Life After Holidays: '09 Will Be Worse

Between a shorter shopping season, winter weather, and dismal consumer spending trends, retailers have their inboxes full of bad news at the moment. But on the eve of Super Saturday, the second-biggest shopping day of the year, a new forecast from TNS Retail Forward promises more misery for 2009. The Columbus, Ohio-based consultant says it is now predicting that retail sales will remain weak through 2009, with no clear rebound until 2010.

Retail Forward's report estimates that sales growth for 2009 will approach 2%, but will fall short of 2008's 2.3% average growth. (That figure is based on data from the U.S. Department of Commerce through November, and excludes cars and gasoline.) Sales will rebound in 2010, and then "gain momentum through 2013, when annual increases in sales will again approach the 5% average growth rate of the past 10 years. Adjusting for inflation, however, growth is forecast to remain below average going forward."

Food, drug and mass channels will be least affected in 2008 and 2009, and likely to achieve a 4.6% average annual rate from 2008 to 2013. (But that still represents a decline of 0.7 percentage points from the prior five-year period.) Supercenters and warehouse clubs, the strongest performers in the recent downturn, are expected to continue to produce the highest sales growth, with discount department stores and supermarkets turning in weaker performances.



In soft goods--which include apparel, accessories, shoes and department stores--the worst may be over. Although a decline is likely for 2009, "the sector is expected to mount a strong recovery in 2010 before improving sales growth in each of the next three years," the report says. Still, growth will be anemic. "Although apparel and accessory retailers have the strongest growth prospects, their pace of sales growth will continue to lag that of supercenters, warehouse clubs, and e-commerce and non-store retailer sales, all of which compete for consumer spending on softwoods categories."

For home goods, however, Retail Forward predicts that the worst is yet to come, with sales declining in appliances, books, building materials, hardware, garden supply, furniture, and home furnishings. Within that category, consumer electronics and sporting goods are expected to post the best growth rates through 2013.

Meanwhile, the latest data is not giving chains much hope for a Christmas miracle. A new poll from Consumer Reports reveals that nearly 70% of Americans say they are making cutbacks this holiday season, with 37% sticking to spending limits, 14% making homemade gifts, and 6% not giving gifts of all.

And the malls are feeling that determination, with ShopperTrak reporting that foot traffic at U.S. stores fell 17.9% for the week ending Dec. 13 as compared to 2007, while the company's retail-sales estimate reported a 0.3% sales decline for the same period. "Super Saturday"--as retailers call the last Saturday before Christmas--is typically the second-biggest shopping day of the year, after Black Friday, and generates about 11.5% of holiday sales.

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