• by Jack Loechner , Staff Writer @mp_research, November 5, 2004

An Early Look at November, December Retail Sales

Archstone Consulting, anticipating the start of the 2004 holiday shopping season, forecasts that retailers will see a 3-5% overall increase in retail sales. Archstone Consulting defines the "holiday shopping season" as sales in November and December.

Michael Unger, Director with Archstone Consulting, said "Barring any catastrophic events, retailers will have reason to celebrate this Holiday Season. However consumers... don't like uncertainty, and regardless of who is elected in November, a large veil of uncertainty will be lifted, further fueling holiday sales."

Discretionary spending categories such as furniture, household appliances and audio/video equipment are expected to see the greatest boost with a forecasted sales increase of 5-7% over last year. Electronic, Apparel and Luxury item retailers can all expect to see significant sales increases.

Archstone Consulting has identified the following economic factors influencing the firm's assessment of the 2004 holiday shopping season:

Positive Economic Factors Affecting 2004 Holiday Spending

- Record low interest rates over the past few years and heavy "cash-out" refinancing earlier in the year have increased household cash flow and discretionary spending, which is driving the tendency to spend more than usual over the coming holiday season.

- While there has been a net job loss, the general trend for employment is positive, and this bolsters consumer confidence about the economy.

- In seven out of nine regions in the US, consumer confidence remains substantially above levels one year ago, according to a recent survey conducted by The Conference Board.

Negative Economic Factors Affecting 2004 Holiday Spending

- The recent rise in interest rates requires consumers to have incremental income to support an increase in debt, in turn curbing discretionary spending.

- According to The Economist, consumer prices are increasing by 2.7%, while wages are increasing by only 2.3%. This means consumers will have to pay more for goods with relatively smaller income.

- Between terrorism fears and an election, consumers are likely to be particularly cautious early in the fourth quarter, 2004

You can find out more in this pdf file.