costs.

E-commerce was the clear winner in 2012, but every purchasing path showed some amount of growth over the 2011 season except for one: credit cards. People are getting smarter with their money and are being more careful when choosing their purchasing tool. Alternatives to credit cards are becoming more accessible – cash and debit cards for in person transactions, and payment processors and prepaid cards online – and are taking a chunk of the marketplace. This trend, more than any other, signals a major shift in the economy of retail commerce.

To read what Alastair Graham, CEO of Payza, has to say about what 2013 will bring to the e-commerce and prepaid card industries, see What Will 2013 Bring for Prepaid and Emerging Payments?

To learn more about how prepaid cards can help keep you out of debt, see 5 Ways Prepaid Cards can Limit Debt and Over-Spending.