Upcoming Holiday Season Looks Dimly Brighter

Sep 24, 2003
Rick Moss

By Rick Moss

Although most economists are warming up their forecasts for the long hoped-for economic revival, the upcoming holiday retail selling season will likely bring somewhat mixed results, according to management consulting and market research firm Retail Forward, Inc. “The economy and retail sales are on the rebound, but the signs suggest that it will be an uneven rebound,” states Frank Badillo, Senior Economist for Retail Forward.

The firm says holiday retail sales should be slightly stronger than last year, growing on average between 3.5 and 4.0 percent from the year before. The top end of that range will be represented by the “GAFO” group of retail channels — general merchandise, apparel, furniture and other, and also by building and home improvement store sales and non-store retail sales (i.e. online and mail order). Tempering the forecast are concerns about a still weak job market and waning home buying and refinancing.

Some factors that may drag down the overall results, says Retail Forward:

  • Concerns about a still foundering job market and declining home sales/refinancing

  • Depressed sales at mall-based department stores

  • Steeper price-cutting may keep apparel stores from performing much better than last year

  • The moderating affect of the weakening housing market on furniture, home furnishings and consumer electronics sales

Among positive influences cited by Retail Forward:

  • Strong growth for supercenters, warehouse clubs and dollar stores as consumers remain oriented toward the value sectors

  • Good performance from online sales, which are forecast to hit $17.5 billion in the fourth quarter, up 27 percent over the prior year period

All-in-all, outside forces may continue to hamper retailers’ best efforts. Says Badillo, “Until consumers benefit from a pick-up in the job market, sustaining the rebound depends on a lot of one-time economic drivers such as the surge in mortgage refinancing and tax breaks. Those one-time drivers should lose steam before a job rebound fully kicks in. The holiday season is far from a slam dunk for retailers.”

Moderator’s Comment: Will shoppers return to a pre-9/11 spirits this holiday season?

With close to 9 million Americans still out of work, health care costs skyrocketing and continuing uncertainty in the Middle East, the spirits that may
be most prevalent will be the kind used to drown sorrows. However, Americans have a capacity for spending beyond their means that is the envy of the world. It may be that, after
three years of caution, consumers will just be sick and tired of “being good”.
Moss – Moderator

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