Holiday sales to crater, home décor stores worse
September 18, 2008,
Columbus, Ohio – Consumers have been taking it on the chin, and this holiday season it will be retailers’ turn, with a new TNS Retail Forward forecast of 1.5% fourth-quarter sales growth, the lowest rate since 1991.
No recent fourth quarter comes near such a flaccid year-over-year volume performance; the worst retail fourth quarter in the past decade was the 2.2 sales increase in 2001. Recent high points among fourth quarters include the 7.0% growth in 2005, and the 8.2% peak in 1999, TNS research shows.
A range of factors are involved in the present situation, said Frank Badillo, senior economist for TNS Retail Forward: “The benefit from a letup in gasoline prices will be overwhelmed by the impact of rising unemployment, tighter credit and other hardships on households.”
Badillo observed, “The holiday sales forecast represents a weakening from modest third-quarter growth as the boost from tax rebates runs out.”
Perhaps not so coincidentally, yesterday the Commerce Department projected for 2008 another 17-year negative milestone: the lowest number of home building permits since 1991.
TNS pointed to two likely bright spots for Q4 ’08: mass merchants and online retailers.
“TNS Retail Forward forecasts 5.6% combined growth, nearly a full percentage point stronger than last year,” the report stated. Some of the increase will be due to higher food prices, however. “Supercenters and warehouse clubs will remain among the best retail performers while discount department stores will be the laggard of the channel,” the survey clarified.
Consumer e-commerce sales are forecast to grow by 9% -- but that may be a disappointment, down from 19% in the year-ago holiday quarter. “This represents the first single-digit growth rate for online retailing during the holiday shopping season since 1999,” Badillo said.
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