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Analysts Expect Christmas Sales Growth Under 4%

Political, Economic Issues Pressure Retail Sales Growth

Oct 3, 2012 6:00 PM   By Rapaport News
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The major retail consulting organizations have predicted Christmas season sales for the U.S. and for the most part they all expect low single-digit increases in 2012. The  growth rates are all less than projects made for Christmas 2011.   Factors that will influence consumer spending in the fourth quarter are related to the so-called fiscal cliff, a looming income tax increase, gasoline prices and government spending cuts.

Deloitte concludes that the economy’s health and the presidential election take center stage among consumers this fall, but with holiday shoppers waiting in the wings retailers should expect a modest increase in 2012 holiday sales.

“Economic headwinds nagging consumers this fall include stubbornly high gasoline prices that continue to creep up and soft housing and job markets,” said Carl Steidtmann, Deloitte’s chief economist. “While consumers turned out in the summer to give retailers solid gains for a few months, that pace may be difficult to sustain through the end of the year. Consumers and businesses alike may pause in advance of the election; however, retailers may benefit from a post-election consumer spending boost.”

Deloitte expects total holiday sales to climb to between $920 and $925 billion, representing a 3.5 to 4 percent increase in November through January. This growth rate is below last year’s 5.9 percent gain.

“Non-store sales continue to outpace overall growth, but increasingly influence consumers’ experience with the retail store, from trip planning, to in-store product research, and post-purchase reviews and  sharing,” said Alison Paul, the vice chairman of Deloitte's retail and distribution sector. “This holiday season, retailers’ most lucrative customers may be the ones they engage across physical and virtual storefronts.”

The National Retail Federation (NRF) concluded that political and fiscal uncertainties temper improvement in consumer confidence, so, holiday sales this year will increase 4.1 percent to $586.1 billion. 

“This is the most optimistic forecast NRF has released since the recession. In spite of the uncertainties that exist in our economy and among consumers, we believe we’ll see solid holiday sales growth this year,” said NRF's president, Matthew Shay. “Variables including an upcoming presidential election, confusion surrounding the ‘fiscal cliff’ and concern relating to future economic growth could all combine to affect consumers’ spending plans, but overall we are optimistic that retailers promotions will hit the right chord with holiday shoppers.”

Recent government data released shows a crosscurrent of indicators that could impact holiday sales, including unimpressive job and income growth and an unemployment rate stuck at eight percent.  However, positive indicators are emerging that show a cautious but capable consumer, such as increases in confidence and home prices.

NRF's chief economist, Jack Kleinhenz, said,  “There’s still some general anxiety amongst consumers when it comes to how the state of the economy is impacting their spending plans, but retailers can expect to see excitement around their promotions and plenty of bargain hunters both online and in stores in the coming months.” for the first time  released its 2012 online holiday sales forecast, expecting sales to grow 12 percent over Christmas 2011 to as much as $96 billion.

Shay said, ''Online retail has been a bright spot for years and we don’t expect that trend to change anytime soon, especially with the growth in mobile. Aside from the convenience, shoppers look to the holiday season to take advantage of retailers’ increased digital offerings. In addition to enhancing the site experience, retailers have spent the year investing in optimizing their mobile and social platforms, just what holiday shoppers are looking for.”



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