The National Retail Federation is predicting that holiday sales will rise 4% this year to $474.5 billion.
The increase is expected to fall below the 10-year average of 4.8%. If the prediction holds true, it would represent the slowest holiday sales growth since 2002, when sales rose 1.3%, the NRF said.
“Retailers are in for a somewhat challenging holiday season as consumers are faced with numerous economic obstacles,” said NRF Chief Economist Rosalind Wells, in a statement. “With the weak housing market and current credit crunch, consumers will be forced to be more prudent with their holiday spending.”
Customers of high-end merchandise will offer a bright spot for luxury retailers as those shoppers are expected to maintain high levels of spending over the holidays. The retailers most affected by the economy will be those catering to the low to middle income consumer.
“This could spell trouble for discounters and some department stores whose shoppers may be looking to trade down,” the NRF said.
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