Expect Moderate Holiday Sales Growth, Says NRF

WASHINGTON -- Coming after the strongest holiday season in five years, grocers and other retailers can expect only moderate holiday sales growth this year, the National Retail Federation here said yesterday. The trade group forecasted that total holiday retail sales--including grocery stores, discounters, department stores, and specialty stores--will increase 5.0 percent over last year, bringing holiday spending to $435.3 billion. In comparison, holiday sales in 2004 rose 6.7 percent to $414.7 billion.

"A combination of many factors, including energy prices, the job market, disposable income, and consumer confidence, will ultimately affect retailers' sales this holiday season," said NRF's chief economist Rosalind Wells. "Though it might be easy to label gas prices as the make-or-break factor for the holidays, it is crucial for analysts to look at the big picture, instead of isolating one economic indicator, to project sales."

One-fifth of total retail industry sales (19.9 percent) occur during the holiday season, making it the most important time period of the year for the industry. This year, retailers will struggle with tough comparisons over 2004, which will make significant gains more difficult to achieve. In addition, the effects of Hurricane Katrina and high prices at the pump play a role in the tempered outlook. However, NRF maintained that steady consumer spending and strong second and third quarter gains indicate potential for a solid holiday season.

"Consumers won't have to wait until the last minute to get the best deals this year, because retailers are expected to be aggressive in their pricing strategies throughout the entire holiday season," said NRF's president and c.e.o., Tracy Mullin. "Stores are planning for holiday sales and promotions, so discounted prices won't have a negative effect on profits."

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