Consumers are set to spend about 3.7% more on holiday shopping this year than they did in 2022, according to the latest Mastercard SpendingPulse report (MA). However, the boost will mostly come from an increase in online sales, not in-store sales. In an interview with Yahoo Finance Live, Mastercard Senior Advisor Steve Sadove says the data shows "we have a healthy, but cautious consumer. The consumer is spending again," noting that spending growth levels are about in line pre-pandemic levels. Given this environment, Sadove notes that "value is an important word" and that the data is still showing that people are still spending on experiences, but less on stuff.

Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.

Video Transcript

BRAD SMITH: According to Mastercard's holiday SpendingPulse, total retail spending is expected to rise 3.7% over the holiday season. But this will be mostly driven by e-commerce, not in-store sales. So is the mall shopping experience dead? Oh, that's grim. Here with the latest trends is Steve Sadove who is the Mastercard Senior Advisor and former Saks CEO and Chairman. Steve, great to get some time with you here this morning and a Happy Thanksgiving weekend to you.

First and foremost, when you think about some of these trends that you were able to pull out of this pulse insights here, what is the first thing that really perhaps comes to mind for you that gives us a sense or kind of tells a story about the consumer?

STEVE SADOVE: Well, great to be with you this morning. You know, I think when I look at the numbers, it tells me that we have a healthy but cautious consumer. The consumer spending, again, 3.7% growth is real growth. The inflation rate is about let's call it in that low 3 range right now. So the consumer is getting essentially flat unit growth. And that's where we've been over the last couple of years. If you look at pre-pandemic, you were seeing 3% or 4% growth. So we're back to that kind of growth.

You had very inflated growth a year ago, but inflation was 7 or 8% growth. So I think the consumer is spending, but they're being very cautious. Value is an important word. They're spending, as we all know, a lot more on experiences and less on stuff. The e-commerce business is healthy again. You know, we had a period during the pandemic when everybody was just shopping e-commerce. You had this massive growth from about 12% to 18% to 20% of commerce in-- being done online.

That then slowed down dramatically as the world opened up and everyone wanted to get back in a store. Now we're into what I would call a more balanced growth. Prior to the pandemic, e-commerce was growing a bit faster than stores and that's the experience that we're seeing right now.