The housing refinance boom could send shoppers pouring into stores to buy new home furnishings, making it a happy holiday season for retailers, the National Retail Federation said Friday.
People will head to shopping malls to spend their windfall from home refinancing and tax credits during the second half of the year, said Ellen Tolley, spokeswoman for the industry trade group.
The National Retail Federation is predicting that U.S. general merchandise sales for July through December will soar 4.5 percent above the same period in 2002. That’s more than double January-to-June’s 2.2 percent sales increase and last holiday season’s equally lackluster 2.2 percent bump over December 2001.
General merchandise sales includes almost everything you buy in stores except cars and restaurant meals.
While none of the major retailers will provide detail about Valley stores, traffic and sales are already up at East Valley malls.
“Things are looking up,” said Sheila Hunter, marketing director for Mesa’s Fiesta Mall. “Most of our store managers are already seeing gains they didn’t see in the first half of the year.”
One of the best indications of retailer optimism is that the local stores are stocking up more inventory than last year for the upcoming back-to-school season, Hunter said.
Arizona Mills mall in Tempe also is seeing an upward trend.
“We are very pleased with the number of shoppers visiting us so far this year,” said mall general manager, Denise Hart. “We are up over last year, and we anticipate strong sales to continue through the second half of the year.”
Women’s apparel and home furnishings are selling especially well, Hart said.
The biggest boost in overall retail sales will happen in the fourth quarter — up an estimated 4.7 percent, Tolley said.
“The first half (of the year) was pretty dismal, with the war starting and ending, national security alerts, a sluggish economy, increasing consumer caution,” she said. “Many economic indicators are now pointing to a light at the end of the tunnel.”
While some economic factors, such as unemployment and business capital investment, are still sagging, others, such as low interest rates, the tax cut and an improving stock market, are positive indicators, Tolley said.
But she said the boom in home refinancing is likely to be the major catalyst for new shopping surges.
“What’s more important than consumer confidence is how much money consumers have in their pockets,” she said.
In fact, the retail group expects people to blow some of those extra bucks to beautify their newly refinanced bungalows.
“The home furnishings sector should do well,” Tolley said. “When people refinance, many times they take the money and put it back into their homes with things like new furniture, new carpeting.”
The last couple of months have been just “OK” overall, she said, and some major retailers are still seeing sales declines.
Sears said June sales slipped 1.8 percent. Sales for The Great Indoors, the company’s home furnishings superstore chain, which has shops in Scottsdale and Chandler, fell in June by a percentage “in the high teens,” a spokesman said. The company also is predicting July sales decreases, but won’t say how the rest of the year is likely to pan out.
The world’s biggest retailer, Wal-Mart, said company-wide sales skyrocketed more than 11 percent in June. For stores that were open at least a year, sales were up a much more modest 2.7 percent — meaning most of the big increase was because of new store openings.
Wal-Mart said the top categories for June sales were food, pet products, plants, automotive accessories, office products and pharmaceuticals.
Despite the National Retail Federation’s optimistic outlook for the second half of the year, Tolley said the analysts are not banking on a sustainable recovery at this point.
At least two or three months of strong, solid growth industry-wide would indicate that a recovery has taken hold, she said.
“We are optimistic that will happen in the second half of the year,” Tolley said.