Holiday retail sales are expected to increase 2.8% to $465.6 billion this season, according to a National Retail Federation (NRF) forecast released on Oct. 6. That is slower growth than last year’s 5.2% increase but slightly greater than the 10-year average holiday sales increase of 2.6%, according to the NRF.
During a conference call with reporters, NRF chief economist Jack Kleinhenz said the industry’s slow growth was due to weakness in demand, lack of confidence, geopolitical issues and unemployment numbers.
He added that the industry should not “confuse speed with direction. The pace is slower than past recoveries, but consumers haven’t thrown in the towel.”
NRF president and CEO Matt Shay said during a conference call that this will be a “promotional holiday season” driven by discounts, promotions and deals. He added that consumers will “operate with caution” and that they’ll be “moving aggressively to use mobile technology and data to focus on the best opportunity.”
Pam Goodfellow, BIGresearch senior analyst, echoed Shay’s remarks during the call.
“Practicality and needs are at the forefront of spending,” she said. “Sales, coupons, mobile technology and magazine insert comparisons will all be used during the season.”
“This will not be a credit card Christmas,” she added. “Credit is no longer seen as the magic money tree. This year, consumers are mindful that impulse purchases on credit will not feed their children.”
Retailers are expected to hire between 480,000 and 500,000 workers for the holiday push, which is consistent with the NRF’s 2010 employment numbers, according to the forecast.
The holiday sales forecast is based on an economic model that measures consumer confidence, consumer credit, disposable personal income and previous monthly retail sales.