• Andrea Lillo

Holiday 2003 looking merry

There may be good reason to celebrate this holiday season, as several organizations predict consumer spending to climb during that time period, making for a very, merry Christmas.

The National Retail Federation, Washington, for example, projects that total holiday retail sales will grow by 5.7 percent to $217.4 billion this season.

"After several strong months of retail sales growth, it seems clear that the economy is picking up momentum just in time for the holidays," said Rosalind Wells, chief economist. "Retail sales gains for the 2003 holiday season will be far better than the meager increases retailers experienced a year ago."

The NRF defines holiday retail sales as sales in November and December for general merchandise stores, clothing and clothing accessories stores, furniture and home furnishings stores, electronics and appliance stores, and sporting goods, hobby, book and music stores.

Brand Keys, a brand and customer loyalty research consultancy here, found that consumers planned to spend more this year than last, which will be $710 on average, or about nine percent more than last year.

Consumers are willing to spend a bit more, according to Brand Keys' Holiday 2003 Trends Predictions, but they want to be perceived as wise shoppers and will spend time searching out the best deals.

Several channels will benefit from this. Online spending will have the biggest jump, as 15 percent more shoppers, for a total of 50 percent, plan to use this channel. Online holiday sales are predicted to jump 62 percent to $20.5 billion this season.

About 70 percent of shoppers, 5 percent more than last year, will spend money at the discount department stores, making this the most used channel, according to Brand Keys. Catalog retailers gained 3 percent for a total of 41 percent. Traditional department stores slipped 2 percent to 52 percent, and specialty stores remained the same at 40 percent. Brand Keys also tracks customer loyalty in several categories, and in the discount store group found that Wal-Mart, Sears, Target, JCPenney and Kmart are most likely to be the beneficiaries of the holidays, in that order.

NRF's Wells attributes the increased spending to low interest rates, low inflation, rising equity markets and mounting consumer confidence, as well as more disposable income resulting from the withholding tax cut and child tax credit checks.

Business spending is another major factor, and retail spending by businesses on equipment and software jumped 8.0 percent at an annual rate in the second quarter following an extended period weakness going back to 2000.

However, a sluggish job market, rising energy costs and geopolitical concerns are nagging factors, Wells added.

"Consumers have spent the last several years on an emotional and economic roller coaster," said Tracy Mullin, president and ceo, NRF. "Now, Americans appear to be ready to shop and ready to spend, just in time for the biggest shopping season for the year." Last year's holiday season made up 22.7 percent of the total retail sales.

NRF's first installment of the 2003 NRF Holiday Consumer Intentions & Actions Survey will be released on Oct. 21.

Source: Brand Keys research
Where they'll shop
Discounters 70% +5%
Dept. stores 52 -2
Online 50 +15
Catalog 41 +3
Spec. stores 40 0
What they'll buy
Clothing/access. 50%
Electronics, etc. 45
Books 32
CDs/DVDs/games 26
Jewelry 25
Home décor 20

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