- The Washington Times - Monday, September 18, 2006

Retailers likely won’t see the booming sales this holiday shopping season that they have experienced over the past few years, according to a forecast to be released today. Some are responding by putting up holiday decorations already.

The National Retail Federation (NRF), a District trade group, is predicting sales will increase 5 percent this holiday over last year to $457.4 billion, the smallest increase since the 1.3 percent jump in 2002.

High gas prices, rising interest rates and a slowing housing market have combined to put a dent in consumer spending, but the retail groups say it’s only a small dent.

“Consumers have faced a number of economic challenges this year and have taken them in stride,” said NRF Chief Economist Rosalind Wells. “Although sales gains will not be as robust as last year, retailers can still expect above-average holiday sales growth.”

Retail Forward Inc., a Columbus, Ohio, market research and consulting firm, has forecast a 5.5 percent increase in fourth-quarter sales — not just November and December, as the NRF uses to measure — this year. Last year, it recorded a 7.2 percent jump.

Frank Badillo, Retail Forward’s senior economist, described the holiday forecast as “decent.”

“It’s a letup in the pace of sales, not a letdown,” he said. “The past two holidays, sales rose at a 7 percent average pace, which is quiet strong by comparison, historically.”

Last year, the NRF predicted a 5 percent jump in holiday sales, but later revised that forecast to 6 percent. Sales ended up increasing 6.1 percent to $435.6 billion.

Mr. Badillo said the expected downturn in the housing market will not affect retail sales until the beginning of 2007 — after the holiday shopping season is over. This holiday, home-furnishing retailers will still be getting the bump from a large crop of new homeowners, he said.

“One of the other factors that’s driving the positive outlook is there’s quite a bit of momentum in the economy,” he said. “You can see that in the job claims are still very low and job creation is still running at a decent clip.”

Consumer confidence, meanwhile, rose last month for the first time since June in part on declining gasoline prices, according to the University of Michigan’s index. Consumer sentiment rose to 84.4 from 82 in August. The index has averaged 88.1 since its inception in 1978.

The holiday shopping season, which the NRF defines as November and December, can be a make-or-break point for many retailers. About 20 percent of retailers’ business is conducted during that time, according to the NRF.

Some retailers have decided to put out holiday decorations this month in an attempt to jump-start sales.

Discounters Target, Wal-Mart and TJ Maxx have already put holiday decorations on their shelves, down the aisle or across the store from fall-colored decor and Halloween pumpkins.

They are not necessarily out of step with consumers. According to the NRF, 21 percent of people make at least one holiday purchase in September.

Other retail groups, including the International Council of Shopping Centers, have not yet released their holiday sales forecasts.



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