TNS Retail Forward Forecasts Weakest Holiday Sales in 17 Years

TNS Retail Forward Forecasts Weakest Holiday Sales in 17 Years
September 17, 2008

Holiday sales this year will be the weakest in 17 years, TNS Retail Forward forecasts. The TNS Retail Forward forecast is for 1.5 percent growth--compared with 1.2 percent in 1991--for the holiday fourth quarter in the key holiday retail segments combined. Included in the forecast are the key retail sectors--where many holiday gifts are traditionally purchased--known as GAFO (general merchandise stores such as conventional and discount-department stores, supercenters, warehouse clubs, apparel stores, furniture, home furnishings, consumer electronics and other specialty stores), as well as home improvement stores, catalogs and online sales. Mass retailers will see a pickup in performance this holiday season as a result of a shift among shoppers toward value formats and the impact of higher food prices. TNS Retail Forward forecasts 5.6 percent combined growth, nearly a full percentage point stronger than last year. Supercenters and warehouse clubs will remain among the best retail performers, while discount-department stores will be the laggard of the channel. Sales at apparel and accessories channels are forecast to decline 1.3 percent, compared with flat growth in 2007. Department stores, including the upscale players, will remain the biggest drag as upper-income households become increasingly vulnerable to economic pressures. Apparel and other specialty stores are expected to register flat growth this holiday season. Homegoods channels will see sales decline this holiday by 1 percent. Furniture and home furnishings stores will experience the biggest deterioration reflecting the lagging impact of the housing market on demand. Home improvement store sales also are forecast to decline 1 percent amid persisting weakness in the housing and mortgage markets. Consumer electronics stores are the exception in the channel with holiday sales growth forecast at 4 percent. Online sales across retail channels are forecast to grow 9 percent this holiday season, compared with 19 percent in 2007. This represents the first single-digit growth rate for online retailing during the holiday shopping season since 1999. TNS Retail Forward forecasts online sales to reach $42.5 billion in the fourth quarter, up $3.5 billion from the prior year.