| Holiday Retail Sales to Rise 4.0 Percent |
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The National Retail Federation (NRF) announced today that it is forecasting 2002 holiday retail sales to increase 4.0 percent on a year-over-year basis. NRF defines “holiday retail sales” as sales in November and December for retail stores in the GAFS category: general merchandise stores, clothing and clothing accessories stores, furniture and home furnishings stores, electronics and appliance stores, and sporting goods, hobby, book and music stores. This year’s moderate sales prediction approximates the 4.3 percent gain seen for the 2000 holiday season. Last year's holiday retail sales were up 5.6 percent -- higher than most industry-watchers had anticipated.
“Consumers this year have been cautious in their spending, but nevertheless continue to bolster retailers' performance,” said NRF Chief Economist Rosalind Wells. “NRF sees the economy growing around 3.5 percent in the second half of this year, which should be a solid enough environment for reasonably good holiday sales. We anticipate that home-related merchandise and leisure goods will do well this holiday season, and that apparel demand should pick up -- as many consumers have postponed this purchase.”
Wells notes that a sluggish economic recovery is the main cause for consumers’ cautious approach. “Employment is growing, but slowly, and incomes are being restrained by soft labor markets,” said Wells. “Consumer and business confidence have wavered due to corporate governance concerns, the stock market has declined, threats of terrorism persist, and the chance of war with Iraq looms.”
However, Wells emphasizes that there are some positive trends that will lead to a continuation of the recovery. She believes chances of a "double dip" recession are slim, as interest rates and inflation remain very low. These factors have been strengthening the housing market, as well as allowing consumers to spend on big-ticket items like new cars. Consumers who refinanced loans have been able to "cash out," thereby providing them with more spending power. Overall, economic productivity is high, so businesses should be better able to increase their profits and step up their capital investment soon.
According to preliminary results from the first installment of the 2002 NRF Holiday Consumer Intentions & Actions Survey, conducted by BIGresearch, consumers plan to take a sensible approach to holiday shopping this year. The majority of consumers surveyed – 62.6 percent – said they plan to spend the same amount on holiday shopping in 2002 as they did last year. Almost one third, or 29.5 percent, said they plan to spend less, while only 7.9 percent said they plan to spend more.
Additional data from BIGresearch’s ongoing survey and measurement of consumer confidence suggest that consumers may also be starting to view the economy more favorably. Confidence figures rose slightly in September – the first increase seen in five months. In September, one third of all consumers (29.9 percent) felt confident or very confident about the chances of a strong economy in 2002. This represented a 1.1 percent increase from August readings.
“The consumer has been giving mixed signals,” said Gary Drenik, President and CEO of BIGresearch. “Yet, they are also telling us that they’re starting to become more confident in their personal near-term outlooks, in buying homes, and financing car purchases.”
According to the forthcoming survey, consumers who plan to spend less this year on holiday are doing so because they’re setting aside money for other purposes, such as supplementing savings or paying down debt.
“In a shopping environment that has turned even more “inward” since last September, retailers need to be sure they are hitting the right notes with the customer,” added Drenik. “This holiday, those notes increasingly focus on practicality, personal care, authenticity, and essentials.”
About the NRF
The National Retail Federation (NRF) is the world's largest retail trade
association with membership that comprises all retail formats and channels
of distribution including department, specialty, discount, catalog, Internet
and independent stores. NRF members represent an industry that encompasses
more than 1.4 million U.S. retail establishments, employs more than 20 million
people -- about 1 in 5 American workers -- and registered 2001 sales of $3.5
trillion. NRF’s international members operate stores in more than 50 nations.
In its role as the retail industry's umbrella group, NRF also represents
32 national and 50 state associations in the U.S. as well as 36 international
associations representing retailers abroad. For more information about NRF,
visit www.nrf.com.
Source: National Retail Federation press release, September 17, 2002.
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