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Tiffany Montgomery
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Slowest growth in six years for Xmas sales

By Tiffany Montgomery
September 23, 2008 6:11 AM

The National Retail Federation released its annual forecast for holiday sales this morning.


Earlier this month it also published some interesting data about online sales.


Retail sales in November and December at brick-and-mortar stores are expected to grow 2.2 percent, the slowest growth since 2002. That year, sales grew 1.3 percent.


In 2007, holiday sales grew 2.4 percent, the NRF said.


"Current financial pressures and a lack of confidence in the economy will force shoppers to be very conservative with their holiday spending," NRF Chief Economist Rosalind Wells said in a statement. "We expect consumers to be frugal this season and less willing to splurge on discretionary items."


The average 10-year growth for holiday sales is 4.4 percent.


Because it is a trade and lobbying group for retailers, the NRF's forecasts are typically more optimistic than those of other analysts. For them to be this pessimistic is noteworthy.


For example, last year, the NRF forecast holiday sales would rise 4 percent, significantly higher than the actual growth of 2.4 percent.


Online retail survey

Earlier this month, the NRF released a survey of online retailers that provided some interesting information about that channel.


According to the survey, a majority of online retailers continue to be cautiously optimistic about how their businesses will perform during the next 12 months.


Seventy-two percent of online retailers believe that the online channel is better suited to withstand an economic slowdown than offline channels.


About one-third (35%) of online retailers surveyed said they expect their online business to perform better than expected in the next 12 months, while another third (33%) anticipate their online business will perform the same as expected.


This outlook is driven primarily by past results, according the the press release. Eighty-one percent of online retailers surveyed reported that their eCommerce business was profitable in 2007, and 75 percent were also more profitable last year than in 2006. Almost half (49%) of online retailers said that their average conversion rate in 2007 was higher than in 2006, and that 36 percent of total sales for the online retailers were driven by repeat customers-higher than in 2006.


However, due to their outlook for the US economy, 37 percent of survey respondents noted that they've lowered their expectations for their online business performance in the next 12 months.


The Shop.org study is called The State of Retailing Online 2008 and was conducted by Forrester Research, Inc.


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