NEW YORK — Coming off a bumpy 2003, retailers are in for a smoother ride in 2004; results will be better across a wider spectrum of stores.
That scenario was laid out Monday by the National Retail Federation at its annual convention here at the Jacob K. Javits Convention Center. The trade organization predicted a 5 percent rise in 2004 GAFS sales, which is a measure of total sales from general merchandisers and stores selling apparel, furniture, home furnishings, electronics, appliances, sporting goods, hobbies, books and music.
“The first half will be stronger than the second half. Fiscal and monetary stimuli early in the year will begin to dissipate later in the year,” said NRF chief economist Rosalind Wells at a press conference.
She cited several factors that bode well for retailers this year — notably, improved labor market trends; expanding incomes; continued low inflation; high productivity, which has helped keep “the lid” on raising prices, and raised consumer confidence.
In addition, Wells noted that retailing tends to do well in a presidential election year, considering the incumbent president works hard to improve the economy.
In 2003, GAFS sales started weak and ended strong. In 2004, the reverse trend is expected. Wells said GAFS sales will gain 6.4 percent in the first quarter, 6.2 percent in the second quarter, 3.8 percent in the third quarter and 4.2 percent in the fourth quarter, averaging out at 5 percent for the year, versus 4.3 percent in 2003. The government is scheduled to release sales data for last year on Thursday. Many people also will be redeeming gift cards during the next several weeks, giving a slight lift to January and February total sales.
In 2003, GDP rose 3.2 percent, Wells said. In 2004, she sees GDP rising 3.2 percent to 4.2 percent per quarter.
The profit picture also looks good, in part because deflation was less severe than the year before, and holiday sales were “a lot less promotional,” Wells maintained. The 2003 Christmas season was the best retailers experienced since 1999, Wells added.
Demand this year will be strong in furniture and home furnishings, electronics and luxury goods, which will continue to benefit from “the wealth effect” of the rising stock market. Sales of luxury goods were extremely strong last year.
“This year will see more balanced economic growth with solid consumer spending and accelerating business investment,” Wells observed. “As employment expands and wages and salaries firm [up], a broader spectrum of consumers will be in better financial shape, which should help lift sales more evenly across the board.”
For the first seven months of 2003, there were job losses. Then, in August, job creation occurred for five consecutive months, Wells noted in her statement.