NEW YORK — Spending with abandon? Don’t look for it from American consumers, according to the National Retail Federation, which is forecasting GAFS sales increasing 3.5 percent this year compared to a far healthier 6.7 percent last year.
GAFS is a measure of total sales from general merchandisers and specialty chains selling apparel, furniture and home furnishings stores, electronics, appliances, sporting goods, hobbies, books and music.
The conservative projection came Monday at the NRF Convention & Expo at the Jacob K. Javits Convention Center here from the trade group’s chief economist, Rosalind Wells. During a news conference, she cited “a slower economy and subdued consumer spending” as well as rising interest costs, higher fuel costs, small employment gains, a lack of economic stimulus including tax cuts, and tough comparison from 2004, particularly the first quarter, which skyrocketed 9.9 percent a year ago. For the first quarter of this year, she projects a 3.7 percent increase.
“Apparel sales will slow somewhat,” through the year, Wells forecast.
But she did cite several positives. “Trends seen in the luxury sector will likely continue and online will continue to thrive.” She said “consumer confidence is moving up and inflation is pretty low.” Tourists, spending more freely due to the weakened dollar, will help the luxury market in the U.S.
Real spending will rise 3.2 percent this year compared to 3.8 percent last year, she projected.
The forecast, she added, is not as bad as a recession year, noting that in 2001, the last recession year, there was a 2.9 percent gain in GAFS.
In her statement Wells said, “The labor market will continue to expand this year, though our concern is that modest employment growth will lead to modest income growth, which will put a financial strain on consumers.”
While high-end stores excel, discounters “will continue to be challenged as their core consumers are most affected by higher energy costs and slow income growth. Also, as the housing market softens, the furniture and home furnishings sector could begin to experience slower growth.”
The NRF also said that its GAFS measure of tracking retail sales will be broadened to include stores that sell food and beverages, building materials and garden equipment, health and personal care, florists and gifts. The NRF feels that by including a wider spectrum of retailers, it will get a more accurate read on consumer spending. “Retailing is going through a metamorphosis. The segments are blurring,” said Tracy Mullin, president and chief executive of the NRF. “It’s so bizarre. You can get almost anything anywhere. High-end gift cards are sold at Safeway.”
This story first appeared in the January 18, 2005 issue of WWD. Subscribe Today.
Mullin said the top priorities with NRF’s lobbying efforts on Capitol Hill will be to fight proposals for a national retail sales tax, which she feared would lead to a three-year economic decline, a four-year employment decline and an eight-year decline in consumer spending.
Other issues of concern are the textile lobby’s efforts to have quotas on a wide range of goods from China, health care and social security costs for retailers and social security benefits for seniors.