NRF Forecasts 4% Holiday Sales Gain

The National Retail Federation on Thursday released its forecast for the upcoming 2007 holiday season, predicting that sales will rise 4 percent this year to $474.5 billion.

NRF defines “holiday retail sales” as retail industry sales which occur in the months of November and December. Retail industry sales include most traditional retail categories including discounters, department stores, grocery stores, and specialty stores; and exclude sales at automotive dealers, gas stations, and restaurants.

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

The 2007 holiday sales increase is expected to fall below the ten-year average of 4.8 percent. It would represent the slowest holiday sales growth since 2002, when sales rose 1.3 percent.

Luxury retailers once again appear to be a bright spot as their customers have demonstrated the ability to maintain high levels of spending, NRF said. Clearly the retailers most affected by the economy will be those catering to the low to middle income consumer. This could spell trouble for discounters and some department stores whose shoppers may be looking to trade down.
NRF will release its first in a series of holiday surveys on Oct. 16, polling consumers on where they will shop and how much they plan to spend.

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