By  on October 31, 2011

Citing pent-up demand and substantial progress by consumers in cutting into their debt loads, Customer Growth Partners has made one of the final holiday forecasts of the season the most bullish.

CGP projected that retail sales in November and December, excluding those for automobiles, gasoline and restaurants, will hit $554 billion, 6.5 percent over their 2010 level and the best showing on a percentage basis since 2004, when sales rose 6.9 percent. Apparel and accessories are expected to generate the strongest gains, at 7.6 percent, their best performance in a decade. E-commerce is seen slowing a bit from last year’s 15.7 percent growth spurt, to about 11.9 percent.

Apparel’s performance will be lifted by strength in the luxury sector, expected to grow 12.3 percent this holiday. Value retailers are expected to see sales grow 7.5 percent, with midtier stores up 5.5 percent.

Craig Johnson, president of CGP, said, “After three years of scrimping and saving, Americans are ready to spend, strategically and smartly, but for the first time in years, very few things will stand between an American consumer and her shopping destination.”

CGP’s projection is more than twice the size of those provided by organizations such as the National Retail Federation, the International Council of Shopping Centers and ShopperTrak, all of which projected holiday increases of 3 percent or less. In 2010, CGP forecast a 4.5 percent increase in holiday expenditures; the actual growth figure was 5.8 percent.

Johnson cited several reasons for his optimistic projection, not the least of which is a 5.8 percent increase in year-to-date retail sales. “Consumers have used the rigors of the recession to get their household balance sheets in shape,” he told WWD, citing a decline in debt payments and obligations to 11.1 percent of disposable personal income, its lowest level since 1994. The liberation of this money previously used to service debt has freed up about $360 billion a year, about one-sixth, or $60 billion, of which could be applied to holiday spending.

With the savings rate down from its 2009 peak of 8.2 percent to 4.5 percent, personal disposable income, which Johnson considers the biggest driver of retail sales, is up 4 percent.

CGP also noted that, while unemployment remains high, the payroll picture in the private sector has improved with the addition of almost 150,000 jobs per month in the past year. Total payroll employment remains high, 7 million jobs below its January 2008 peak, but up 1.5 million from a year ago, “the best year-on-year increase to kick off the holiday season in five years.”

Based in New Canaan, Conn., CGP performs advisory and research services for retailers, investment firms and consumer products companies.

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