The National Retail Federation (NRF)'s 2008 economic forecast predicts that retail industry sales (which exclude automobiles, gas stations, and restaurants) will increase 3.5 percent from last year.
According to its quarterly Retail Sales Outlook report, released this morning at NRF's 97th Annual Convention & EXPO, NRF expects the slow pace in sales growth to continue before picking up in the second half of the year.
"Consumers will be under financial stress from high energy costs, the fallout from the housing slump, and sluggish employment and income growth," said NRF Chief Economist Rosalind Wells. "Shoppers will seek to pay down debt, spend more in line with income growth, and approach discretionary purchases with more restraint."
While the outlook is somewhat reserved, Wells expects sluggish first half sales to eventually give way to stronger sales in the third and fourth quarters. NRF expects industry sales to increase 3.2 percent in the first half of the year followed by a 3.8 percent increase in the second half as economic conditions improve.
"Retailers will once again be forced to market to more practical consumers, many of whom will be looking to trade down," said Wells. "Even areas of past high growth like luxury goods and online shopping will feel the pressure. In 2008, the challenges will be formidable for everyone."
The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services.