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Holiday 2009—Second-Worst in 42 Years, Retail Forward Forecasts

COLUMBUS, September 22, 2009 – Retail sales during the fourth quarter holiday period will be on the road to recovery but will still rank as the second-worst holiday in 42 years, Retail Forward forecasts.  Retail Forward forecasts flat growth—compared with a 4.5% decline a year ago—for the holiday fourth quarter in the key holiday retail segments combined.

The holiday segments represent all retailing except the auto, food and drug channels.  Included are home improvement stores, catalogs, online sales and the key retail sectors—where many holiday gifts are traditionally purchased—known as GAFO (general merchandise stores such as conventional and discount department stores, supercenters, warehouse clubs, apparel stores, furniture, home furnishings, consumer electronics and other specialty stores).

“Softer August retail sales declines are signs of an emerging retail recovery that will be driven by growing confidence among households,” comments Frank Badillo, Senior Economist for Retail Forward.

“This is positive news as we move into the critical holiday season, but the economic environment will remain difficult,” Badillo adds.  “Sales declines will persist for specific retail channels—particularly apparel and homegoods—but will end for aggregate measures of retail sales.”  

The weak improvement in the sales growth trend is forecast to gain strength quarter by quarter in 2010.  Retail Forward expects the retail sector in aggregate to approach long-term average growth rates by the end of 2010.

Holiday Retail Sales Results* (Fourth Quarter Year-over-Year Growth)

*For GAFO, Home Improvement and Non-Store Retail Lines of Trade
Sources:  U.S. Department of Commerce and Retail Forward

Anticipated key retail sector holiday sales performance: 

• Sales at apparel and accessories channels are forecast to decline about 2% during the fourth quarter holiday period compared with a more than 9% drop last year.  Most of the continued decline will be at department stores which continue to feel the brunt of a combination of economic, competitive and demographic trends. 
• The broad group of mass retailers that includes discount department stores, supercenters, warehouse clubs and small-format value stores is forecast to grow sales 2.5% this holiday season.  This is an increase from 2.0% a year ago.
• The homegoods channel will see sales decline more than 2% compared with a 7.4% decline last year.  Consumer electronics stores will experience the biggest decline in part due to Circuit City’s exit.  Building and home improvement retailers will see sales declines ease to -2.0%.  This channel is expected to be the first to benefit from improvements in the housing market and is forecast to see slight sales gains emerge in early 2010.

Online sales across retail channels are forecast to grow 4% this holiday season after declining 5% a year ago.  “We expect the pace of online sales to be sustained into 2010, but remain shy of the double-digit growth we saw in the channel for several years,” Badillo comments. 

“The emerging recovery will be driven by growing confidence among households in response to, among other things, subsiding job cuts by businesses.  Businesses, in turn, are taking their foot off the brakes in light of leaner inventories and expectations that pent up demand and economic stimulus will soon require new business investment,” Badillo concludes. 

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About Retail Forward
Retail Forward, Inc. (www.retailforward.com ») is a global management consulting and market research firm specializing in retail intelligence and strategies. The company's syndicated research and executive development program, known as the Retail Forward Intelligence System™, provides members with an authoritative perspective on the retail and consumer products industries.  To learn more, contact Katherine Clarke at kclarke@retailforward.com ».

Join Retail Forward economists and retail and shopper insights experts for Holiday 2009:  It’s All Relative, a one-hour Webinar on Wednesday, September 23, 2009 at 11:00 am EDT.  Retail Forward’s panel will unwrap the holiday outlook and share significant findings from Retail Forward’s monthly ShopperScape™ Online Survey to paint a picture of holiday 2009.  To register, follow this link:  http://www.retailforward.com/webinarpage.asp ».