News

NRF forecasts holiday sales increase of 2.3 percent

October 5, 2010

After a disastrous 2008 and a ho-hum 2009, this year's holiday season isn't expected to deliver retailers a lump of coal. Retail sales are predicted to increase a moderate 2.3 percent this year to $447.1 billion, according to the National Retail Federation. While that growth remains slightly lower than the 10-year average holiday sales increase of 2.5 percent, it would be a marked improvement from last year’s 0.4 percent uptick and the 3.9 percent sales decline in 2008.
 
"While many consumers will be wishing for apparel and electronics this holiday season, retailers are hoping the holidays bring sustainable economic growth," said Matthew Shay, NRF president and CEO. "Though the retail industry is on stronger footing than last year, companies are closely watching key economic indicators like employment and consumer confidence, before getting too optimistic that the recession is behind them."

Much like they have in previous years, retailers are expected to focus on supply chain efficiencies and inventory control this holiday season to limit their exposure to excess merchandise and unplanned markdowns. Companies are also expected to leverage new channels — like mobile — to drive sales and provide added service to customers who want to shop anytime, anywhere.

"While consumers have shown they are once again willing to spend on what’s important to them, they will still be very conscientious about price," said Jack Kleinhenz, NRF chief economist. "Retailers are expected to compensate for this fundamental shift in shopper mentality by offering significant promotions throughout the holiday season and emphasizing value throughout their marketing efforts."

NRF’s holiday sales forecast is based on an economic model using several indicators, including employment, industrial production, disposable personal income and previous monthly retail sales reports. The retail climate has been uneven for most of 2010. Sales have not been able to maintain momentum due to concerns about the viability of the economic recovery.