Retailers have modest hopes for sales in 2012

NEW YORK/CHICAGO?? Hopefully, U.S. retailers liked 2011, because 2012 is looking like it will offer more of the same.

A consensus is emerging that the new year will again bring a slow but steady increase in business, after moderate growth last year that was capped by a holiday season that saw shoppers spend if stores gave out bargains.

"Consumers are doing everything they can in light of the current environment to be consumers," Paul Hurley, founder and chief executive of Ideeli, a flash sales website. "We're not seeing a deflationary spiral where people are putting off purchases."

The National Retail Federation at the start of its annual convention in New York said U.S. retail sales should rise 3.4 percent this year, down from an increase of 4.7 percent in 2011, which came after weak sales in 2010.

"It's realistic given the challenges that we face in the economy," NRF Chief Executive Matthew Shay told Reuters in an interview, noting that improvements in consumer spending would continue to be "incremental" for the time being.

U.S. shoppers have been held back by modest growth in income and high unemployment, currently at 8.5 percent.

ShopperTrak, a data firm that makes sales projections based on foot traffic, expects sales to be "on par" with 2011 levels.

And Customer Growth Partners gave a preliminary forecast of 5 percent to 6 percent growth for 2012, including e-commerce. That compares with an expected 5.6 percent for the year that will end this month.

Last year, e-commerce sales rose 15 percent, according to comScore.

While unemployment remains high, consumer spending growth has outpaced overall economic growth because shoppers who spent freely during the housing boom in the early 2000s were forced to pay down debt during the recession. Also, consumers with jobs are now driving sales growth, said Craig Johnson, president of Customer Growth, a retail consulting firm.

"The consumer is doing better and the reason is, primarily, consumers have put themselves, basically, on a financial fitness program the last few years," Johnson said.

The November-December holiday selling season came in better than most analysts had expected, with sales rising 4.1 percent, excluding autos, gasoline and restaurants, according to the National Retail Federation. That exceeded the retail trade group's initial forecast of a 2.8 percent increase.

Still, the single biggest impediment to a sizeable jump in retail sales is the anemic growth in job creation. The U.S. job market perked up in December, creating 200,000 jobs, but at 8.5 percent, unemployment is still far above levels that would allow for meaningful recovery in consumer spending.

"We've seen some improvement in the job market and if that is sustained, then we'll start to see good growth in consumer spending," said Ira Kalish, a director with consulting firm Deloitte.

Copyright 2012 Thomson Reuters. Click for restrictions.

Source: http://www.msnbc.msn.com/id/46015573/ns/business-retail/

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