Retail group expects 5% increase in holiday spending - East Valley Tribune: Business

Retail group expects 5% increase in holiday spending

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Posted: Wednesday, September 21, 2005 7:25 am | Updated: 7:18 am, Fri Oct 7, 2011.

Americans will spend an estimated $435.3 billion this year on holiday gifts, decorations, parties and party wear — 5 percent more than they spent in 2004.

That’s the prediction from the industry trade organization National Retail Federation, always first out of the gate to forecast the annual November-December spending splurge.

It’s not even October, and the big holiday season is still far from the front of most retailers’ minds or store windows.

The far north Scottsdale Target store is setting up some Christmas card displays this week, but the rest of the store is full of ghosts, jack-o’- lanterns and fall merchandise.

"We are just finishing backto-school clearance sales, and Halloween is selling like crazy," said store manager Ellie Bernards.

The Christmas cards are for the benefit of people who like to get an early start on their mailing lists, Bernards said, but the store won’t really gear up for the annual holiday rush until after Halloween.

The National Retail Federation, which won’t make its Halloween forecast until next week, is already looking ahead to the behemoth shopping season.

The boost the group predicts is an acceptable bump, better than the lean years at the start of the century, but not as good as last year’s 6.7 percent increase over 2003 holiday sales.

Gas prices, the job market, interest rates and consumer confidence all affect spending, said Ellen Davis, spokeswoman for the trade group.

But the most likely reason for the slowdown in momentum this year is the fact that the take was so high in 2004, Davis said.

"Last year’s holiday season was so strong, and it’s tough to maintain that kind of growth year after year," she said.

Davis expects clothing, electronics, gift cards and perennial holiday favorite — toys — to be big categories this season.

"A hot toy hasn’t emerged yet, but the season is young," she said.

Expect retailers to be cognizant of gas prices and to stock shelves conservatively this year, she said. And they will try to ensure empty endof-season racks by luring customers to shop early, she said.

"If you really want it, you better buy it when you see it," Davis said. "Last year, most consumers procrastinated. This year, retailers will try to get people in early with great deals and deep discounts."

Holiday shopping estimates soon will come tumbling forward from various sources — trade groups, industry consultants, retailers and mall owners.

It’s not surprising. Retailers ring up an average 20 percent of their annual sales in Christmas and other November-December holiday merchandise. For some merchants — card shops, florists and jewelry stores, for example — Christmas accounts for an even bigger chunk of their revenue.

In 2004, according to the National Retail Federation, department stores rang up 26 percent of their annual sales in November and December, and discounters such as Target and Wal-Mart made 23 percent of their money during the holiday season.

The surge helps the economy in other ways such as filling tax coffers and emptying unemployment lines. In 2004, retailers hired 3.5 percent more staff for November and December, according to statistics compiled by the U.S. Department of Labor.

This year, the National Retail Federation added retail categories — drugstores, home improvement stores, office supply stores and grocery stores — to its holiday estimates. The company recalculated previous years’ holiday figures to include those categories so the comparisons will be accurate. The only retail businesses not included in the holiday statistics are auto dealers, restaurants and gas stations.

Davis said the change reflects the variety of places consumers now shop for the holidays. "The traditional retail lines are blurring," she said.

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