The US retail sector is likely to observe 0.5% fall in sales in the current year due to reduced consumer spending hit by adverse job prospects.
According to the National Retail Federation (NRF) forecast, the US retail sales (excluding automobiles, gas stations and restaurants) are likely to decline 0.5% in 2009, as reported by Reuters.
This plunge would be the first annual fall since 1979 and significantly low from the modest 1.4% increase in 2008. The retail sales are expected to tumble 2.5% during H1 2009 and during Q3 2009, they will improve slightly to fall 1.1%. The sales of discretionary products such as home goods and clothing will continue to see low demand in 2009.
Collective sales for the last two months of 2008 declined 2.8%, substantially lower than 2.2% increase forecasted by the Association.
The key factor for the gloomy forecast for 2009 is declining consumer confidence due to which they are cutting down shopping. The US is facing the worst impact of global economic turmoil which is certainly affecting the consumers. Increasing unemployment, which is expected to rise further, and the constantly worsening economy in the backdrop of global crisis are deteriorating consumer sentiments. Housing market has not been able to escape the negative impact. These factors will together contribute to the future decline in retail sales.
Mass layoffs throughout all the sectors is one of the biggest challenges currently US retail industry facing. If an economic stimulus package is not given by the US government, then the conditions may get even tougher. Thus, the NEF has urged US government to enact the legislation to boost the consumer spending without any further delay.
However, the fourth quarter of 2009 is likely to bring good news for the retail sector as it is predicted to witness 3.6% growth in sales. From there onwards, the economy will start boosting.
According to a Research Analyst at RNCOS, “After having a hard-time in 2008, this year is also appearing challenging for the US retailers. Under such tough time, underperforming retail stores are likely to face closure. Thus, the retailers must get united to arrive at some concrete measures to reduce the loss and bring the declining sales back on track.”
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