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National Retail Federation Projects Promising Holiday Shopping Season

National-Retail-FederationAlthough 2014 experienced a turbulent start for retailers, the National Retail Federation (NRF) just released the current holiday sales forecast, which looks promising. With two major holidays just around the corner, Halloween and Christmas, retail sales in November and December, excluding auto, gas, and restaurant sales, is expected to increase by 4.1% to $616.9 billion, up from the 3.1% increase seen this same time last year.

Including 2014’s estimates, on average holiday sales have grown 2.9% in the past 10 years and expected to represent approximately 19.2% of the industry’s annual sales of $3.2 trillion. If sales reach analysts’ estimates, it would be the first time since the 2011 holiday season that an increase of more than 4% occurred.

According to Matthew Shay, President and CEO of the NRF, 2014 holiday shopping should give retailers a much-needed boost. Even though higher sales are anticipated, there is still some uneasiness among consumers specific to purchase decisions based on lingering thoughts of a slow-recovering economy.

Shay points out that because of the anticipated boost in sales for the upcoming holidays, not only will stock increase but between 725,000 and 800,000 seasonal workers will be hired by retailers, potentially surpassing the 768,000 workers hired for the prior holiday season. For many of these people, the seasonal work will turn into an opportunity for a long-term career.

While better retail sales, more jobs, and current housing data are all indicators of healthy gains, shoppers will likely pace themselves. To accommodate, retailers will offer competitive pricing, exclusives products, and overall great value. Even being price conscious, analysts believe that increased spending power during the holiday season will get a push thanks to improvements in consumer confidence.

This scenario is a good reminder that retailers need to maintain enough product in inventory to meet consumer demand but not so much that they are forced to rely on heavy promotions during the holiday season in an effort to draw in customers.

Because of relatively weak earnings growth, the NRF believes the holiday sales season will rev up quickly due to Black Friday sales but also finish fast based on consumers waiting on 11th hour promotions. Due to the popularity of internet shopping, activity in mall retail stores might not be the best indicator of this year’s shopping behavior as it was years ago.

Mid-day trading for Macy’s (NYSE: M) was down 1.38% to $57.70, below the 52-week range of $42.18 and $63.10, Target (NYSE: TGT) was down 1.20% to $61.53, just under its high 52-week high value of $67.25, and Best Buy (NYSE: BBY) also dropped 2.64% to $31.35, mid-range of its 52-week of $22.15 to $44.66. However, with the NRF’s new announcement, value of shares should begin to climb for these and other retailers.

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