Forecast: Credit Crunch to Flatten Holiday Sales
Included in the forecast are home improvement stores, catalogs, online sales and 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).
"The credit crunch will lead to a consumer crunch by the holidays. This will extend the weakness in retail sales beyond home improvement stores to other retail channels," said Frank Badillo, senior economist for TNS Retail Forward
"This top-line forecast may still underestimate the extent of the weakness. Our forecast numbers are even weaker when home improvement and catalog retailer sales and online sales are excluded. And, the risks are biased in favor of still weaker growth, particularly if the housing market deteriorates further."
Mass retailers will remain the most resistant to the economic slowdown. Supercenters and warehouse clubs will continue to be among the best retail performers while discount department stores will be the laggards of the sector.
Homegoods channels will see growth slip this holiday season, with furniture and home furnishings stores creating the biggest drag on growth as the downturn in the housing market has a lagged impact on demand for other homegoods. Among all channels, home improvement faces the most significant risk of weaker-than-expected performance.
Online sales will remain the best performing channel among all of retailing. TNS Retail Forward expects online retail sales to approach $42 billion in the fourth quarter, mpared with $35 billion last holiday season, a year-over-year increase of 18.5%. Online sales as a share of total retail sales will reach a new high of 3.5% this holiday compared with 3.1% a year ago.