Forecast optimistic for holiday sales


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Even as one of the nation's largest retail trade groups issued a relatively upbeat projection calling for holiday sales to rise 4.1 percent to $586.1 billion this year, the group's leadership warned that a gridlocked Congress could still play Grinch and steal all the presents.

While a 4.1 percent growth rate would be down from last year's 5.6 percent increase, it is evidence of more confidence than this time last year when the National Retail Federation issued a conservative number, only to later revise its projections upward.

"This is the most optimistic forecast NRF has released since the recession," said Matthew Shay, the group's president and CEO in the official analysis of the projections released Tuesday. "In spite of the uncertainties that exist in our economy and among consumers, we believe we'll see solid holiday sales growth this year."

Unless, of course, something really goes wrong.

The Washington, D.C., group isn't the only one calling for politicians to give retailers a hand, urging elected officials to bolster consumer confidence, rather than pushing consumer's shopping carts off the so-called "fiscal cliff."

PG graphic: Holiday sales history and forecast
(Click image for larger version)

A week ago, another retail industry group -- the New York-based International Council of Shopping Centers -- issued its own projection for a solid sales gain for November and December, and raised its own pointed questions asking "will the Christmas holiday shopping season be held hostage to Congress' deliberations on the automatic federal spending cuts and tax increases?"

Michael P. Niemira, vice president of research and chief economist for the group, noted lawmakers could actually play the role of Santa Claus if they manage to get the problem of looming and widespread federal spending cuts figured out quickly and calm consumers' concerns. In that case, holiday sales might achieve greater heights, he said.

As Barack Obama and Mitt Romney prep for their first debate, the nation's major retailers have been trying to get the country in the holiday mood. Kohl's trumpeted that it plans to hire more than 52,700 workers this holiday season, up more than 10 percent from last year; Macy's will add 80,000, up from last year's 78,000; and Toys 'R' Us promised to hire 45,000 seasonal workers, up from 40,000 last year.

As for holiday promotions, there's been an ongoing arms race in the battle to offer the best layaway program, a shopping tool revived by the Great Recession, and retailers from Dollar General to Wal-Mart have been promising discounts and deals on toy purchases over the next few months.

The industry is also fully embracing technology, working to get in front of smartphone-wielding customers wherever they may be -- at home, in the office or in a store looking for a better deal. "Mobile, in particular, is going to play a bigger role than ever before," said Mr. Shay, during a conference call to discuss the projections.

In part acknowledging the changed retail landscape, the retail federation recently began including online sales in its calculations, as well as auto parts and auto accessories results, although it still doesn't count car dealers, gas stations and restaurants. The group revised its numbers for the past several years to reflect the changes.

No matter what's happening at the mall, the presidential election and the machinations in the nation's capital are a distraction. In a survey of consumers in September, more than 60 percent said political and economic uncertainty had them planning to either spend somewhat less or much less, according to BIGinsights, a research group that works with the retail federation.

The election, at least, should be over by Nov. 7, leaving retailers time to get customers' attention with their holiday marketing, said Pam Goodfellow, director of consumer insights for BIGinsights. "I think consumers will see this as a welcome change of pace," she said Tuesday, during the conference call.

ShopperTrak, a Chicago company that analyzes the number of people going through shopping centers, said retailers should expect a lull before the election, as political ads dominate TV, radio and other marketing venues. The company said shopping activity fell 6.3 percent the week before the 2008 presidential election.

But after hitting polling places, people return to retail spaces, and the company believes there will be chances to show off the hottest electronics and newest sweaters in front of more people this year. ShopperTrak is projecting foot traffic at shopping centers will be up 2.8 percent, after a 2.2 percent drop last year.

businessnews - holidays

Teresa F. Lindeman: tlindeman@post-gazette.com or at 412-263-2018.


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