2002

Holiday Sales Expected Up 5%

Dec. 2002

The holiday season may still, indeed, be the most wonderful time of the year.

A group of analysts recently agreed that--while this will not be the strongest of holiday seasons--retail overall is likely to experience sales growth this year.

"This is not the worst of times, but it’s certainly not the best of times, either," said Carl Steidtmann, chief economist for Deloitte Research.

The range of predictions for holiday sales increases ranged from Steidtmann’s 6% from 2002 levels to the 3% predicted by Daniel Barry, managing director of Merrill Lynch.

Further encouragement for retailers comes from recent sales and confidence studies. U.S. chain store sales rose in the first retail week of November, for example, boosted by strong sales of winter clothing, home furnishings, jewelry and electronics goods, according to the weekly Redbook report by Instinet Research.

Sales gained 0.9% in the week ended Nov. 9 compared with the same period last month.

This increase throws into doubt the results of a survey by the International Council of Shopping Centers, which predicted lackluster jewelry sales for the season.

Another factor negating gloomy predictions in consumer confidence, which surged in November from its depressed levels in October, according to a report by the University of Michigan.

The university’s widely-watched index of consumer sentiment rose to 85 in early November from 80.6 in October. The mid-November current-conditions index also rose—to 93.8 from 92.4 in October, the Associated Press reported.

The consumer expectations index increased to 79.2 from October's 73.1 reading.

Consumers themselves, meanwhile, say that their average household holiday spending will rise 5% this year, according the 2002 American Express Retail Index on holiday shopping, a national consumer poll.

This year’s holiday budget is expected to be $1,656, a modest increase from the $1,564 projected in 2001.

While consumers indicate that they will spend more this holiday season than last, the Index shows that more shoppers this year are setting budgets for their purchases, and are waiting and watching for sales and special promotions.