Monday, November 18, 2013
Despite a contrary federal government and a tepid economy, First Data Corp. is reporting good news as the holiday shopping season ramps up in the United States. Based on its SpendTrend analysis of electronic payment data, consumer spending increased by over one percentage point from September 2013 to October 2013, signaling a surge in shopping that bodes well for a profitable holiday season for retailers.
First Data reported dollar volume growth in October was 6.8 percent, up from 5.3 percent in September. The Atlanta-based acquirer said the growth was a result of cooler temperatures nationwide, which drove sales of seasonal merchandise. With fewer days in the 2013 holiday shopping season, retailers started advertising deals earlier this year that, in consequence, may have attracted foot-traffic into their stores, according to First Data.
SpendTrend, which is a monthly macro-economic report based on aggregate same-store sales activity from merchants that process via First Data, also charted a bounce-back in retail spending. Retail dollar volume growth in October rose to 5.6 percent, two percentage points higher than September's 3.6 percent growth. "Retail spending growth accelerated toward the end of the month as the government shutdown ended and shoppers regained confidence," First Data said.
"Consumer spending growth gained momentum in October, which should provide retailers with an optimistic outlook heading into the holiday season," said Krish Mantripragada, First Data's Senior Vice President, Information and Analytics Solutions. "Retailers should expect holiday spending to be modestly stronger compared to last year barring any number of external events that could negatively impact sales such as poor weather or geopolitical events at home or abroad."
Further SpendTrend statistics supported First Data's overall optimism. All retail sub-categories showed positive year-over-year dollar volume growth, the acquirer said. Spending growth at clothing and general merchandise retailers hit 4.1 percent and 4.9 percent respectively. This time last year, those retailers experienced only 0.9 percent and 2.9 percent growth respectively. "Gas prices also continued to moderate which likely lifted discretionary purchasing power," First Data said.
The growth in the size of the average ticket also returned to positive territory, the acquirer reported. The average ticket rose by 0.5 percent in October, up from the decline of a negative 0.2 percent in September. Additionally, the average retail ticket size jumped to 1.8 percent in October, up from 0.8 percent growth in September, as retailers eased discounts. These numbers would have been higher if not for the drag from the gas station average ticket size, which stood at a 12-month low of a negative 7.9 percent in October 2013, First Data found.
Also of note is that consumers, for the tenth straight month, continued to spend more with credit cards in October 2013 than with debit cards. Credit dollar volume growth of 7.7 percent outpaced both signature debit (6.0 percent) and PIN debit (6.2 percent), according to SpendTrend. First Data said growth in credit card usage signaled consumers' choice of credit to fund discretionary purchases.
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