Holiday Season Could Be Tough on Retailers

 

Sept. 23, 2004--Two forecasts released Monday revealed varying expectations for retail sales this holiday season.

The National Retail Federation on Monday predicted holiday retail sales would grow by 4.5% over the previous year. The Washington-based trade group cited a weak holiday season in 2002, which resulted in comparatively high year-over-year growth in 2003, to warn that this year's gains may not be as strong in comparison.

"Although consumer spending has been inconsistent in recent months, we expect the holiday season to bring more stability to the industry," said Rosalind Wells, chief economist for the NRF, in a statement. "Home-related merchandise and consumer electronics should do well this holiday season and trendy fashions should help spark clothing sales."

Retail Forward, an Ohio-based market research firm, sounded a more optimistic note for holiday retail sales. The company on Monday predicted an overall growth rate of 6.5% this December, which would match the strong gain posted in 2003. Retail Forward also forecast a 6% rate of growth for the combined retail sectors that include general merchandise, apparel, furniture and other specialty stores, which would be the highest growth rate recorded since 1999.

"The outlook for the holiday season should not be deterred by recent weak job growth and high fuel prices, which have raised doubts of the sustainability of the economic rebound," said Frank Badillo, senior economist for Retail Forward. "Lean inventories and firm prices should help. Retail prices should also continue to be boosted by a healthy housing market."

The holiday season typically accounts for nearly a quarter of annual retail sales, according to the NRF.

"Retailers know they will have their work cut out for them this holiday season, but they are up to the challenge," said NRF president and CEO Tracy Mullin. "Despite economic and geopolitical concerns, consumers continue to set aside money for what is most important to them."