Based on retail sales figures for the 2002 holiday season, it appears that many consumers stuck close to hearth and home and ventured out to stores much less frequently than retailers might have liked.
The National Retail Federation (NRF), the world's largest retail trade organization, reported that 2002 holiday sales rose a mere 2.2 percent over 2001 levels, the smallest increase since the group began tracking sales in 1992. The National Retail Sales Estimate (NRSE), released during last month's NRF trade show in New York, revealed the same trend. According to the NRSE, U.S. retail sales for the combined months of November and December grew by only 2.0 percent over 2001 figures.
Developed by Shopper Trak, a privately held organization, the NRSE provides a nationwide benchmark of retail sales. It is derived from the U.S. Commerce Department's GAFO (general merchandise, apparel, furniture and other related store sales) statistic, as well as ShopperTrak's proprietary industry intelligence.
Low levels of consumer confidence in the economy were not the only factors contributing to sluggish holiday sales. NRF Chief Economist Rosalind Wells pointed out that retailers made heavy use of promotions and sales. In addition, there were six fewer shopping days between Thanksgiving and Christmas than there were in 2001. On the upside, retailers reported a big increase in the sale of gift certificates. Retailers don't book those sales until the certificates are redeemed, so January and February numbers may change the view of how well the season went (and place unseasonable demands on distribution centers as well).
The NRF sounds considerably less gloomy when it comes to its forecast for this year, predicting that 2003 GAFS sales (sales reported by stores selling general merchandise, apparel, furniture and home furnishings, electronics and appliances, and sporting goods, books and music) will increase 5.6 percent from last year. The group bases its optimism on projected gains in consumer income and continued low interest rates.
Wells said she expected sales to pick up slowly this year, with the strongest growth in the second half. "The economy has been going through a 'soft spot' in activity, which wi ll give way to accelerated growth this year, "she said. "2003 will not be a year of exceptional strength, but rather of solid advance. GAFS sales trends will parallel overall economic activity and improve during the year."
All the same,the group hedges its forecast,saying its optimism is tempered by the risk of war and the continuing weakness in the nation's labor markets. Wells said the uncertainty sur rounding potential war with Iraq and worries over terrorism presented the largest obstacles to economic growth.
For 2002 overall, retail sales grew by 5.0 percent, according to the NRSE. By comparison, retail sales for the 2001 calendar year gained just 3.9 percent from the year 2000, while 2000 sales grew by 6.1 percent over 1999 levels.