Hol­i­day sales ex­pected to rise 3.6%

Daily Local News (West Chester, PA) - - BUSINESS - By Anne D’In­no­cen­zio AP Re­tail Writer

NEW YORK » Amer­i­cans are ex­pected to spend at a faster clip than last year for the crit­i­cal hol­i­day sea­son, helped by an econ­omy that should only con­tinue to pick up, ac­cord­ing to the na­tion’s largest re­tail in­dus­try trade group.

The Na­tional Re­tail Fed­er­a­tion, based in Wash­ing­ton, D.C., is fore­cast­ing hol­i­day sales for the No­vem­ber and De­cem­ber pe­riod to rise 3.6 per­cent to $655.8 bil­lion, much bet­ter than the 3 per­cent growth seen in the year-ago pe­riod.

The fig­ure also is much higher than the 10-year av­er­age of 2.5 per­cent and above the 3.4 per­cent growth seen since the re­cov­ery be­gan in 2009. The dol­lar fig­ure ex­cludes sales from au­tos, gas and restau­rants but in­cludes on­line spend­ing and other non­store sales. The group es­ti­mates that non-store sales should rise 7 per­cent to 10 per­cent to as much as $117 bil­lion. Last year, that rate was 9 per­cent.

NRF Pres­i­dent and CEO Matthew Shay noted that this year has had some rocky mo­ments like a warm win­ter and an un­sea­son­ably warm fall. That has hurt sales of cloth­ing and forced stores to dis­count more heav­ily. But Shay said all the fun­da­men­tals are in place even if the noise from the pres­i­den­tial elec­tions might serve as a short-term dis­trac­tion.

“Our fore­cast re­flects the very re­al­is­tic steady mo­men­tum of the econ­omy and in­dus­try ex­pec­ta­tions,” Shay said. “We re­main op­ti­mistic that the pace of eco­nomic ac­tiv­ity will pick up in the near term.”

The fore­cast is based on an eco­nomic model that takes into ac­count such in­di­ca­tors as con­sumer credit, dis­pos­able per­sonal in­come and monthly re­tail sales. It’s a key in­dus­try barom­e­ter for re­tail­ers who de­pend on the last two months of the year. Hol­i­day sales ac­count for nearly 20 per­cent of an­nual re­tail in­dus­try sales. It also of­fers a

snapshot of the mind­set of the shop­per.

The fore­cast comes as re­tail­ers con­tinue to wres­tle with broader changes in how shop­pers are buy­ing. They’re shift­ing more of their money to ex­pe­ri­ences like travel and away from cloth­ing and other stuff. And they’re in­creas­ingly buy­ing more on­line, forc­ing stores to look at new ways to bring shop­pers into their stores.

But Na­tional Re­tail Fed­er­a­tion ex­ec­u­tives told re­porters on a call Tues­day there’s plenty of rea­son for op­ti­mism.

“We are in bet­ter shape than we were last year,” said the re­tail trade group’s economist, Jack Klein­henz.” We have a lot more peo­ple work­ing this year.”

Govern­ment fig­ures show that 2.5 mil­lion more Amer­i­cans have jobs as of Au­gust com­pared to a year ear­lier. The govern­ment is sched­uled to re­lease Septem­ber job num­bers on Fri­day. The cur­rent un­em­ploy­ment rate is 4.9 per­cent, lower than the 5.1 per­cent rate a year ago.

And a re­port from the Cen­sus Bureau that was re­leased last month showed that U.S. house­holds got a raise last year after seven years of slug­gish in­comes. In­creas­ing pay also boosted the poor­est house­holds, slash­ing poverty by the sharpest amount in nearly a half a cen­tury. The me­dian U.S. house­hold’s in­come rose 5.2 per­cent in 2015 to an in­fla­tion-ad­justed level of $56,516, ac­cord­ing to the Cen­sus. That

marks the largest one-year gain on data dat­ing back to 1967. It’s up 7.3 per­cent from 2012, when in­comes de­clined to a 17-year-low.

Given the tight la­bor mar­ket, re­tail­ers are even dan­gling perks like higher pay, ex­tra dis­counts and more flex­i­ble sched­ules to lure tem­po­rary hol­i­day work­ers. Still, while the over­all num­ber of jobs for sea­sonal work­ers looks to be flat this year, the big­gest growth area in re­cent years has been in trans­porta­tion and ware­house jobs be­cause of the rise in on­line shop­ping.

Shop­pers also are en­joy­ing lower food prices at the gro­cery store, which of­fer re­lief to those liv­ing from pay­check to pay­check.

The Na­tional Re­tail Fed­er­a­tion

warned that geopo­lit­i­cal un­cer­tainty, the pres­i­den­tial elec­tion and un­sea­son­ably warm weather could hurt shop­ping pat­terns. Last year, for ex­am­ple, ma­jor stores like Macy’s had to ag­gres­sively dis­count coats and boots after mild tem­per­a­tures lin­gered into the win­ter months be­cause shop­pers didn’t need to buy heavy win­ter ap­parel. That hurt hol­i­day sales. In fact, the Na­tional Re­tail Fed­er­a­tion’s orig­i­nal fore­cast was for a 3.7 per­cent in­crease.

Klein­henz said stores are be­ing more watch­ful of their in­ven­tory com­pared to last year.

And while the po­lit­i­cal ral­lies seem to be air­ing a lot of dis­con­tent among vot­ers, Klein­henz said that

one has to sep­a­rate their at­ti­tudes to­ward the po­lit­i­cal world and how they are go­ing to spend for the hol­i­days for their loved ones.

“The eco­nomic spend­ing power of the con­sumer is re­silient and it should never be un­der­es­ti­mated,” Klein­henz said.

Other fore­casts from Deloitte, Re­tailNext, In­ter­na­tional Coun­cil of Shop­ping Cen­ters and AlixPart­ners of­fer fore­casts sim­i­lar to that of the Na­tional Re­tail Fed­er­a­tion. The growth fore­casts range from 3.2 per­cent to 4 per­cent. PwC, how­ever, pre­dicts that hol­i­day spend­ing will up 10 per­cent. But that fore­cast for the first time in­cludes travel and en­ter­tain­ment. Other hol­i­day fore­casts ex­clude restau­rants and travel.

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