After last year's holiday season proving to be the strongest in the last five years, NRF is predicting moderate holiday sales growth for this year. Total holiday retail sales are expected to increase 5.0% over last year, bringing holiday spending to $435.3 billion. In comparison, holiday sales in 2004 rose 6.7% to $414.7 billion.
“A combination of many factors, including energy prices, the job market, disposable income, and consumer confidence, will ultimately affect retailers sales this holiday season,” said NRF chief economist Rosalind Wells. “Though it might be easy to label gas prices as the make-or-break factor for the holidays, it is crucial for analysts to look at the big picture instead of isolating one economic indicator to project sales.”
One-fifth of retail industry sales (19.9%) occur during the holiday season, making it the most important time period of the year for the industry. This year, retailers will struggle with tough comparisons over 2004, which will make significant gains more difficult to achieve. In addition, the effects of Hurricane Katrina and high prices at the pump play a role in the tempered outlook. However, NRF maintains that steady consumer spending and strong second and third quarter gains indicate potential for a solid holiday season.
“Consumers wont have to wait until the last minute to get the best deals this year because retailers are expected to be aggressive in their pricing strategies throughout the entire holiday season,” said NRF President and CEO Tracy Mullin. “Stores are planning for holiday sales and promotions, so discounted prices wont have a negative effect on profits.”
