- The Washington Times - Thursday, September 20, 2007

Holiday sales this year are expected to increase at their slowest pace since 2002 as shoppers keep a tighter hold on their wallet in the face of a credit crunch and a slow housing market.

Retail sales are expected to rise a tepid 4 percent this holiday period, according to the National Retail Federation’s annual forecast, which is expected to be released today. The industry’s largest trade group is forecasting that holiday sales will rise to $474.5 billion.

“Retailers are in for a somewhat challenging holiday season as consumers are faced with numerous economic obstacles,” said Rosalind Wells, chief economist for the National Retail Federation (NRF). “With the weak housing market and current credit crunch, consumers will be forced to be more prudent with their holiday spending.”

Last year, shoppers were drawn to deep discounts on electronics, such as high-definition televisions, prompting a “modest” 4.4 percent increase in holiday sales, according to the group. The NRF had predicted a 5 percent increase.

TNS Retail Forward, a Columbus, Ohio, retail consulting and analysis group, has predicted a 3.3 to 4.6 percent increase, in line with the NRF’s forecast. NRF measures November and December sales, while TNS Retail Forward measures the fourth quarter. The International Council of Shopping Centers, a New York retail trade group, hasn’t announced its holiday forecast.

“Our forecast numbers are even weaker when home improvement and catalog retailer sales and online sales are excluded,” said Frank Badillo, senior economist at TNS Retail Forward. “And, the risks are biased in favor of still weaker growth, particularly if the housing market deteriorates further.”

Luxury retailers are expected to fare well, as they haven’t been as strongly affected by economic conditions, the groups say. Low-income shoppers are expected to be hardest hit, possibly hurting sales at discounters and some lower-end department stores.

The decline in holiday growth is expected to make retailers cut back on the number of seasonal employees they hire, according to Challenger, Gray & Christmas, a New York employment research firm.

The company expects retailers to hire the “bare minimum” in extra help, possibly the fewest since 2001.

“Retailers will enter the holiday season very cautiously and with lowered sales expectations,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

“Some retail companies may postpone hiring until they have a better handle on the sales situation. So, stores that typically start hiring extra workers in early October may wait until the end of the month or early November in order to see how sales are going.”

Daniel Butler, vice president of retail operations at the NRF, said retailers will not be “as aggressive” this year in the number of seasonal people they hire.

“Especially in the home appliances and repair [industry], which has been affected by the housing market,” he said, adding that he doesn’t think other retailers will be hit as hard as they were in 2001.

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