"Retailers could see a welcome boost in holiday shopping, giving some companies the shot in the arm they need after a volatile first half of the year and an uneventful summer," NRF President and Chief Executive Matthew Shay.
CLEVELAND, Ohio -- In a sure sign that retailers expect the holidays to be both merry and bright, the National Retail Federation is forecasting a green Christmas for America's retailers, with sales soaring 4.1 percent to $616.9 billion, a full percentage point higher than last year's actual increase of 3.1 percent.
With only 11 Saturdays left until Christmas, the world's largest retail trade association said the mood among store executives is buoyant, optimistic and enthusiastic heading into their final and most important quarter.
"A lot of folks are anticipating a very good holiday season in terms of sales, and there's a general sense that many of these companies are going to do well," said Matthew Shay, NRF president and chief executive, in a conference call with journalists Tuesday.
View full sizeJack Kleinhenz, chief economist for the National Retail Federation Jack Kleinhenz, the Cleveland-based chief economist for the Retail Federation, said that income, employment and consumer confidence are all improving, inflation is subsiding a bit, and gasoline prices are dropping. All of which leave more discretionary income for things such as holiday shopping, he said.
This the first time since 2011 that holiday sales will be higher than 4 percent, and the NRF expects November and December buying to contribute 19.2 percent to the retail industry's $3.2 trillion in annual sales.
But another retail survey by PwC US and Strategy& expects holiday sales to decline, saying shoppers are still cautious about spending.
"The upcoming holiday shopping season will look very similar to 2013 as shoppers remain cautious on the economy and are concerned about disposable income, the rising cost of living, and insufficient salary, leading surveyed participants to project an average household spend of $684, down from $735 in 2013," Steven Barr, PwC's U.S. retail and consumer practice leader, said in a written statement.
"The spending divide among shoppers is widening, creating two distinct groups that we are tracking - survivalists and selectionists - and retailers must cater to both segments." PwC defines survivalists as those generally making under $50,000 per year, and selectionists as those generally making more than $50,000 per year.
PwC said shoppers have high expectations for a seamless experience, no matter how they want to shop, and have "no tolerance for another season of data privacy invasion." Retailers will have to figure out how to cater to them or they risk losing their loyalty.
NRF's rosy forecast comes after a decade during which holiday sales grew an average of only 2.9 percent.
View full sizeSharie Icam of Strongsville started and finished her Christmas shopping in a single day at SouthPark Mall in this file photo. The National Retail Federation expects holiday sales to be up 4.1 percent this year."Retailers could see a welcome boost in holiday shopping, giving some companies the shot in the arm they need after a volatile first half of the year and an uneventful summer," Shay said.
Not only are retailers hiring more seasonal workers than ever to handle in-store, online and mobile purchases, UPS and FedEx are also adding workers in anticipation of brisk and busy holiday deliveries.
NRF expects retailers to hire 725,000 to 800,000 seasonal workers this holiday season, compared to the 768,000 they actually hired last year.
Shay said three major factors hurt sales last year: a government shutdown, harsh weather and the holiday shopping season was the shortest possible period between Thanksgiving and Christmas. He doesn't think those will be an issue this year.
At the same time, he and Kleinhenz acknowledged that "not all parts of the economy are experiencing a recovery, or feel like they're experiencing a recovery."
"While expectations for sales growth are upbeat, it goes without saying there still remains some uneasiness and anxiety among consumers when it comes to their purchase decisions. The lagging economic recovery, though improving, is still top of mind for many Americans," Shay said.
View full sizeTracy Albers shops at Crocker Park in Westlake in this file photo. Retailers are hoping for the most successful holiday shopping season in years. Consumers are still wary and still price-sensitive, so retailers will have to walk a fine line between dangling low prices and making enough of a profit to stay in business. Shay said retailers spend a tremendous amount of time figuring out prices, because they don't want to repeat the unanticipated markdowns they had to take during the 2008-09 recession.
"Though we have only seen consumer income and spending moderately -- and erratically -- accelerate this year, we believe there is still room for optimism this holiday season," Kleinhenz said.
"In the grand scheme of things, consumers are in a much better place than they were this time last year, and the extra spending power could very well translate into solid holiday sales growth for retailers; however, shoppers will still be deliberate with their purchases, while hunting for hard-to-pass-up bargains."
Kleinhenz said consumers have been resilient, and that 1.5 percent of the GDP growth since June 2009 has come from consumers.
Retailers will be looking for more ways to interact with and entice shoppers, from live chats to mobile offers to in-store promotions. Stores are all striving to offer the right merchandise to the right consumers at the right time and at the right price, Shay said. "That's the difference between making a sale or having that sale go to a competitor."