WASHINGTON - While holiday sales are expected to increase this year, it could be a "subdued" season for retailers, according to the National Retail Federation here.
The industry trade group, in its annual holiday forecast released last week, predicted total retail sales will increase by 5% over last year, bringing the nation's holiday spending to $457.4 billion. In comparison, holiday sales in 2005 rose 6.1% to $435.6 billion.
Over the last decade, the average annual percentage increase in sales for the holiday season was 4.6%, the organization said.
With the housing market softening, an anemic job market, gas prices still high but slowly dropping, and growing unrest regarding the Bush administration's Mideast policies and the Iraq War, retailers are becoming increasingly concerned about how consumer confidence will hold up through the holiday season. But as the NRF points out, consumers have been resilient this year, keeping retailers mostly satisfied.
According to NRF statistics, one-fifth of retail industry sales occur during the holiday season. NRF defines holiday retail sales as those occurring in November and December. NRF's retail scorecard tabulates most traditional retail categories including discounters, department stores, grocery stores and specialty stores, and excludes sales at automotive dealers, gas stations and restaurants.
"Consumers have faced a number of economic challenges this year and have taken them in stride," said NRF chief economist Rosalind Wells, in a statement. "Although sales gains will not be as robust as last year, retailers can still expect above-average holiday sales growth."
"Consumers make small sacrifices all year so they can splurge a little during the holidays," added Tracy Mullin, NRF's president and chief executive officer. "If gas prices continue to fall, shoppers will find a little something extra in their wallets, giving them even more reason to celebrate."
NRF will provide more specific projections in its 2006 NRF Holiday Consumer Intentions & Actions Survey, to be released Oct. 17.