The National Retail Federation (NRF), a Washington, D.C.-based trade association representing the retail industry, expects holiday retail sales to increase 2.3 percent this year.
 
In its holiday season forecast released today, NRF estimates that retail sales during November and December will reach $447.1 billion, compared with $437.02 billion in the same period last year. This year’s forecast growth is slightly lower than the 10-year average, but it is an improvement from last year’s 0.4 percent increase and 2008’s 3.9 percent decrease, NRF reported.

“While many consumers will be wishing for apparel and electronics this holiday season, retailers are hoping the holidays bring sustainable economic growth,” said NRF president and CEO Matthew Shay. “Though the retail industry is on stronger footing than last year, companies are closely watching key economic indicators like employment and consumer confidence before getting too optimistic that the recession is behind them.”

NRF’s holiday sales expectations are slightly lower than those released last week by Kantar Retail, a consultant group in Columbus, Ohio. Kantar expects 2010 fourth quarter sales to increase 2.5 percent, which would be the highest increase since 2006. Holiday sales could climb more than forecast if confidence in the economy increases in the coming weeks, Kantar reported.
 
NRF expects retailers to focus on supply chain efficiencies and inventory control this holiday season. Such efforts would make it less likely that retailers would be left with unsold merchandise come the new year. Retailers are also expected to leverage new channels, like mobile, to drive sales and provide added services to customers.

“While consumers have shown they are once again willing to spend on what’s important to them, they will still be very conscientious about price,” said NRF chief economist Jack Kleinhenz. “Retailers are expected to compensate for this fundamental shift in shopper mentality by offering significant promotions throughout the holiday season and emphasizing value throughout their marketing efforts.”

NRF’s holiday sales forecast is derived from several indicators, including employment, industrial production, disposable personal income and previous monthly retail sales reports. Retail sales exclude sales at car dealerships, gas stations and restaurants. <HOME>