Retail group expects slightly brighter holiday season sales

Thu Oct 3, 2013 12:11am EDT
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By Jessica Wohl

(Reuters) - U.S. retail sales should rise 3.9 percent this holiday season, outpacing last year's gains, though economic concerns may impact shoppers' spending, the world's largest retail trade association said on Thursday.

The National Retail Federation expects U.S. sales in November and December to rise 3.9 percent to $602.1 billion. That would surpass the 3.5 percent increase seen in 2012 and average growth of 3.3 percent over the past decade, but fall short of gains of more than 5 percent seen in both 2011 and 2010.

The NRF forecast is closely watched ahead of the holiday season. The season is critical to retailers, as it can account for anywhere from 20 to 40 percent of a retailer's annual sales and accounts for about 20 percent of total industry annual sales, according to the trade group.

The NRF's forecast assumes that the federal government shutdown will get resolved. For now, the issue is not a big concern for most shoppers, NRF President and Chief Executive Officer Matthew Shay said in an interview.

The NRF surveyed consumers on Tuesday, "and more than two-thirds of them said the government shutdown is not going to affect their spending," Shay said.

"But if it continues for an extended period of time then it certainly could have consequences for the broader economy and for consumer spending and holiday retail sales," Shay said.

With consumer spending making up about 70 percent of the U.S. economy, the holiday season is an important gauge for the overall economy. For the last year, 70 percent to 80 percent of consumers listed the economy as the top issue they take into consideration when making spending decisions, Shay said.

On Friday, the U.S. Commerce Department said that American families spent 0.3 percent more in August than the month before. Incomes rose 0.4 percent, the most since February, which analysts said could drive faster spending in the coming months. However, consumer sentiment slid in September to its lowest level in five months, according to the final reading of the Thomson Reuters/University of Michigan's consumer survey.   Continued...

Shoes are displayed in the Nike store in Santa Monica, California, September 25, 2013. REUTERS/Lucy Nicholson