4.7% Rise in U.S. Retail Sales Forecasted

U.S. retail sales look set to rise 4.7 percent, according to the National Retail Federation (NRF), who released their 2006 forecast yesterday. However, the organization warned of an economic slowdown that will restrain industry sales gains.

Despite their caution, the NRF predicts that several categories of specialty retailing will continue to achieve solid sales growth. They include clothing and accessory stores, which includes shoe stores and jewelry stores; food and beverage retailers; and health and personal care retailers. These categories are expected to see steady sales gains in the 4.0 to 5.0 percent range.

In its quarterly Retail Sales Outlook Report, released at the NRF’s 95th Annual Convention & EXPO, the organization announced that a stronger than expected 2005 saw retail sales increase 6.1 percent, slightly higher than the 5.6 percent gain NRF had been forecasting. However, tough comparisons, rising energy costs and a slowdown in the housing market have caused the NRF to expect subdued retail sales growth in 2006.

“With the housing market beginning to slow, consumers will be challenged to find new sources of spending power.” said NRF Chief Economist Rosalind Wells. “The strong retail sales we saw in the second half of 2005 will be replaced by more conservative spending in the New Year.” The NRF expects 2006 first quarter retail sales to increase 5.0 percent, compared to gains of 6.5 percent in the fourth quarter of 2005.

The highest growth in 2005 was achieved by building material stores, warehouse clubs, and electronic shopping.

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services.