Moody’s forecasts 4- to 5% sales increase in 2015

New York --The outlook for the U.S. retail industry in 2015 is stable, according to a new report by Moody’s Investor Service, which forecasts that retail sales will grow 3- to 4% in 2014, and 4- to 5% in 2015.



The report, Moody’s U.S. Retail Industry Outlook, also finds that traditional brick-and-mortar retailers will be formidable competitors to pure-play online merchants.



“Best Buy’s and Walmart’s online sales grew nearly 30% year-over-year, indicating that well-run retailers can easily grow at rates around 20% once they develop certain base level capabilities such as in-store pick-up and ship-from store,” the report states. “Some brick-and-mortar retailers are already using their physical locations as a powerful weapon in the race for faster delivery times.”



Moody’s sales outlook is based on Moody’s Macroeconomic Board’s forecast for U.S. GDP growth of 1.5% to 1.5% in 2014, and 2.5% to 3.5% in 2015.



The report finds that performance by retail category will be mixed. Home improvement, drug stores and auto retailers will bolster growth, and apparel and footwear retailers will outperform in 2015.



Moody’s expects online sales, which average about 5% of total sales, to remain the fastest growing segment of the retail industry.



The report describes economic fundamentals as mixed, with solid gains in household wealth on the back of stronger equity and housing markets a clear positive. However, it notes that the distribution of wealth is very skewed and doesn’t help lower income consumers, who remain pressured.



“As long as disposable income remains depresed, underemployment persists and wate growth remains weak, it is difficult to see what catalysts will drive consumer spending higher,” the report states.



In another findings, Moody’s does not expect retailers hit by data breaches to experience any material financial fallout.