Retail industry sales – excluding those logged at automobile sellers, gas stations and restaurants – are expected to decline 0.5% this year, the National Retail Federation said in its 2009 economic forecast. This marks the first time that the trade group has projected a decline in annual retail sales since it started tracking them in 1995.

The NRF said the sales weakness is a result of consumers cutting back in their discretionary purchases as well as many shopping differently in a recessionary environment.

“Most of the consumer behavior we saw in 2008 will continue well into this year,” NRF chief economist Rosalind Wells said in a statement. “Shoppers will be seeking value, and trading down to discount and off-price retailers in order to stretch their purchasing power.”

The NRF's quarter-by-quarter outlook calls for a 2.5% sales decline in the first half of the year. It estimates sales to decrease 1.1% in the third quarter followed by a 3.6% increase in sales in the fourth quarter.

However, the firm qualified the projected 3.6% increase in the fourth quarter, saying that much of that improvement will likely be due to “easy comparisons” from the 2008 holiday season, as well as a likely pick up in the economy by the end of the year.