Report: Holiday Retail Sales Will Rise But More Slowly

Hillsborough, N.J., With consumers facing a host of pressures, retailers can expect 2007 holiday-season sales growth to come in at least two percentage points below 2006 levels, according to Clear Thinking Group, LLC, a retailing/consumer products and industrial-manufacturing consultancy.

“We’re looking for holiday 2007 retail sales to grow in the 2% to 2.5% range during the traditional six-week shopping period between Thanksgiving and Christmas, vs. the 4.6% gain attained in the same period last year,” said Lee A. Diercks, a partner and managing director in the firm. “There are so many pressures on the average consumer’s wallet that this season will be difficult for most retailers.”

Diercks added that the news could be slightly better if January 2008 sales are factored into this equation, given that gift cards have extended the holiday-purchasing process to span November through January, rather than the traditional six to eight weeks of years past.

“When including January 2008 figures, we anticipate that sales for 2007’s extended three-month season will increase in the range of 3% over prior-year levels,” Diercks said. This would compare with gains of 3.8%, 6.5% and 6.9% for the extended holiday seasons in 2006, 2005 and 2004, respectively.

According to the firm, rising food and oil prices top the list of economic issues that will compress retail sales growth in the fourth quarter. Other factors expected to have a negative effect on fourth-quarter retail sales include the slowdown in the housing market, increasing consumer concern about recession, and the dearth of hot “must have” gift items for 2007.