* 2010 to mark rebound from 2009 when sales fell 2.5 pct
* Trade group cites improving housing, jobs market
* Rise of 2.5 pct to be among weakest posted since 1995
* S&P Retail Index rises 1.1 percent
(Updates with stock price reaction)
By Nicole Maestri
SAN FRANCISCO, Jan 26 U.S. retail sales should
rise 2.5 percent this year, signaling that store chains have
made it through the worst of the downturn as improvements in
the housing and job markets bolster shoppers' confidence, a
trade group forecast on Tuesday.
The 2010 forecast from the National Retail Federation marks
an expected improvement from a 2.5 percent drop in 2009 and a
1.3 percent increase in 2008. The data covers retail industry
sales, excluding automobiles, gas stations, and restaurants.
Major retail shares tracked by the Standard & Poor's Retail
Index .RLX rose 1.1 percent in early trading. Data released
by the Conference Board on Tuesday also showed U.S. consumer
confidence rose for the third straight month in January to the
highest since September 2008. [ID:nN26357538]
But this year's retail industry sales forecast, while
calling for growth, is still a modest one. Excluding the past
two years of recession, a 2.5 percent rise in retail industry
sales would mark the lowest year-over-year increase since 1995,
when the trade group began tracking such figures.
"I wouldn't describe this as a very strong year," said NRF
Chief Economist Rosalind Wells in an interview. "We're not
going to have a V-shaped recovery in the economy, and we won't
have a V-shaped recovery in consumer spending or retail sales.
It's a slow return to a more normal level."
U.S. retailers just completed a better-than-expected
holiday sales season. Holiday retail sales rose 1.1 percent in
2009, according to the NRF, beating its own forecast for a 1
percent drop in sales for the November-December period.
Retail chains were able to improve upon a dismal 2008, when
holiday sales fell 3.4 percent, by cutting inventories and
offering more targeted discounts to attract frugal shoppers.
JOBS, HOUSING TO HELP RETAIL SALES
The question looming is whether retailers can keep that
momentum going in 2010 as consumers remain under pressure and
joblessness stands near a 26-year high of 10 percent.
For 2010, Wells expects consumers to keep a frugal mind-set
with a focus on values. That should help sales at discount
retailers, warehouse clubs and off-priced retailers like
Wal-Mart Stores Inc (WMT.N), Costco Wholesale Corp (COST.O) and
TJX Cos Inc (TJX.N).
"In 2010, the retail environment will remain difficult, but
the improved economy and easy comparisons will result in
positive sales gains," the NRF stated in its Retail Sales
While the employment picture is "far from pretty," the NRF
said the size of the monthly job losses has diminished and
employment may start to grow this year.
"The hope is that as the year goes on, we'll see
improvement in the job market. When that happens, we'll see a
better consumer confidence level, we'll see higher incomes, and
that will all contribute to making consumers feel better and
loosening up the pocket book," Wells said.
The housing market also is showing signs of stabilization,
"We think the housing market has bottomed," Wells said,
adding that a recovery in housing would help boost home values,
consumer confidence and demand for home goods, like furniture
or bedding, she said.
Wells also said there is already some improvement in sales
among more upscale retailers.
"The high-end retailers are seeing better business because
their consumer is a little less worried about losing their
jobs," she said.
But retailers facing the biggest challenges for 2010 are
those catering to middle-income shoppers.
"The difficulties are still in the middle-income market.
That will continue to struggle," she said.
(Reporting by Nicole Maestri; Editing by Michele Gershberg,
Carol Bishopric, Dave Zimmerman)