NRF: Soft Landing Due in 2007

Retail sales will slow in 2007, the National Retail Federation (NRF) estimated during its annual forecast press conference here. NRF expects a 4.8% increase in retail sales this year compared to a 6.3% gain in 2006.

With the housing market losing steam, NRF anticipates big-ticket home furnishings items will follow suit, particularly furniture, appliances, and building materials. NRF chief economist Rosalind Wells projected retail sales growth for the home furnishings category during the first half to rise in the low single digits.

Current retail trends will persist throughout the year, Wells predicted. "Luxury retailers will continue to outperform. Online shopping will continue to escalate. Retailers catering to the lower and mid-level income consumer will find achieving sales gains more challenging."

Wells looks to softer growth in the first half, with stronger sales gains occurring during the final six months of 2007. In part, this has to do with comparisons with last year. The bottoming out of the housing market also factors in, she said.

The first-quarter sales gain is expected to be 3.8%, with a second-quarter bump of 4.6%. Wells predicted a 5.2% gain in the third quarter and a 5.7% increase in the fourth.

The retail sales gain for the past holiday season (November/December) was 4.4%, falling below NRF's 5% projection. However, Wells noted, a 4.3% decline in sales at building materials and supply stores sales dragged down the overall figure. When factored out, holiday retail sales rose 5.3%.

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