NRF puts holiday growth at 3.7%
The National Retail Federation issued an above average holiday season sales forecast in which the desire of Americans to spend will be offset by their ability to do so.
The trade group projects that total holiday sales will increase 3.7% to $630.5 billion during the November time-frame and that online sales would increase between 6% and 8% to represent $108 billion of the total.
The 3.7% growth rate is a deceleration from a prior year increase of 4.1% but well above the 10 year average growth rate of 2.5%. Even so, the estimate could be viewed as conservative given improvements in the unemployment rate, now at 5.1% nationally, and the year over year decline in gasoline prices and the impact cheap gas has on the disposable incomes of many Americans.
“With several months of solid retail sales behind us, we’re heading into the all-important holiday season fully expecting to see healthy growth,” said NRF president and CEO Matthew Shay. “However, while economic indicators have improved in several areas, Americans remain somewhat torn between their desire and their ability to spend. The fact remains consumers still have the weight of the economy on their minds, further explaining the complex retail spending environment we are seeing right now. We expect families to spend prudently and deliberately, though still less constrained than we saw even two years ago.”
NRF’s outlook is tempered by some political variables, which may or may not come to pass. For example, Shay indicated that NRF’s outlook was tempered by the potential for disruptions cause by a possible government shutdown in mid-December. A slower pace of job creation and income growth also weighed on NRF’s outlook.
“Price, value and even timing will all play a role in how, when, where and why people shop over the holiday season. Retailers will be competitive not only on price, but on digital initiatives, store hours, product offerings and much more,” Shay said.
The 2015 holiday season is shaping up to being one of crosscurrents that will have offsetting effects, according to NRF’s chief economist, Jack Kleinhenz.
“While confidence data is encouraging, slower job growth in 2015, deflationary retail prices and the mix of consumer spending somewhat shifting toward big ticket items and services, as well as the wild card in our government spending debates, will all contribute to the slower growth rate of sales expected for the holiday season,” Kleinhenz said. “All said, there’s no reason to doubt that we will see solid retail sales growth in the final two months of the year.”