Retail group expects holiday sales to rise 3.6 to 4 percent

Target employees refold clothes displayed for sale at a store in Jersey City Nov. 27. U.S. retail sales rose 7.9 percent between Black Friday and Christmas Eve, excluding cars and gas, with women’s apparel and furniture seeing the biggest gains, according to figures from MasterCard Advisors. For all of November and December, sales were up 4.6 percent -- slightly better than expected. Must credit: Bloomberg photo by Michael Nagle.

NEW YORK (AP) — With stores closing and retailers filing for bankruptcy, a trade group says it still expects holiday sales to at least match the 3.6 percent growth of a year ago, as online shopping keeps increasing and improving wages may put people in a mood to spend.

The National Retail Federation said Tuesday it expects sales in November and December to rise 3.6 percent to 4 percent, to a range of $678.75 billion to $682 billion. It’s the first time the group forecast in a range rather than by a fixed percentage, because the impact of several big hurricanes is still uncertain.

Retailers fighting the dominance of Amazon are trying to reinvent themselves, and are being forced to close if they don’t do it fast enough. Dozens of retail chains have filed for bankruptcy this year and hundreds of stores have closed — particularly among those dependent on clothing sales. Toys R Us is reorganizing in bankruptcy at a critical time of year. Holiday sales account for nearly 20 percent of the annual industry sales total.

But online spending is still growing strongly, which accounts for some of the optimism, and stores that are doing well include off-price chains, dollar stores and discounters.

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“Retail is not dead,” said NRF CEO Matthew Shay. “It’s transforming.”

Holiday forecasts from Deloitte, the International Council of Shopping Centers and AlixPartners have come in around the same level, ranging from growth of 3.5 percent to 4.5 percent. PwC predicts that holiday spending will rise 6 percent, but that includes travel and entertainment. Other forecasts exclude restaurants and travel.

The NRF forecast — which considers economic indicators such as consumer credit, disposable personal income and monthly retail sales — excludes sales from autos, gas and restaurants but includes online spending and other non-store sales like those from catalogs. It estimates that online spending and other non-store sales will rise 11 percent to 15 percent. There’s also one more day in the season this year since Christmas is a Monday.

While job growth in August hit a lull, the U.S. economy has been adding jobs. The economy is now in its ninth year of growth and unemployment is near a 16-year low.

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Still, retail experts point to a widening spending gap as wealthier shoppers benefit from a strong stock market and lower-income shoppers are more affected by rising costs in rent and health care.

PwC ‘s survey shows that shoppers with incomes less than $60,000 planned to spend just 0.3 percent more this holiday season, while those with household income above that plan to step up their spending by 5 percent. In the $100,000 to $149,900 income range, people plan to spend 15 percent more, and at more than $150,000 people said they’ll spend 8 percent more.

As more and more sales move online, Credit Suisse believes that there could be 8,640 store closings this year, which would surpass the 2008 peak of 6,200. But retail research group IHL says retailers are opening about 1,300 more stores in 2017 than they are closing. That’s according to its report that reviewed 1,800 retail chains with more than 50 U.S. stores in 10 areas.

And AlixPartners found 71 percent of consumers say they plan to do half or more of their holiday shopping in stores this season, the same percentage as in a similar poll the consulting firm conducted a year ago.

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“The brick-and-mortar shopping experience is still core to customers’ everyday life, particularly their holiday shopping experience,” said Roshan Varma, a vice president at AlixPartners, and that’s where shoppers go to check out merchandise and seek advice. “But they need to adjust.”


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