By Sabrina Escobar

U.S. consumers didn't let inflation or rising interest rates slow down their online shopping this past holiday season.

People spent $241.4 billion online from Nov. 1 to Dec. 31, 8.7% more than last year, Adobe said, far outstripping the gain in purchases at stores reported elsewhere.

Half of the online spending was in just three categories: electronics, apparel, and furniture and home goods. Discounts in two of those areas -- electronics and apparel -- were among the biggest for the season. Markdowns for electronics peaked at 30.1% off listed prices, while apparel discounts peaked at 23.2%, Adobe said.

"Strong discounts this season enticed consumers who have become increasingly price sensitive," Adobe said.

U.S. consumers have been budget conscious for the better part of the past two years as households navigate higher inflation and interest rates. Online shopping, which makes it easier to compare prices and secure the best deal, has emerged as a way for people to better control expenses, in addition to offering the convenience of home delivery.

Indeed, while online shopping had a stellar season, in-store sales struggled, according to data from other sources. Mastercard SpendingPulse data suggest that in-store sales increased 2.9%, while online retail sales surged 6.7% and total consumer spending rose 3.8% year over year.

As shoppers get more comfortable with buying things online, they are also experimenting with new tools and shopping channels. For instance, most online transactions -- 54.5% -- took place on a smartphone this holiday season, up from 51.1% last year and hitting a new milestone, Adobe said.

Usage of Buy Now, Pay Later tools also hit a high, contributing $18.2 billion in online spending. That was $1.6 billion, or 9.6%, more than in the 2023 holiday season.

And according to Adobe, hat bots powered by artificial intelligence helped improve traffic to retail sites. Chat bot-driven traffic was up 1,300% from last year.

"The 2024 holiday season showed that e-commerce is being reshaped by a consumer who now prefers to transact on smaller screens and lean on generative AI-powered services to shop more efficiently," said Vivek Pandya, lead analyst at Adobe Digital Insights.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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January 07, 2025 11:31 ET (16:31 GMT)

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