Holiday Sales Growth Expected to be Second-Worst in 42 Years

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Holiday Sales Growth Expected to be Second-Worst in 42 Years

By Jessie Bove - 09/23/2009
Retail sales this holiday season will be the second-worst they have been in 42 years, according to Retail Forward. The Columbus, Ohio-based market research firm forecasts flat sales growth for the fourth quarter of 2009. The only growth that was lower in the Past four decades was the 4.5 percent decline in 2008, and while this year may be an improvement over last year, it appears a full comeback for retail sales is unlikely this year.

The holiday segments reviewed represent all retailing (except the auto, food and drug channels), including home improvement stores, catalogs, online sales and the key retail sectors -- where many holiday gifts are traditionally purchased -- known as GAFO (general merchandise stores, supercenters, warehouse clubs, apparel stores, furniture, home furnishings, consumer electronics and other specialty stores). This forecast is consistent with a recent prediction by Deloitte that expected to see flat sales over the holiday season.

“Softer August retail sales declines are signs of an emerging retail recovery that will be driven by growing confidence among households,” said Frank Badillo, senior economist for Retail Forward. “This is positive news as we move into the critical holiday season, but the economic environment will remain difficult. Sales declines will persist for specific retail channels -- particularly apparel and homegoods -- but will end for aggregate measures of retail sales.”

Sales at apparel and accessories channels are forecast to decline about 2 percent during the fourth-quarter holiday period, compared with a more than 9 percent drop last year. Most of the continued decline will be at department stores.

The broad group of mass retailers that includes discount department stores, supercenters, warehouse clubs and small-format value stores is forecast to grow sales 2.5 percent this holiday season. This is an increase from 2 percent a year ago. The homegoods channel will see sales decline more than 2 percent, compared with a 7.4 percent decline last year.

Consumer electronics stores will experience the biggest decline, in part due to Circuit City’s exit. Online sales across retail channels are forecast to grow 4 percent this holiday season after declining 5 percent a year ago. Retail Forward expects the retail sector in aggregate to approach long-term average growth rates by the end of 2010.

- Nielsen Business Media