Jan 14, 2008

U.S. Retail Sales Growth May Slow to 3.5% in 2008By Heather BurkeBloomberg.com

(Bloomberg) — Sales at U.S. retailers may increase at the slowest pace in six years in 2008, an industry retail group predicted, as cash-strapped consumers reduce spending on jewelry and electronics.

Sales might increase 3.5 percent this year, slowing the first six months, and then accelerating later on as the economy improves, the Washington-based National Retail Federation said today in a statement.

Consumers grappling with $3-a-gallon gasoline, the worst housing slump in 27 years and higher unemployment are shopping at Wal-Mart Stores Inc. instead of apparel chains and department stores.

“Financial stress” may cause people to pay down debt and limit spending to necessities, slowing growth even at luxury retailers, the NRF said.

“In 2008, the challenges will be formidable for everyone,” NRF Chief Economist Rosalind Wells said in the statement. “Retailers will once again be forced to market to more practical consumers, many of whom will be looking to trade down.”

A 3.5 percent gain would be the slowest since 2002, with the possible exception of last year. The NRF forecast a 4.8 percent increase in 2007, and will release its final figures tomorrow following the U.S. Commerce Department’s retail sales results. Revenue increased 3 percent in 2002, excluding sales of automobiles, at gas stations and restaurants.

Read complete article.