Hurricanes, slumping consumer confidence and the prospect of rising energy prices may have dimmed retailers' optimism about this year's holiday selling season, but they're not giving up hope. Those obstacles notwithstanding, the industry expects moderate holiday sales growth this year, according to the National Retail Federation (NRF). The group projects that total holiday retail sales will increase 5 percent over last year, bringing holiday spending to $435.3 billion. Last year's holiday sales, by contrast, rose 6.7 percent to $414.7 billion.
The NRF maintains that steady consumer spending and strong second- and third-quarter gains indicate potential for a solid holiday season, and it's undeterred by the prospect of surging energy costs. Gas and home heating oil prices are only part of the picture, the NRF points out. "A combination of many factors, including energy prices, the job market, disposable income, and consumer confidence, will ultimately affect retailers' sales this holiday season," says NRF chief economist Rosalind Wells. "Though it might be easy to label gas prices as the make-or-break factor for the holidays, it is crucial for analysts to look at the big picture instead of isolating one economic indicator to project sales."
Even so, it appears that retailers aren't taking any chances—they're rolling out the bargains early to lure price-sensitive shoppers." Consumers won't have to wait until the last minute to get the best deals this year because retailers are expected to be aggressive in their pricing strategies throughout the entire holiday season," says NRF President and CEO Tracy Mullin. "Stores are planning for holiday sales and promotions, so discounted prices won't have a negative effect on profits."