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On the heels of a holiday season that outperformed most analysts’ expectations, holiday retail sales for 2011 are expected to increase 2.8 percent to $465.6 billion, according to the National Retail Federation.
While that growth is far lower than the 5.2 percent increase retailers experienced last year, it is slightly higher than the 10-year average holiday sales increase of 2.6 percent.
“Retailers are optimistic that a combination of strong promotions and lean inventory levels will help them address consumer caution this holiday season,” said Matthew Shay, NRF president and CEO. “While businesses remain concerned over the viability of the economic recovery, there is no doubt that the retail industry is in a better position this year to handle consumer uncertainty than it was in 2008 and 2009.”
Though several economic indicators paint a solid picture for the holiday season – including 14 consecutive months of retail sales growth and a substantial reduction in household debt – continued consumer uncertainty over the stock market, higher gas and food prices, fiscal policy and sputtering job growth will impact spending this holiday season. Additionally, the substantial year-over-year gains for the 2010 holiday season will create more difficult comparisons for retailers to achieve this year.
“Just when you think the U.S. economy is turning around, another factor comes into play that changes the game,” said Jack Kleinhenz, NRF chief economist. “Persistently high unemployment, an erratic stock market, modest income growth and rising consumer prices are all combining to impact spending this holiday season. How Americans will react to shaky economic data is the question, but the good news for retailers is that shoppers have not yet thrown in the towel.”
NRF’s holiday sales forecast is developed based on an economic model using several indicators including consumer confidence, consumer credit, disposable personal income and previous monthly retail sales releases.
For the first time this year, NRF used its holiday forecasting model to create a projection for seasonal hiring in retail. According to NRF, retailers are expected to hire between 480,000 and 500,000 seasonal workers this holiday season, which is comparable to the 495,000 seasonal employees hired last year.
While most retailers bring in additional employees during the holiday season to account for an uptick in traffic and sales, retailers have also been hiring throughout the last year. Since last August, the retail industry has added nearly 100,000 jobs.
“The hundreds of thousands of jobs created during the holiday season help people support their families by supplementing their household income and providing generous employee discounts,” Shay said. “As the retail industry bounces back from the recession and continues to add jobs, some holiday employees could find themselves with an opportunity for even more: a new career in one of the most innovative industries on the planet.”
NRF’s global membership includes retailers of all sizes, formats and channels of distribution as well as chain restaurants and industry partners from the United States and more than 45 countries abroad.