RetailSails

After better-than-expected November results and continued strength in retail spending through the first few weeks of December, the National Retail Federation, International Council of Shopping Centers and ShopperTrak have all raised their projections for holiday season retail sales gains. Year-on-year increases are now expected to be the highest in at least 4 or 5 years.

The National Retail Federation (NRF) now expects holiday retail sales to grow 3.3% from 2009, up from their previous forecast of a 2.3% rise.

“The start to the holiday season has surpassed all expectations,” said NRF President and CEO Matthew Shay. “While employment data is still a concern, we are starting to see improvement in other economic indicators that support an increase to our forecast. In order to sustain this momentum for retailers and the U.S. economy, there must be a renewed focus on jobs as we enter the new year.”

While still below peak spending levels from 2007, the 3.3% gain would represent the best YoY increase since 2005:

“Consumers have not been suffering from a lack of spending power, they’ve just been missing the confidence to use it,” said NRF Chief Economist Jack Kleinhenz. “With noticeable improvement in key economic indicators combined with great deals on merchandise, consumers have certainly shown they shouldn’t be counted out this holiday season.”

While using a different measure of retail sales, The International Council of Shopping Centers (ICSC) also raised their forecast and expects gains to be the best in 5 years. They now project same-store sales to rise 3.5% to 4.0% for the November-December period, up 0.5% from their previous forecast. Also, GAFO store sales are expected to rise 3.7% and shopping center-related sales should rise 4.2% (both 1.2% higher than previously forecast)

Commenting on weekly sales results, ICSC director of research and chief economist Michael Niemira said ”Sales rose both on a year-over-year and on a week-over-week basis as consumers stepped up their holiday gift purchases with the ICSC-Goldman Sachs Consumer Tracking Survey showing that the average holiday-gift completion rate rose from 40.1 percent last week up to 56.6 percent this week,”

“That is a rather impressive increase over the past two weeks, but consumers are still a tad below last year’s pace and noticeably below two-years ago, which suggests a stronger late-buying rush over the next two weeks,” Niemira added.

Meanwhile, ShopperTrak again raised its guidance for the holiday season, now expecting a sales and traffic increase of 4.0% and 1.8% over last year, compared to a previous estimate of 3.2% and 1.0%, which were already up from their initial prediction of a 2.9% sales gain and 0.1% traffic decrease.

“Looking ahead, retailers will be paying close attention to the week leading up to Christmas as this is the period that annually boosts December performance and provides a real bookend to the holiday shopping season,” said Bill Martin, co-founder of ShopperTrak. “Typically the 10 days prior to Christmas accounts for 31 to 34 percent of total holiday sales, so winning retailers will have the appropriate deals and promotions in place to drive traffic during this period to assure a healthy holiday season.”

Retailers are doing all they can do attract last-minute shoppers, including pulling all-nighters – Toys R’ Us will stay open 88 straight hours leading up to Christmas. However, consumers will still be relatively cautious with their spending until the employment picture perks up, so it will likely be another year at least until spending returns to pre-recession levels.