U.S. Holiday Retail Sales May Slow: ShopperTrak

Holiday retail sales in the U.S. may have the slowest growth in two years as high unemployment and gas prices restrain consumer spending.

Retail sales may rise 3 percent in November and December, compared with a 4.1 percent gain a year earlier, according to a report released by ShopperTrak, a Chicago-based consulting firm. Sales dropped 1.3 percent in 2009. Traffic at stores may decrease 2.2 percent.

Confidence among U.S. consumers plunged to the lowest in more than two years in August as Americans’ outlook for employment, incomes and business conditions soured. The unemployment rate was 9.1 percent last month and has been 9 percent or higher for 26 of the past 28 months. Holiday sales and traffic make up about 20 percent of annual retail activity, according to ShopperTrak.

“The persistently high unemployment and fuel rates, along with consumers’ conservative purchasing attitudes will affect spending this holiday season, more than in recent years,” said Bill Martin, co-founder of ShopperTrak.

Shoppers this holiday season may have the same frugal approach taken in 2009, Ellen Davis, vice president of the Washington-based National Retail Federation, said in an interview.

Making Investments

“Shoppers are very calculated and careful about what they are purchasing,” Davis said. “They especially want things that will last, so they may be willing to spend on longer-term investments.”

Lower-end apparel and accessories retailers may face pressure to mark down items to compete with discount chains, while high-end stores may have an advantage because shoppers are more likely to spend for better value, ShopperTrak said.

Luxury companies like jeweler Tiffany & Co. (TIF) and handbag- maker Coach Inc. (COH) will do well, said Paul Lejuez, an analyst at Nomura Securities in New York. Discount chains such as Ross Stores Inc. (ROST) and T.J. Maxx may also have strong sales, he said.

Specialty retailers such as Gap Inc. (GPS), Abercrombie & Fitch Co. and American Eagle Outfitters Inc. (AEO) are in a “standoff” as they compete for the same struggling customers, he said.

“This year, we’ve seen the strong stay strong and the weak stay weak,” Lejuez said. “Nothing is going to change that this holiday season.”

To contact the reporter on this story: Ashley Lutz in New York at alutz8@bloomberg.net.

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.