A shortened holiday shopping calendar favored electronic platforms over stores, preliminary data suggest, with much of the growth in sales coming from a surge in online orders that taxed the delivery system.
Total U.S. retail sales, excluding automobiles, rose 3.4% from Nov. 1 through Christmas Eve compared with last year, according to Mastercard SpendingPulse, which tracks both online and in-store spending with all forms of payment.
The gains came during a compressed holiday-shopping season in which an increasing share of consumers left at least some gift buying until the 11th hour. Super Saturday, as the last Saturday before Christmas is known, was projected to be the year’s biggest shopping day.
The tighter window raised the stakes for retailers to draw last-minute shoppers. It has also increased pressure on delivery companies, which in some cases were caught off guard by the sheer volume of packages early in the holiday season and have been trying to catch up.
“There were many records set in this historic peak season,” FedEx Corp. President and Chief Operating Officer Rajesh Subramaniam said in an interview Monday. He said package volumes started off above projections the Monday after Thanksgiving, and subsequent Mondays have hit historic levels, which he chalked up partly to the shorter season. “It’s very compressed and that had something to do with it.”
Many industry consultants have predicted strong or steady holiday retail sales, buoyed by a robust U.S. economy and low unemployment. This season so far reflects some of the larger forces shaping the retail industry, with department stores struggling to attract shoppers, while others, including Amazon.com Inc. and Target Corp. , continue to grow online and grab market share.
Online sales continued to grow faster than sales overall, rising 18.8% during the period and accounting for 14.6% of total sales, the highest percentage ever recorded by Mastercard. Another tracking firm, Adobe Analytics, found that shoppers spent $125.6 billion online from Nov. 1 through Dec. 19, a 13.6% increase compared with last year. Buying on smartphones accounting for 35% of that revenue, according to Adobe, which tracks hundreds of retail websites.
Preliminary data show more shoppers avoiding stores in favor of online buying. Mastercard said in-store sales rose about 1.2% in the period it measured. Traffic to physical stores on Super Saturday fell 9.7% compared with the Saturday before Christmas last year, according to Sensormatic Solutions ShopperTrak data, which uses cameras to count traffic to stores. Traffic to stores between Nov. 3 and Dec. 21 fell 7.7% compared with last year.
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With six fewer days this year between Thanksgiving and Christmas, more shoppers than usual waited longer to finish their gift buying. As of early December, 52% of shoppers who had started buying gifts had completed their shopping, compared with 58% at the same point last year, according to a survey of 7,779 adult consumers by the National Retail Federation.
Walmart Inc., the country’s largest retailer by revenue, said 25% of shoppers hadn’t yet started their holiday gift buying as of last week. An online survey by e-commerce platform Shopify showed 43% of people planned to make their final purchases in the three days before Christmas.
The backloaded season has made the overall holiday sales performance more difficult to predict.
“I don’t think any of us know how folks are going to behave,” said Steve Barr, head of the retail practice at consulting firm PricewaterhouseCoopers LLP.
PwC has predicted that overall holiday sales will rise 2.7%, slightly lower than the roughly 4% increase predicted by the NRF and some other consultants.
“So many consumers I’ve interviewed say, ‘I can’t believe Christmas is [this] Wednesday,” said Marshal Cohen, chief retail industry adviser at the NPD Group, Inc., in an interview late last week. “Now we are in gifting mode,” which should help categories like toys and apparel see strong sales, he said.
FedEx Corp. and United Parcel Service Inc. have relied on billions of dollars in investments in added sorting facilities, aircraft and technology to redirect packages to cope with the record shipping volume.
Amazon also continued to handle a growing percentage of its own packages with a nascent delivery network expected to deliver 3.5 billion packages world-wide for the year. Parcel industry research firm SJ Consulting Group Inc. estimated that Amazon would deliver twice as many packages in the U.S. as it did last year.
The shorter window left carriers less time to catch up from a tough start to peak season. Cyber Week proved busier than expected for FedEx, which handled nearly 38 million packages on the Monday after Thanksgiving, well above its projection for 33 million packages on that day.
Bad weather early on in places like Colorado, the Upper Midwest and the Northeast caused delays and dips in on-time delivery performance, according to ShipMatrix Inc., a software provider that analyzes shipping data.
The environment created logjams at some facilities, delaying deliveries. Michael Nicholson of Minneapolis said that his girlfriend’s dress didn’t arrive in time for an office holiday party because it was stuck on a FedEx trailer at a nearby sorting center for several days. “They were so far behind and they had trailers to unload before the one her dress was loaded on,” Mr. Nicholson said in an email.
FedEx’s Mr. Subramaniam said that such problems are likely isolated events that occurred because of severe weather. “When it happens in certain pockets, we put our best team forward,” he said.
Shippers tend to use FedEx’s Ground network earlier in the peak season, then transition to its Express network closer to Christmas for guaranteed delivery before the holiday. Mr. Subramaniam said FedEx expects all packages promised by Christmas to make it. “We are in good shape.”
Delivery companies have caught up in many regions, with on-time delivery rates rising in the second week of December, according to ShipMatrix. Weekend deliveries have helped, according to industry consultants and an executive from a regional carrier, allowing packages to be cleared out of the network before a fresh batch of parcels arrive for processing.
UPS said it is expecting record shipping volume at the end of the year, in part because of online shopping and returns that will continue at a high level through the first week of January.
“We have provided strong on-time customer deliveries throughout the period, and adapted well to weather and other challenges,” David Abney, UPS chairman and chief executive, said in a statement.
The U.S. Postal Service chipped in to help Amazon, FedEx and UPS meet their holiday goals. All three companies will sort packages by ZIP Codes and drop them off at post offices around the country. In some communities, the Postal Service sends out vehicles dedicated to solely deliver packages early in the morning before the regular mail route sweeps through neighborhoods with other items.
A Postal Service spokesman said that the agency is able to scale up its network during the busiest period “through our unrivaled network” that visits more homes daily than the other carriers. “We continue to have a successful peak season,” he said.
—Charity L. Scott contributed to this article.
Write to Sarah Nassauer at sarah.nassauer@wsj.com and Paul Ziobro at Paul.Ziobro@wsj.com
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