Storeowners should feel a bit more cheer this holiday season, as experts are projecting stronger retail sales than last year, though the gains will be modest as the recession will continue to limit consumer spending.
The National Retail Federation (www.nrf.com) announced on Oct. 6 that holiday sales should increase 2.3 percent this year and reach $447.1 billion. The financial advisory firm Deloitte (www.deloitte.com) said on Sept. 20 that holiday retail sales would rise 2 percent.
Granted, the projected gains are modest, but they outpace the 0.4 percent increase in holiday sales last year and the 3.9 percent decline in 2008. Though retail sales should improve between November and January, experts said consumers will still spend cautiously.
“Sustained weakness in the housing and employment markets continue to restrict consumer cash flow,” said Carl Steidtmann, Deloitte’s chief economist, in a statement. “Consumers’ discretionary funds have dwindled as households remain focused on reducing debt and increasing their savings, while banks continue to limit access to credit, and stimulus checks have run out.”
Shoppers will continue to be sensitive about prices during the holidays, according to NRF chief economist Jack Kleinhenz. “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,” he said in a statement. “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.”
While sales at brick-and-mortar stores will improve slightly, online sales should be a bit stronger, according to Alison Paul, Deloitte’s vice chairman and retail sector leader in the United States. “Non-store retailing, particularly e-commerce, is gearing up to be the bright spot in the holiday picture this year,” said Paul in a statement, adding that non-store sales (including the online channel, catalogs and interactive TV) would increase 15 percent.