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NRF Predicts Consumer Spending to Increase 4% for Christmas Season

Oct 7, 2014 9:24 AM   By Jeff Miller
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RAPAPORT... The National Retail Federation (NRF) predicts that U.S. Christmas-season retail sales will increase 4.1 percent year on year to approximately $619.9 million for the months of November and December 2014.  The projected increase is higher than actual increases for the holiday seasons in 2012 and 2013, but lower than the 4.8 percent rise in 2011. Online retail sales growth is expected to be in the 8 percent to 11 percent range, according to the NRF.

The Christmas season is the most important time of the year for U.S. retailers as total sales represent more than 19 percent of annual figures,  although jewelers perform much better.  The NRF noted that during the Christmas season in 2013,  jewelry stores experienced the bulk  of their annual sales -- at 28 percent, or $9.3 billion nationwide. By comparison, seasonal sales at department stores, totaling $41.7 billion, accounted for 23.8 percent of that sector's annual total. Electronics and appliance stores, sporting goods, hobby and book stores and clothing stores also derive between 22 and 23 percent of their sector's annual sales during the Christmas season, according to the NRF.

Roughly 40 percent of U.S. consumers who shop for the Christmas season are already on the annual hunt for gifts and bargains. The NRF also found that other reasons why consumers shop earlier each year is to spread out their shopping budget, avoid crowded stores during the traditional  Thanksgiving and Christmas weeks and to avoid the general stress cause by the shopping frenzy.

“Retailers could see a welcome boost in holiday shopping, giving some companies the shot in the arm they need after a volatile first half of the year and an uneventful summer,” said NRF's president and CEO, Matthew Shay. “While expectations for sales growth are upbeat, it goes without saying there still remains some uneasiness and anxiety among consumers when it comes to their purchase decisions. The lagging economic recovery, though improving, is still top of mind for many consumers.

“Recognizing the need to keep household budgets in line, we expect shoppers will be extremely price sensitive as they have been for quite some time. Retailers will respond by differentiating themselves and touting price, value and exclusivity,” said Shay.

NRF's chief economist, Jack Kleinhenz, added, “Though we have only seen consumer income and spending moderately -- and erratically -- accelerate this year, we believe there is still room for optimism this holiday season. In the grand scheme of things, consumers are in a much better place than they were this time last year and the extra spending power could very well translate into solid Christmas sales growth for retailers; however, shoppers will still be deliberate with their purchases, while hunting for hard to pass-up bargains.”

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Tags: Christmas sales, Consumers, holiday season, Jeff Miller, Jewelry, NRF, retail sales, spending, stores
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