Retail categories that experienced the strongest year-over-year sales increases during the holiday shopping season (Nov. 1 – Dec. 31, 2006) included drugstores/pharmacies, electronics and home furnishings stores and restaurants. As Visa predicted earlier in December, the busiest shopping day for Visa at retailers during the 2006 holiday shopping season was Dec. 23, followed by Dec. 22 and Nov. 24 (Black Friday).
Based on an analysis of spending on Visa-branded credit, debit and prepaid cards between Nov. 1 and Dec. 31, 2006, Best cited four major trends that affected last year’s holiday shopping season:
* Cautious consumers. “Even though the job market has been healthy, with wages and salaries showing solid growth this year, shoppers appeared to be distracted by the shaky housing market,” Best said. “A big source of spending in recent years has been from home-equity refinancing, which allowed shoppers to extract cash from their inflating home values; refinancings have dropped sharply as interest rates have risen, creating a much more cautious consumer.”
* Retailers poised to capture share of gift-card redemption in the coming months. “Expect to see retailers enticing consumers to redeem their gift cards during the post-holiday shopping season as merchants seek to extend the traditional season into the new year,” Best said. “Consumers will be looking for discounts and other incentives to use the gift cards they received over the holidays and will continue to do so in the early weeks of January.”
* Cross-selling products. “Drugstores and supermarkets appeared to experience stronger sales during this holiday season by selling products you typically wouldn’t expect to see in these categories,” Best said. “Providing consumers with products such as flat-screen televisions, personal entertainment devices and toys is one reason why these and other segments may have performed better than others.”
* Late surge in gas prices put a pinch on consumer spending. “Although fuel costs fell this fall, the national average price per gallon was still higher in December than a year earlier,” Best said. “If consumers are spending more to fill up their tanks, they're probably spending less at the mall.”
Throughout the holiday shopping season consumers and merchants relied heavily on VisaNet, the largest payment system in the world, to process secure payments with 100 percent reliability for the 14th consecutive holiday period. On Dec. 23, the payment network’s data centers securely cleared and settled a record $9.8 billion. What’s more, the payment network’s data centers securely processed a record 6,803 transactions per second, sustained over a one-hour period on Dec. 22 — a 7 percent increase from the previous year.
Purchase Personal Consumption Expenditure (PCE) in the United States totaled an estimated $7.2 trillion in 2006 with general-purpose payment cards capturing about one-third of that total. Spending on Visa-branded credit, debit and prepaid products represented nearly 17 percent of total Purchase PCE. That means $17 out of every $100 spent by consumers was on a Visa-branded card.
