Holiday Sales Expected to Decline 1% in 2009

October 8, 2009

This article is included in these additional categories:

Analytics, Automated & MarTech | Financial Services | Retail & E-Commerce

Holiday retail industry sales are expected to hit $437.6 billion this year, a 1% decline from $441.97 billion in 2008, according to the 2009 holiday forecast from the National Retail Federation (NRF), which is not predicting a cheerful holiday for most US retailers.?

While this number falls significantly below what the NRF has tracked as the 10-year average of 3.39% holiday season growth, the decline is not expected to be as dramatic as last year’s 3.4% drop in holiday retail sales – from $457.75 billion in 2007.

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The holiday drop also is expected to be less precipitous than the NRF’s projected 3% decline in 2009 annual retail industry sales, which fell from $2.39 billion om 2008 to $2.32 billion. Last year marked the first decline in holiday sales recorded by the NRF since it started tracking them in 1992, writes Retailer Daily.

The NRF said some signs of economic recovery, such as improved retail sales in August and momentum in the stock market, exist. However, the the organization expects continued consumer uncertainty over job security and housing values to take a toll on 2009 holiday spending. And, as retailers continue to use more incentives and promotions, the NRF said certain popular holiday categories – such as apparel and electronics – may experience deflation because of aggressive sales.

The NRF’s 2009 holiday forecast is slightly more pessimistic than those of several other major research organizations, who are all predicting flat holiday sales this year. According to a recent survey from The Nielsen Company, the 2009 holiday season should deliver virtually flat sales results. The survey indicates 44% of consumer households will spend the same on the 2009 holidays as they did in 2008, with 42% planning to spend less and only 4% planning to spend more.

Two other recent research reports also predict static holiday sales performance this year. Retail Forward expects flat holiday growth in all retail channels except automotive, food, and drug. Unlike Nielsen, Retail Forward predicts a 2% decline in apparel sales (marking an improvement from last year’s 9% drop). However, Retail Forward is in sync with Nielsen with its predictions for a 2% decline in home goods retailer sales and 2.5% increase in sales at mass retailers.

In addition, research firm Deloitte is also predicting flat holiday sales. Deloitte’s 2009 holiday forecast expects total 2009 holiday sales to register a 0% change, excluding motor vehicles and gasoline, from last year. This would be an improvement from what Deloitte tracked as last season’s 2.4% decrease, the first decline in holiday sales according to Deloitte’s analysis of Commerce Department data dating back to 1967.

Other recent studies also indicate this year’s holiday sales will likely be soft. A consumer study commissioned by online job site CareerBuilder.com, 61% of US workers live paycheck-to-paycheck to make ends meet. These workers make no or minimal contributions to retirement accounts, and? tend to avoid all but the most necessary purchases. The study also indicated that few consumers, including affluent consumers who do have disposable income to spend, have a desire to start holiday shopping early this year, especially without coupon, discounts or other incentives.

In one other indication holiday sales will be sluggish this year, at least in the department store sector, according to the September American Express Spending and Saving Tracker update, 69% of consumers across all income levels said a department store discount would not be enough to motivate them to start holiday shopping early.

About the data: For its holiday shopping survey, the NRF defined “holiday sales” as retail industry sales in the months of November and December. Retail industry sales include most traditional retail categories including discounters, department stores, grocery stores, and specialty stores, and exclude sales at automotive dealers, gas stations, and restaurants. BIGResearch assisted the NRF with its holiday sales forecast.

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