Skip to content
Link copied to clipboard

Retail sales projected to grow but skeptics remain

National retail sales are forecast to go up 3.1 percent in 2016 from last year, according to the National Retail Federation. The trade group said the growth will be fueled by strong job growth and more consumer spending.

Violette Hobbs of University City at the Bloomingdale's Outlet at Liberty Place. Job creation and consumer confidence look good.
Violette Hobbs of University City at the Bloomingdale's Outlet at Liberty Place. Job creation and consumer confidence look good.Read moreMICHAEL BRYANT / Staff

National retail sales are forecast to go up 3.1 percent in 2016 from last year, according to the National Retail Federation. The trade group said the growth will be fueled by strong job growth and more consumer spending.

"There is a lot of enthusiasm about the year ahead, and there is a great deal of disruption going on at the moment, and disruption creates opportunity," said Matthew Shay, president and chief executive officer of the NRF.

Shay said the 3.1 percent projection represents a rise from the 10-year average of 2.7 percent growth. He gave the forecast during a conference call with reporters on Wednesday.

The NRF also announced that it expects non-store sales - Internet and catalog sales - to grow 6 percent to 9 percent in 2016.

"Wage stagnation is easing, jobs are being created, and consumer confidence remains steady, so despite the headwinds our economy faces from international developments - particularly in China - we think 2016 will be favorable for growth" in retail, he said.

Not all agree with the NRF's rosy forecast. "I believe the 3.1 percent increase forecasted for 2016 is overstated," said national retail consultant Howard Davidowitz in New York. "Sales now are not strong. Online continues to be good, but it won't offset poor overall sales."

But for local retailers, Bill Park, head of retail for this region at consultant Deloitte & Touche, said his numbers were projecting an uptick in retail sales.

"During the end of 2015, despite a relatively strong labor market and high consumer confidence, we saw a slowdown in the rate of personal consumption and a corresponding increase in the personal savings rate," Park said. "As the labor market continues its strength and if gas prices remain fairly stable, consumers will start to believe that the real income gains they have experienced are not transitory."

The growth expected by the NRF follows a tough fourth quarter of 2015 for many retailers, especially those with stores along the East Coast. The warm weather made moving winter merchandise, such as coats and gloves, hard for companies like Macy's and Burlington Coat Factory.

Many reported declines in sales in the fourth quarter compared with 2014. Stores like Boscov's began deeply discounting coats in early January, far earlier than usual, to gain floor space for spring arrivals.

But Shay said there were gains in other parts of the country to offset the decrease in retail sales on the East Coast so 2015 finished with an overall increase of 3.0 percent for November and December. He said online sales helped as well.

Retail sales figures for 2015 come out Friday.

NRF chief economist Jack Kleinhenz, who was also on the conference call, said: "Despite the volatility, the economy continued to reduce unemployment, raise wages, and actually increase real GDP [Gross Domestic Product] by 2.4 percent," he said. "Lower gas prices are creating more discretionary income to save, pay down debt, and spend on travel, eating out, and personal services."

Among the NRF's other predictions for 2016:

Economic growth should be more of the same and uneven - likely in the 1.9 to 2.4 percent range.

Monthly employment gains of about 190,000 on average are expected, with unemployment falling to 4.6 percent.

"However, spending will come largely from the growth in jobs and not as much from increased wages," Kleinhenz said.

sparmley@phillynews.com

215-854-4184 @SuzParmley