Will modest growth this year be good enough for retailers?
The National Retail Federation (NRF) expects retail industry sales (excluding autos, gas and restaurants) to grow 3.1 percent this year, higher than the annual average of 2.7 percent over the past decade. As in past years, NRF expects online sales to outpace brick and mortar, growing somewhere between six and nine percent in 2016.
NRF expects retail’s growth to outpace the economy as a whole. While employment growth will not be as robust as in 2015, the group expects the economy to add roughly 190,000 jobs a month, bringing the unemployment rate down to 4.6 percent by year’s end.
“Wage stagnation is easing, jobs are being created and consumer confidence remains steady, so despite the headwinds our economy faces from international developments — particularly in China — we think 2016 will be favorable for growth in the retail industry,” said Matthew Shay, president and chief executive of NRF, in a statement. “All of the experts agree that the consumer is in the driver’s seat and steering our economic recovery.”
“The economy had a bumpy ride in 2015 with fits and starts along the way,” said Jack Kleinhenz, NRF’s chief economist. “Despite the volatility, the economy continued to reduce unemployment, raise wages and actually increase real GDP by 2.4 percent. Lower gas prices are creating more discretionary income to save, pay down debt and spend on travel, eating out and personal services. Retailers have benefited as well, and continue to find ways to compete and succeed in a very cost-conscious environment.”
A RetailWire poll of attendees at the NRF’s Big Show in New York last month found that 77 percent were somewhat (65 percent) or much more (12 percent) optimistic about the retail industry’s prospects for 2016. Only 14 percent were somewhat or much less optimistic.
- NRF Forecasts Retail Sales to Grow 3.1% in 2016 – National Retail Federation
- NRF Show attendees are hopeful for 2016 – RetailWire
DISCUSSION QUESTIONS: Do you agree with NRF’s forecast of modest growth for the year ahead? Which economic factors do you think will play the biggest role in the retail industry’s performance in 2016?