Retailers expect holiday sales to increase a modest 2.3 percent this year, down from the 10-year average of 2.5 percent but well above last year's tepid 0.4 percent, the National Retail Federation said.
Consumer spending accounts for 70 percent of U.S. economic activity and is closely watched by the freight transportation industry. Consumer imports drive the annual peak season for containerized imports, which carriers say is beginning to wane after apparently peaking in August. Intermodal rail shipments continued strong in September, hitting annual highs for two consecutive weeks.
"While many consumers will be wishing for apparel and electronics this holiday season, retailers are hoping the holidays bring sustainable economic growth," said NRF President and CEO Matthew Shay. "Though the retail industry is on stronger footing than last year, companies are closely watching key economic indicators like employment and consumer confidence before getting too optimistic that the recession is behind them."
The holiday season is make-or-break for many retailers. Last year's small year-to-year increase in holiday sales followed a 3.9 percent decline in the 2008 season, which came on the heels of the financial crisis.
Retailers reported a fairly strong back-to-school season this year, driven mainly by purchases of basic products. Several retailers have noted in recent weeks that consumers are spending more but concentrating their purchases on necessities. In response, retailers have kept close watch on inventory levels.
The retail federation said the concentration on supply chain efficiencies and inventory control will continue during this holiday season as retailers limit their exposure to excess merchandise and unplanned markdowns. Companies are also expected to leverage new channels - like mobile - to drive sales.
"While consumers have shown they are once again willing to spend on what's important to them, they will still be very conscientious about price," said NRF Chief Economist Jack Kleinhenz. "Retailers are expected to compensate for this fundamental shift in shopper mentality by offering significant promotions throughout the holiday season and emphasizing value throughout their marketing efforts."
The NRF's holiday sales forecast is based on an economic model using several indicators including employment, industrial production, disposable personal income and previous monthly retail sales reports.
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