U.S. Holiday Retail Sales May Climb by 3.9%, NRF SaysLindsey Rupp
U.S. retail sales may increase 3.9 percent during the holiday season, as political and economic uncertainties damp consumer confidence, the National Retail Federation said.
Sales may rise to $602.1 billion in November and December, Washington-based NRF said today in a statement. The increase is slightly higher than last year’s 3.5 percent gain and the 10-year average of 3.3 percent, NRF said. Stores may hire 720,000 to 780,000 seasonal employees, compared with 720,500 last year, the group also said.
The first partial government shutdown in 17 years and the prospect of a lengthy budget fight could jeopardize the economic recovery and cool consumer sentiment, the auto market and sales of luxury goods. The economy has shown positive signs as unemployment dropped in August to its lowest level since December 2008, while sales of previously owned homes rose in August and housing prices gained 15 percent from a year earlier.
“We’re trying to balance looking at the whole year of relatively strong fundamentals underlying the economy against the uncertainty coming out of Washington and the significant unresolved issues that exist at a policy level,” NRF President Matthew Shay said in an interview. “We’re in for what could be a solid season, but we have to let the folks in Washington get out of their own way a little bit to let that happen.”
Online sales will rise as much as 15 percent to $82 billion in November and December, the NRF’s shop.org arm projected. That would compare with an increase of 15.5 percent in e-commerce sales in the fourth quarter of last year, the NRF said, citing Commerce Department data.
The Federal work stoppage may subtract as much as 1.4 percentage points from economic growth, depending on its length, according to Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC.
The partial shutdown entered its third day today after a meeting between President Barack Obama and congressional leaders yesterday failed to break the budget logjam that has led to the first shutdown since 1996.
The NRF would consider revising the sales estimate to take into account the impact of the shutdown if it persists, especially beyond a few weeks, Jack Kleinhenz, the group’s chief economist, said on a conference call today.
Focus on Value
In addition to the political uncertainty, consumers are contending with a 2 percentage-point increase in the payroll tax and rising mortgage rates, after the Federal Reserve signaled in May that it was prepared to start phasing out its monthly bond purchases this year.
While lower-income households have restrained purchases this year because of the increase in payroll tax, Shay said shoppers at all income levels this season will focus on value, whether in the form of discounts, quality or service.
Many retailers, from Macy’s Inc. to Nordstrom Inc. to Wal-Mart Stores Inc., missed second-quarter sales estimates and cut forecasts as consumers preferred to spend on bigger items like cars and home-related products.
The NRF’s projected increase in holiday sales compares with an estimated gain of 3.4 percent by the International Council of Shopping Centers last month, up from 3 percent in 2012. Deloitte LLP has projected sales may increase as much as 4.5 percent for November to January, led by non-store sales from online and catalog retailers, in line with the gain for last year.
Earlier in September, Chicago-based researcher ShopperTrak said sales in stores may advance 2.4 percent over the holidays, the smallest increase since 2009 as customers visit fewer stores. Customer traffic in November and December may decline 1.4 percent from the same period a year earlier, ShopperTrak also said.
To draw in shoppers, retailers may begin offering promotions as early as Nov. 1 this year to take advantage of a shorter holiday season, according to the researcher.
This year, there are 25 days between the day after Thanksgiving -- known as Black Friday -- and Christmas, compared with 31 days in 2012, and four instead of five weekends. Sales in November and December account for 20 percent to 40 percent of U.S. retailers’ annual revenue, according to the NRF.
Challenger, Gray & Christmas Inc., a Chicago-based employment consulting firm, has a more pessimistic view on holiday hiring by U.S. retailers, projecting a decline of about 6.9 percent this year amid shaky consumer confidence and as stores implement more efficient practices reducing demand for seasonal workers. Retailers will hire about 700,000 temporary staff, down from 751,800 last year, which was a 12-year high, the firm said last month.
Some retailers have begun announcing holiday hiring plans. Wal-Mart said in September that it would boost holiday hiring to 55,000, a 10 percent increase from last year. Target Corp. has said it would take on about 70,000 workers, 20 percent fewer than a year earlier.