Analysts Raise Holiday Sales Forecasts

by Doug Desjardins

Strong November retail sales and a promising start to December have prompted analysts to raise their sales forecasts for the holiday season.

The National Retail Federation (NRF) revised its forecast and raised its projected sales increase from 2.3 percent to 3.3 percent for the holiday season. NRF president Matthew Shay said the strong start in November, when sales jumped 6 percent for the month, has raised hopes for a true rebound at retail.

“The start to the holiday season has surpassed all expectations,” said Shay.

NRF chief economist Jack Kleinhenz said that consumers seem to be reacting to positive signs that the economy is turning around, something that is giving them more confidence to spend. “Consumers have not been suffering from a lack of spending power, they’ve just been missing the confidence to use it,” said Kleinhenz. “With noticeable improvement in key economic indicators, combined with great deals on merchandise, consumers have shown they shouldn’t be counted out this holiday season.”

The International Council of Shopping Centers (ICSC) raised its forecast as well. The ICSC is now forecasting a 4-percent increase in sales for November and December, up slightly from its original forecast for a 3.5-percent increase. In a statement, the ICSC said “the key story change is that the comparison is likely to represent the strongest holiday sales season since 2005.”

Research Firm ShopperTrak is forecasting a similar increase in sales for the holidays. The Chicago-based research firm raised its holiday forecast from a 3.2-percent increase to a 4-percent jump in sales based on November results.

“Retailers can always count on the strength of Black Friday to impact November performance, as it’s been the number one performing day since 2005, but our data shows activity early in the month of November provided the biggest lift,” said Bill Martin, co-founder of ShopperTrak.

Martin said sales activity the week before Christmas will provide retailers with a better idea of whether the strong sales will continue.

“Looking ahead, retailers will be paying close attention to the week leading up to Christmas, as this is the period that annually boosts December performance and provides a real bookend to the holiday shopping season,” said Martin. “Typically, the 10 days prior to Christmas accounts for 31 percent to 34 percent of total holiday sales, so winning retailers will have the appropriate deals and promotions in place to drive traffic.”

Regardless of how the last week goes, retailers will still be better off at the end of December than they were the past two years. In 2008, holiday sales plunged 3.9 percent. Last year, they rebounded but posted only a 0.4-percent increase.

Resources

NRF Revises Holiday Forecast Up to 3.3 Percent

Shoppers in the Mood to Buy

ShopperTrak Reports Strong November Boosts Projections for Holiday Season