Smaller Holiday Sales Drop Expected in 2009

The National Retail Federation (NRF) predicts holiday retail sales in 2009 will decline one percent this year to $437.6 billion. While this number falls below the ten-year average of 3.39 percent holiday season growth, the decline is not as dramatic as last year’s 3.4 percent drop. The trade organization tallies holiday sales in the months of November and December and includes the discounter, department store, grocery store and specialty store sectors, while excluding sales at automotive dealers, gas stations and restaurants.

“As the global economy continues to recover from the worst economic crisis most retailers have ever seen, Americans will focus primarily on practical gifts and shop on a budget this holiday season,” says NRF chief economist Rosalind Wells.

The NRF points to some hopeful signs that a recovery has begun, including better-than-expected sales in August and momentum in the stock market. However, job uncertainty and declining housing values are expected to take a toll on holiday spending in 2009. Popular categories like apparel and electronics may also experience deflation due to aggressive sales.

“The expectation of another challenging holiday season does not come as news to retailers, who have been experiencing a pullback in consumer spending for over a year,” says NRF president and ceo Tracy Mullin. “To compensate, retailers’ focus on the holiday season has been razor-sharp with companies cutting back as much as possible on operating costs in order to pass along aggressive savings and promotions to customers.”