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NRF predicts slower 2005

New York – The National Retail Federation’s 2005 forecast predicts GAFS sales (general merchandise stores, apparel stores, furniture and home furnishings stores, electronics and appliances stores, and sporting goods, hobby, book and music stores) will increase 3.5 percent from last year, far from the 6.7 percent growth seen in 2004.

In its quarterly Retail Sales Outlook Report, released this morning at the NRF Convention & Expo, NRF cites tough comparisons and lack of economic stimulus as the reasoning behind its guarded forecast.

For starters, strong comparisons will make this year more difficult for growth, said NRF. Last year, GAFS sales soared 9.9 percent in the first quarter, which will make first quarter growth this year hard to achieve. This year, due to tough comparisons, NRF is predicting growth of 3.7 percent for the first quarter.

NRF's retail sales forecast is restrained this year for a variety of other reasons. "This year, consumers will be under increased financial pressure due to higher energy costs and slow wage growth," said NRF Chief Economist Rosalind Wells. "Additionally, past stimuli provided by tax cuts and very low interest rates will no longer be there to boost consumer spending."

Also, starting this month, NRF will broaden the retail categories it tracks, adding food and beverage stores, building materials and garden equipment stores, health and personal care stores, and miscellaneous retailers including florists and gift shops. NRF will release a revised historical retail analysis and forecast at the beginning of the second quarter.

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