The National Retail Federation said Tuesday that it is forecasting 2002 holiday retail sales to increase 4% from the previous year.
The 2000 holiday retail sales were up 5.6% from the previous year, which was higher than NRF originally predicted.
According to preliminary results from the first installment of the 2002 NRF Holiday Consumer Intentions & Actions Survey, conducted by BIGresearch and due to be released Oct. 16, consumers plan to take a sensible approach to holiday shopping this year. The majority of consumers surveyed (62.6%) said they plan to spend the same amount on holiday shopping in 2002 as they did last year. Almost one third, or 29.5%, said they plan to spend less, while only 7.9% said they plan to spend more.
NRF defines “holiday retail sales” as sales in November and December for retail stores in the GAFS category: general merchandise stores, clothing and clothing accessories stores, furniture and home furnishings stores, electronics and appliance stores, and sporting goods, hobby, book and music stores.
Separate figures for jewelry, watches, and other luxury goods were not released in the preliminary report. Scott Krugman, an NRF spokesman said data pertaining to the jewelry industry will be available when the full report is released next month. “We expect jewelry to prosper during the holiday season because consumers are still in the mood for purchasing ‘home and hearth’ type products,” he told JCK.
“Consumers this year have been cautious in their spending, but nevertheless continue to bolster retailers’ performance,” said Rosalind Wells, NRF chief economist. “NRF sees the economy growing around 3.5% in the second half of this year, which should be a solid enough environment for reasonably good holiday sales. We anticipate that home-related merchandise and leisure goods will do well this holiday season, and that apparel demand should pick up—as many consumers have postponed this purchase.”
Wells notes that a sluggish economic recovery is the main cause for consumers’ cautious approach. “Employment is growing, but slowly, and incomes are being restrained by soft labor markets,” said Wells. “Consumer and business confidence have wavered due to corporate governance concerns, the stock market has declined, threats of terrorism persist, and the chance of war with Iraq looms.”
However, Wells emphasizes that there are some positive trends that will lead to a continuation of the recovery. She believes chances of a “double dip” recession are slim, as interest rates and inflation remain very low. Overall, economic productivity is high, so businesses should be better able to increase their profits and step up their capital investment soon.
Additional data from the ongoing survey and measurement of consumer confidence suggest that consumers may also be starting to view the economy more favorably. Confidence figures rose slightly in September—the first increase seen in five months. In September, one third of all consumers (29.9%) felt confident or very confident about the chances of a strong economy in 2002. This represented a 1.1% increase from August readings.
“The consumer has been giving mixed signals,” said Gary Drenik, president and CEO of BIGresearch. “Yet, they are also telling us that they’re starting to become more confident in their personal near-term outlooks, in buying homes, and financing car purchases.”
According to the forthcoming survey, consumers who plan to spend less this year on holiday are doing so because they’re setting aside money for other purposes, such as supplementing savings or paying down debt.