The National Retail Federation Monday predicted slower growth in 2013 as consumers metabolize tax increases in the early part of the year and open up their wallets as the year goes on.

This story first appeared in the January 29, 2013 issue of WWD. Subscribe Today.

The Washington-based trade association forecast retail sales growth of 3.4 percent for the year, slightly above the 3.3 percent growth registered in 2010 and below the increase of 5.8 percent in 2011 and the 4.2 percent increase expected to be tallied for last year once final figures are in.

A 3.4 percent increase would put retail sales this year at $3.11 trillion, up from $3.01 trillion last year. It would also fall below the 10-year average of a 3.6 percent increase.

Matthew Shay, president and chief executive officer of NRF, said online sales growth — defined as the volume of all nonstore transactions — would be up between 9 and 12 percent. The figures exclude sales of automobiles and at gas stations and restaurants. That follows an 11.1 percent growth rate during the holiday season last year for what has been the hottest segment of domestic retail sales. Overall holiday sales were up 3 percent.

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Shay said that the start of 2013 will resemble the end of 2012, with consumers holding back because of uncertainty as Congress and the Obama administration continue to squabble over ways to reduce costs and enhance revenues.

“Many people will be shopping for price more often, and there may be some trading down and reshuffling because of changes that many people are seeing in their paychecks,” he noted.

Those changes included tax increases that greeted wage earners at the start of the new year and are likely to depress spending, particularly in the first quarter. Growth is likely to expand after a difficult first quarter, as the hit on paychecks is digested. Having gauged the mood of ceo’s at NRF’s Big Show in New York, which wrapped up on Jan. 16, he said executives were reasonably optimistic but, in a reference to the gridlock permeating Washington in recent years, they believe growth could improve materially “if we could just get out of our own way.”

“The recession’s been over a long time,” Shay said. “The problems in the last two years are largely homemade.”

He repeated his call for pro-growth policies from the government, including reforms of the U.S. tax code, a resolution of immigration policy and exploitation of domestic energy sources to spur job, income and spending growth.

Jack Kleinhenz, NRF’s chief economist, said he expected “a continuation of a subpar growth economy” this year, with expansion in gross domestic product of approximately 2 percent, “about the way that 2012 ended.” He said he expected unemployment to descend to the “low sevens” from its current rate of 7.8 percent.

He added that apparel sales would benefit from “reasonable and steady” cotton pricing. “Demand will be a function of people’s needs,” he said in response to a question from WWD, “but don’t underestimate the importance of fashion.” He also pointed out that some of the appreciation in retail sales of apparel in the past two years was a function of higher prices rather than greater demand or stronger unit sales.

Shay and Kleinhenz both referred to the strength of retail sales during the early part of last year, a phenomenon that is expected to make it more difficult to generate strong increases in the first months of 2012. As sales decelerated later last year, comparisons will become easier as the year progresses.

Also on Monday, Customer Growth Partners projected “anemic” retail sales growth of 2.9 percent for the year, “a second year of deceleration from the peak postrecession year of 2011,” according to Craig Johnson, president of the New Canaan, Conn.-based research and consulting group. He said slow income growth, coupled with tax increases, would deter sales expansion, while growth in the housing market and pent-up demand for home projects would offset these factors.

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