Retail trade group sees modest holiday sales gain

[October 06, 2011]  NEW YORK (AP) -- The National Retail Federation, the nation's largest retail trade group, expects winter holiday sales to rise 2.8 percent to $465.6 billion this year.

That would be smaller than 2010's 5.2 percent increase, but it's higher than the average increase for November and December over the past 10 years.

And it would continue a recovery begun last year after holiday sales fell the previous two years; they dropped 4.4 percent in 2008 and 0.4 percent in 2009.

NRF's president and CEO, Matthew Shay, said the challenging economic climate -- particularly the high unemployment rate -- will weigh on the biggest shopping period of the year.

But he said stores and their shoppers are acclimating.

"While businesses remain concerned over the viability of the economic recovery, there is no doubt that the retail industry is in a better position this year to handle consumer uncertainty than it was in 2008 and 2009," Shay said in explaining Thursday's forecast.

Shay predicted a "slow and steady" holiday season.

The NRF forecast is in line with sales predictions from ShopperTrak and the International Council of Shopping Centers, which both foresee a 3 percent increase in sales for November and December. Those groups both measured a 4.1 percent increase in 2010.

Consulting firm Deloitte LLP also expects sales in the same range. It forecasts an increase of 2.5 percent to 3 percent for November through January, and it too sees a drop from a year earlier, when it measured a 5.9 percent gain.

NRF says holiday revenue grew 2.6 percent per year on average over the past decade. The NRF counts sales at discounters, department stores, grocery stores and specialty merchants. It excludes automotive dealers, gas stations and restaurants from its counts.

The industry's cautious stance heading into the holidays contrasts with stores' optimism earlier in 2011. Encouraged by strong holiday shopping in 2010, stores were starting to see a road to economic recovery. Jobs growth was gaining momentum, and consumers' confidence was climbing, though it remained anemic.

But the situation has stagnated: Job growth has sputtered, and the housing market remains weak. Gas, food and clothing cost more than a year ago. And the stock market is in turmoil amid over the European financial crisis and continuing uncertainty in the U.S.

The good news is that spending in mid-July through mid-September, the back-to-school period, appears to have been solid. According to MasterCard Advisors' SpendingPulse, sales of back-to-school categories like children's clothing and office supplies rose 3.2 percent for the period, the biggest increase since 2007, when they rose 2.1 percent. SpendingPulse data includes all forms of payment including cash.

Shopping in late summer is not a predictor for the holidays -- because people are more focused on necessities like children's clothing and school supplies -- but back-to-school trends can be a helpful gauge.

And experts say shoppers are still looking for bargains.

"The consumer needs to be lured with a deal, and that's why we are seeing more aggressive deals," David Bassuk, managing director of retail at AlixPartners, a consultancy.

Also coming Thursday: September sales reports from selected major chain retailers, including Macy's Inc., Target Corp. and J.C. Penney Inc.

The retailers will report on a key indicator of their fiscal health: the comparison of September 2011 sales with September 2010 sales at stores open at least a year. Overall, ICSC expects the figure to rise 4 to 5 percent. It rose 4.6 percent in August.

[Associated Press; By ANNE D'INNOCENZIO]

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