Holiday Sales Flat, CE Down: Report

By Alan Wolf -- TWICE, 9/23/2009

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Columbus, Ohio - Fourth-quarter retail sales will be flat to last year, when holiday revenue fell 4.5 percent, according to the latest forecast by market research firm Retail Forward.

But sales through the CE specialty store channel are expected to decline, due in part to the loss of Circuit City, the firm said.

The projected sales results, based on core distribution channels and merchandise categories, would rank the coming holiday season as the second-worst in 42 years.

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But not all is gloom and doom. According to Retail Forward senior economist Frank Badillo, softer sales declines in August suggest an emerging retail recovery that will be driven by growing consumer confidence.

"This is positive news as we move into the critical holiday season, but the economic environment will remain difficult," Badillo noted. "Sales declines will persist for specific retail channels" - particularly CE, apparel and home goods - "but will end for aggregate measures of retail sales."

Included in the company's forecast were general merchandise stores such as conventional and discount department stores, supercenters and warehouse clubs; specialty stores, including consumer electronics, furniture, home furnishings and apparel chains; home improvement stores; catalogs; and online sales. Excluded from the forecast were the auto, food and drug channels.

Consumer electronics stores are expected to experience the biggest declines, due in part to Circuit City's exit, while online sales across all retail channels are forecast to grow 4 percent this holiday season after declining 5 percent a year ago. The broad group of mass retailers that includes discount department stores, supercenters, warehouse clubs and small-format value stores is forecast to grow sales 2.5 percent this holiday season, compared with an increase of 2 percent a year ago.

"The emerging recovery will be driven by growing confidence among households in response to, among other things, subsiding job cuts by businesses," Badillo said. "Businesses, in turn, are taking their foot off the brakes in light of leaner inventories and expectations that pent up demand and economic stimulus will soon require new business investment."

The weak improvement in the sales growth trend is forecast to gain strength quarter by quarter in 2010, and approach long-term average growth rates by the end of next year, the firm projected.