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Holiday season may be a downer for retailers

Wednesday, September 21, 2011 | 12:36 p.m. CDT; updated 3:46 p.m. CDT, Saturday, September 24, 2011

NEW YORK — It looks like retailers will have to work extra hard to keep this holiday season from turning into a let down.

A new forecast indicates that sales growth will likely not be as high as last year and that shoppers won't be hitting the stores as much.

Retail sales for the November and December period are expected to rise 3 percent during what is traditionally the most critical period of the year for retailers, according to the research firm ShopperTrak. That would be below last year's 4.1-percent sales growth.

The holiday sales prediction matches the outlook from the International Council of Shopping Centers, which released its forecast on Friday.

Shoppers have been cautious about spending through 2011, faced with uncertain economic conditions, rising gas prices and high unemployment.

Heading into the holiday season, job worries are emerging as the most important problem in the U.S., according to a recent Gallup Poll. Thirty-nine percent of Americans in September cite unemployment as the most important problem facing the country, up from 29 percent in August, Gallup reported last week. This means many consumers are still seeking out bargains, buying essential goods over discretionary items and curtailing purchases for themselves.

Another reason retailers may not be jolly this year is that a measure of customer traffic in the stores is expected to be down 2.2 percent over the holidays. With shoppers hitting stores less frequently or deciding to make online purchases instead, this means retailers will be under even more pressure to get consumers to buy when they are out at the malls.

"Every shopper in a store will be more valuable than last year, and retail stores should be ready to convert their holiday shoppers into sales," ShopperTrak co-founder Bill Martin said in a statement on Wednesday. The research firm measures foot traffic in 25,000 stores in the U.S. and blends those figures with economic data.

Holiday sales and traffic traditionally make up about 20 percent of annual retail activity, according to ShopperTrak.

When consumers do head out to the stores for the holidays, the divide that's been seen this year between luxury purchases and bargain shopping will continue.

ShopperTrak says specialty shops that sell low-end clothing and accessories may feel the need to cut prices to compete with discount chains, but that upscale stores will likely be able to cash in on consumers looking for goods they feel will hold up over long-term use.

The retail analyst expects clothing and accessories sales to rise 2.7 percent over the holidays, but for its traffic to dip 1.1 percent compared with a year ago.

Electronics and appliance sales are expected to rise 1.2 percent from the previous year, but traffic is predicted to fall 4.9 percent. ShopperTrak says the category will likely be hurt as consumers do comparison shopping and then buy online as well as the lack of any "hot" holiday product that will draw in more shoppers. The demise of many of the nation's consumer electronics chains, such as Circuit City, has also left consumers with fewer places to shop.

The National Retail Federation, the nation's largest retail industry group, is expected to release its holiday revenue forecast early next month.


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