Retail Sales Expected To Grow 3.4% In 2013
Written by Ken Gaebler
National Retail Federation releases modest growth projection based on a lack of disposable income and lagging consumer confidence.
Every business is impacted by economic factors. But retail businesses are particularly vulnerable to fluctuations in the nation's economy. Even slight variations in employment, consumer spending and the general economic zeitgeist can have significant repercussions on sales and profits.
The National Retail Federation's (NRF) projection for retail sales in 2013 reflects the sluggishness of the current economic recovery. In a recently released statement, the NRF projects 3.4 percent growth in retail sales in 2013 -- a downward revision from its preliminary projection of 4.2 percent in late 2012. The NRF also reported that holiday sales in 2012 grew at a modest rate of 3 percent.
"What we witnessed during the holiday season is an indication of what we are likely to see in 2013. Consumers read troubling economic headlines every day and look at their bottom lines at the end of the month, and they don't like what they see," said NRF President and CEO Matthew Shay. "Retailers will compensate for the drag on household spending this year by managing inventories and focusing on providing value for their shoppers through unique promotions in stores and online and exclusive product lines."
The one bright spot in the NRF forecast is online sales, which are expected to grow between 9 and 12 percent in 2013. By implementing proven strategies for e-commerce, small retailers can expand their geographic reach and compensate for lackluster growth in the brick-and-mortar portion of their operations.
Some of the factors that the NRF considered in its projection included:
- Consumer Income. The expiration of payroll tax relief and slow income growth among consumers will limit disposable incomes throughout the year.
- Inflation. Prices will remain relatively stable in 2013, with the Consumer Price Index expected to increase by 1.9%, down slightly from a 2.1% increase in 2012.
- Confidence. Although the recovery will likely gain steam during the second half of the year, the first six months will feature consumer uncertainty related to the fiscal cliff and legislative wrangling.
For more information about this year's retail forecast, visit the National Retail Federation website.
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