Ho-ho-hum. That may sum up the sentiment this holiday season, as retailers — and consumers — proceed with caution, according to a forecast released Thursday by the retail industry trade group the National Retail Federation.
Holiday retail sales are expected to rise 2.8 percent to $465.6 billion, the NRF predicts. This growth, while far slower than last year’s 5.2 percent gain, is slightly higher than the 10-year average holiday sales gain of 2.6 percent, the group said.
“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’s 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.”
During that period, retailers were caught with large levels of excess inventories as the financial crisis prompted consumers to cut spending, reduce their household debt levels and get their budgets under control.
Since then, retailers too have learned to do more with less. One sign of that is reflected in the NRF's first-ever seasonal hiring forecast, which said retailers will hire about the same number of workers this year as they did last year.
Since the financial crisis and the recession, there has been persistently high unemployment, and there is no telling when the labor market will strengthen. At the same time, consumers have seen only modest income growth, while prices for many things they buy — gasoline, groceries, clothes to name a few — have risen.
More recently, there are signs of potential pressure on another front: the wild swings in the stock market. That could be bad news for luxury goods, which have been a bright spot, as high-income consumers tend to spend less in a down market, and may more guarded about their spending in this climate.
Still for the moment, consumers have been trucking along. Retail sales have grown for 14 consecutive months and household debt levels have fallen. But with consumer confidence remaining at depressed levels, it is unclear how sustainable this is.
“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,” said NRF Chief Economist Jack Kleinhenz.
The NRF’s forecast is very much in line with other sales estimates issued by other industry analysts and consultants. Deloitte, ShopperTrack, Kantar Retail and the International Council of Shopping Centers all have predicted holiday sales gains in the 2 percent to 3 percent range.
Although different methods of calculating retail sales mean that these numbers are not directly comparable, they all translate the same tone: Sales will good, but not great.
As for retail hiring, several major retailers have already announced their hiring plans. Some, including Kohl’s , Macy’s , JC Penney and Target , have said they would boost the number of temporary workers they hire. However, others such as Best Buy and Toys ‘R Us said they would hire fewer workers than they did last year.
The NRF predicts the industry will hire between 480,000 and 500,000 seasonal workers this year. The NRF said this is comparable to the 495,000 seasonal employees that were hired last year.
The group cautioned that this is not the full hiring picture for the industry, which has been adding jobs throughout the year. Since last August, the industry has added nearly 100,000 jobs.
Retailers also have become more efficient at scheduling more workers to be on duty during times when consumer traffic peaks, and reducing staff during slower periods.