NRF: Holiday sales predicted to fall 1.0%

Washington, D.C. The National Retail Federation on Tuesday released its 2009 holiday forecast, which projects that November and December holiday retail sales will decline 1.0% this year to $437.6 billion.

The NRF pointed out that while the decline is a sharp departure from the 10-year average 3.39% holiday growth, it is a slightly more optimistic projection than last year’s 3.4% drop in holiday sales.

The predicted 1.0% decline is also an improved picture than the 3.0% decline in annual retail industry sales expected for all of 2009.

“As the global economy continues to recover from the worst economic crisis most retailers have ever seen, Americans will focus primarily on practical gifts and shop on a budget this holiday season,” said NRF chief economist Rosalind Wells.

The NRF added that although some hopeful signs of a recovery have begun to emerge -- such as better-than-expected sales in August and momentum in the stock market -- continued consumer uncertainty over job security and housing values will take their toll on holiday spending.

And, as retailers become even more promotional, certain popular holiday categories such as apparel and electronics may experience deflation due to aggressive sales.

“The expectation of another challenging holiday season does not come as news to retailers, who have been experiencing a pullback in consumer spending for over a year,” said NRF president and CEO Tracy Mullin. “To compensate, retailers’ focus on the holiday season has been razor-sharp with companies cutting back as much as possible on operating costs in order to pass along aggressive savings and promotions to customers.”

An Associated Press report on Tuesday compared the NRF forecast to those of several other groups, including the International Council of Shopping Centers, which predicted a 1.0% rise for November and December. ICSC chief economist Michael Niemira cautioned that the holiday 2009 numbers may look better in part because last year’s drop was so severe. "The turn is upon us in the upcoming months, but it's mainly driven by the arithmetic," Niemira said.