Holiday Sales Growth Slackens, May Be Slowest Since 2002

Lower prices and pre-Thanksgiving sales could be in store this holiday season. The National Retail Federation predicted on Thursday that holiday sales will grow at the slowest pace in five years, writes the AP.

With slower growth, marketers may be more aggressive with price cutting as they compete for a larger piece of the holiday pie.

“Retailers are in for a somewhat challenging holiday season as consumers are faced with numerous economic obstacles,” says NRF chief economist Rosalind Wells. “With the weak housing market and current credit crunch, consumers will be forced to be more prudent with their holiday spending.”

Growth has averaged 4.8 percent over the last decade; the NRF predicts that growth this year will be 4.0 percent, the slowest since the 1.3 percent rise in 2002.

The prediction excludes online sales, as well as business from auto dealers, gas stations and restaurants.

A key question will be whether retailers jump the “fire wall” that is the Thanksgiving holiday. Most retailers reserve their discounts for after Thanksgiving, but last year, Wal-Mart stood out by offering big price cuts on toys and electronics beginning in mid-October.
Electronics is expected to be a strong category, particularly underscored by a bullish forecast from Best Buy. Apparel will be mixed, according to Michael P. Niemira, chief economist at the International Council of Shopping Centers. He believes that luxury stores like Saks Fifth Avenue should continue to do well.

The Federal Reserve cut its benchmark interest rate by half a point earlier this week in a move that was applauded by Wall Street, but Niemira believes that, while it will “soften the downside,” it won’t help to directly improve spending during the holiday season.