Holiday Sales Projected to Rise 3.9%

(Los Angeles Times/MCT) -

Holiday sales this year will be so-so at best, with fiscal concerns and the stalemate in Washington weighing down more promising economic signs, according to the retail industry’s top trade group.

Sales in November and December will tick up 3.9 percent to $602.1 billion, according to the National Retail Federation’s forecast.

Last year, sales rose 3.5 percent. The average increase in the past decade is 3.3 percent. The holiday season accounts for as much as 40 percent of individual retailers’ annual revenue and about 20 percent of the industry’s total haul, according to the NRF.

“While neither robust nor pessimistic, this is a realistic forecast of the industry’s expectations,” NRF chief executive Matthew Shay said in a statement. “The potential for higher growth exists, but the potential for consumer spending cutbacks also exists if we don’t see policy leaders address the bigger problem – job creation and long-term economic recovery.”

Online sales growth is expected to be stronger. The NRF said it expects revenue to jump 13 percent to 15 percent in the final two months of the year, amounting to as much as $82 billion.

Last year, e-commerce sales in the fourth quarter rose 15.5 percent from the same period in 2011, according to the government.

The NRF expects seasonal employment at retailers to grow by 720,000 to 780,000 workers. In 2012, merchants brought 720,500 holiday employees on board, a 13 percent boost from the year before. Inc. said this week that it will hire 70,000 full-time seasonal workers, a 40 percent upswing from last year. Wal-Mart Stores Inc. said it will add 55,000 seasonal associates, while Toys R Us Inc. plans to hire 45,000 employees.

Target Corp. said its holiday hiring will slide 20 percent to 70,000 seasonal workers.

Vendors worried about holiday sales have some factors working in their favor. The housing market is on the upswing, and personal incomes in August rose the most since February. Also, consumers appear increasingly willing to spend on big-ticket items.

But the government shutdown could crimp holiday shopping plans for many public employees.

“The timing couldn’t be worse, as we are just weeks away from the all-important holiday season, when retailers and other businesses benefit from increased spending,” John A. Challenger, chief executive of consulting firm Challenger Gray & Christmas Inc., said in a statement this week. “Depending on how long the shutdown lasts, government workers may have to slash holiday spending.”