U.S. retail industry sales growth will shrink to 3.4 percent this year, hampered by the lingering housing slump, a trade group forecast.
Sales will total $2.53 trillion in 2012 after inflation helped boost growth to a greater-than-projected 4.7 percent last year, the Washington-based National Retail Federation said. The 10-year average annual growth rate was 3.1 percent, said Ellen Davis, a spokeswoman for the trade group.
This year’s expansion will be “incremental, modest,” NRF Chief Executive Officer Matthew Shay said in an interview yesterday at the organization’s annual convention in New York. The housing slump is the “biggest drag” on the U.S., he said.
Holiday sales grew a greater-than-predicted 4.1 percent last year, the NRF reported this past week. Retailers, including J.C. Penney Co. (JCP) and Williams-Sonoma Inc. (WSM), have reduced profit forecasts for the fourth quarter because of the promotions they used to drive those sales.
“The economy is not growing at the pace we would hope,” Shay said. “Consumers are finding a way to get out there and spend. But the consumers are different today. They are much more focused on value. They are much more informed than they ever were.”
Home prices will drop 1 percent in 2012, according to a forecast by Freddie Mac, which along with Fannie Mae and Ginnie Mae guarantee so-called agency mortgage bonds with government backing. The housing market has been held back by weak demand because of high unemployment and concerns about job security, Douglas Duncan, Fannie Mae’s chief economist, said Jan. 12.
The government must help the industry by lowering U.S. retailers’ average corporate tax rate from about 35 percent to the 25 percent average enjoyed by companies in the countries of the Organization for Economic Development, Shay said. The U.S. government must establish “tax fairness” by capturing state sales taxes from online sellers as it does from brick-and-mortar stores, and should make it easier for foreign tourists to obtain visas so they can shop in the U.S., he said.
“For retailers in 2012, risk-taking will move from optional to mandatory,” Shay said. “You are going to have to distinguish yourself with something other than price.”
The NRF’s measure of retail industry sales is based on the Commerce Department’s figures and excludes autos, gasoline and restaurants.
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