Commentary

Merchandise Sales Up Five Percent In 2004

Merchandise Sales Up Five Percent In 2004

The National Retail Federation (NRF) released its 2004 forecast, predicting that GAFS sales (general merchandise stores, apparel stores, furniture and home furnishings stores, electronics and appliances stores, and sporting goods, hobby, book and music stores) will increase 5.0 percent from last year. According to its Retail Sales Outlook Report, NRF cites gains in consumer income and low inflation as major contributors to growth in 2004.

Much of the anticipated growth this year is attributed to continued momentum that began in the second half of last year. "In the second half of 2003, consumers played their part with hefty spending increases and businesses kicked in with strong investment spending," said NRF Chief Economist Rosalind Wells.

Several factors will lead to moderate growth in 2004. Inflation is low and will stay modest--even though there is increased strength in the economy, prices are not expected to move up significantly in the near future. Also, interest rates are expected to remain low and the stock market and home values continue to increase.

Additionally, the job market continues to improve. After seven straight months of job loss in early 2003, job creation occurred for four consecutive months starting in August. "If demand from the consumer sector and the business sector continue to grow, firms will step up their hiring plans," said Wells. "Prospects are brighter than they have been for some time that faster job creation is achievable in 2004."

Forrester Research and Shop.org, the online marketing unit of the National Retail Federation (NFR), says online sales will come in at between $96 billion to $100 billion for 2003 and jump to $125 billion this year. The anticipated 25%-plus growth for 2004 would bring online shopping up to 5.6% of all retail sales.

NRF represents an industry with more than 1.4 million U.S. retail establishments, more than 20 million employees - about one in five American workers - and 2002 sales of $3.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations.

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