NRF forecasts 1% holiday sales decline

The National Retail Federation’s (NRF) 2009 holiday forecast has projected holiday retail industry sales will decline 1% this year to $437.6 billion, which falls below the 10-year average of 3.39% in holiday season growth. However, this projection is not expected to be as steep as last year’s 3.4% drop or the 3.0% decline in annual retail industry sales expected for all of 2009.

“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,” said NRF chief economist Rosalind Wells.

Despite some signs of a recovery, like better-than-expected sales in August, consumer uncertainty over job security and housing values will hamper holiday spending. Furthermore, promotions may cause certain holiday categories like apparel and electronics to 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,” said 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.”

Holiday sales, as defined by the NRF, include retail industry sales in November and December.