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After three robust years of fourth quarter growth, overall retail sales are expected to slow to a more moderate 5.5 percent clip this holiday season, according to market research firm Retail Forward.
The forecast includes home improvement stores, catalogs, online sales and the key retail sectors known as GAFO, comprised of department stores, big box discounters and warehouse clubs; apparel stores; furniture, home furnishings and consumer electronics stores; and other specialty stores.
The projected 5.5 percent growth is lower than the 7.2 gain last year, and the smallest increase since 2002, when holiday sales gained 2.8 percent.
While Retail Forward senior economist Frank Badillo attributes the slowdown to higher interest rates, a cooling housing market and historically steep fuel prices, he cautions that those factors will likely have an even greater impact on retail sales in the first half of 2007.
The research group also predicts that growth at consumer electronics and appliance stores will slip slightly from last year, and that sales at big box discounters and warehouse clubs, both one-stop shopping formats, will continue to outpace most other retail channels again this holiday season as high gas prices compel consumers to consolidate shopping trips.