The National Retail Federation is forecasting a moderate increase in retail sales this, up 4.8% from 2006.
In 2006, retail sales jumped 6.3%, according to the NRF. Robust consumer spending in the first half of the year contributed to stronger-than-expected sales. Spending, however, weakened in the second half thanks to a housing slowdown, rising energy costs and lackluster employment growth.
“This year, slow economic growth will be reflected in moderate consumer spending and retail sales gains,” NRF Chief Economist Rosalind Wells said in a statement. “The quarterly industry sales pattern will be the opposite of last year with modest gains early in the year and better increases in the second half.”
Holiday retail sales came in slightly lower than expected at 4.4%. Retailers led off the season with “aggressively planned promotions” in November and into December, but shopper procrastination and unusually warm weather held back sales, the NRF said.
Gift cards helped fuel spending during the holidays. About $24.8 billion was spent on gift cards, a 6.3% increase from 2005, Wells said. About 40% of cards will be redeemed in January, the NRF estimates.
For 2007, The NRF outlined the following trends:
- The use of online shopping will continue to rise.
- Retailers will cater to lower and mid-level income consumers.
- Luxury retailers will continue to outperform.
A soft housing marketing will impact demand and sales for merchandise related to home.
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