Forecast: Outlook improved for 2010

Columbus, Ohio Retail Forward released its economic forecast Tuesday, predicting that retail sales will show quarter-by-quarter improvement in 2010 and approach long-term average growth rates by the end of the year.

A Kantar Retail company, Retail Forward’s 2010 forecast for retail sales excluding the auto and fuel channels is an increase of 1.5% to 2.0% in the first two quarters of the year and a step up to 3.0% to 4.0% growth in the second half of the year as job and income growth start to re-emerge.

“The first clear sign that retail sales are on the path to recovery came during the holiday,” said Frank Badillo, senior economist for Retail Forward. “Keeping retail sales on this recovery path will require -- more than anything -- a return of job and income growth.”

Retail Forward said that retail sales growth in 2010 will be led by the channels that performed strongest during the holiday, including non-store and online; food, drug and mass (FDM); and soft goods. Retail sales excluding the auto and fuel channels grew 1.2% in the fourth-quarter holiday period, ending four consecutive quarters of declines. When supermarkets, restaurants and drug stores are also excluded, sales rose 0.9% in the key holiday channels that sell most holiday gifts.

“As we head into 2010, non-store and online sales will remain strong as shoppers continue to shift demand for consumer electronics and other categories online,” Badillo said. Also leading growth will be apparel stores, particularly off-mall value specialty stores, and small-ticket discretionary categories.

Value-focused mass retailers will also hold up well, including supercenters and warehouse clubs, according to the forecast.