Holiday retail sales look brighter than before

Thu Dec 15, 2011 12:26am EST

(Reuters) - An influential retail trade group raised its forecast for U.S. holiday retail sales on Thursday, citing strong results in November and expectations that consumers still have more shopping to do.

The National Retail Federation said it now expects holiday sales to rise 3.8 percent to a record $469.1 billion. That is up from the group's October forecast, which called for growth of 2.8 percent.

The new forecast is still lower than the 5.2 percent growth seen last year, but is above the 10-year average increase of 2.6 percent.

"Consumer spending this holiday season has surpassed expectations, though many shoppers continue to stick to their budgets and buy only what they need," said NRF Chief Economist Jack Kleinhenz in a statement.

The holiday shopping season, which kicks off unofficially after the U.S. Thanksgiving holiday, is critical for retailers from Wal-Mart Stores Inc (WMT.N) to Best Buy Co Inc (BBY.N) to Gap Inc (GPS.N).

The reason for the updated forecast is that NRF, a retail industry trade group, found that industry sales for November rose 4.5 percent year-over-year, and that the average American has completed far less of their holiday shopping than in previous years -- an indication that many shoppers bought for themselves in November and have lots of shopping left to do.

While retailers are "cautiously optimistic" that the season will turn out better than initially expected, NRF President Matthew Shay said "a number factors, including the debt crisis in Europe and continued political wrangling in Washington, could impact consumer spending this holiday season and into 2012."

The NRF's figures compare sales at retail stores with the year-earlier period and exclude restaurants, gasoline, automobiles and online sales.

That is why its results look different than those announced by the U.S. Commerce Department, which said U.S. retail sales grew a weaker than expected 0.2 percent in November.

(Reporting By Martinne Geller in New York, editing by Matthew Lewis)

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Comments (1)
bobbyhawk wrote:
Its interesting that the retail association is predicting 469 billion and the US census bureau is predicting 399 billion, and when I go to the mall on the week of Christmas, I can easily find a parking place some 6 to 7 spaces from the front door, and there is no increase from the daily mall traffic throughout the year, as a matter of fact its less than a normal Friday night.

Remember their predictions are based upon some percentages over the last year of last month, but not upon solid historical numbers, neither is there data given to back up the claims, only percentages. Any time you see percentages given as evidence of change, question the data. Percent of what? Specifically what sales are we discussing? They could be giving you the percent of chocolate bars sold from last year to this year in retail establishments and you would never know it unless you ask questions about the real data.

This is a favorite trick among marketers; Quote one overall large number such as EXPECTED retail sales and then quote percentages of specific items as an increase over last year or last month or over several years. The audience thinks the discussion is about that big number and the overall sales, when the discussion is actually about a prediction (pie in the sky number) and the increased sales of one or two well performing items only. Never, ever trust percentages, especially if their basis is not defined, even then question for the background data.

This presentation appears to be a smoke and mirrors marketing game. The numbers presented simply are not justified by the observations made at our local shopping malls and retail outlets. Until solid data is provided, these estimates and claims should be taken with much skepticism. Look for the final, actual numbers to be buried beneath some overwhelming story in early 2012. And look for those numbers overall to be quite dismal in comparison to these wild claims. My expectation is you will see some slight growth compared to a year ago and negative growth compared to our highest sales over the past 10-12 years. Expect to see solid numbers comparable to the early 1990s or late 1980s. And expect a pull foreword from 2012 which will make Q1 2012 numbers even more dismal.

If the Euro continues to fail at its present rate, expect next Dec 2012 to be the most dismal in many decades with negative growth compared to 2011. Further expect the shedding of many retail outlets and the foundational shaking of some of the larger retail establishments, as they trim back on all their fat in order to survive. Expect the large retail establishments to become far more austere on their policies of return and warranty than years past, which will turn off customers and drive them away. Watch the markets and the retail establishments and you can surmise your own trend which is far more likely to be correct than these smoke and mirrors percentages. Even the estimates given by the US government from the census bureau, are provided in estimate percentages. A crystal ball with provide you as much accuracy as estimate percentages will. They are simply provided as a feel good number to push consumers into spending more. Simply put they are deceptive reporting of business activity and no smart consumer should ever accept percentages without the specific and accurate, data upon which they were calculated.

Dec 20, 2011 5:50am EST  --  Report as abuse
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