As Government Shutdown Continues, Retailers Prep for Ho-Hum Holiday Season

National Retail Federation Predicts Sales Will Increase 3.9% to $602 Billion

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It's poised to be another ho-hum holiday season for retailers.

Kmart is already running holiday ads
Kmart is already running holiday ads

The National Retail Federation says economic headwinds and the distractions of a government shutdown could temper spending this holiday season. The group expects sales in the months of November and December will increase modestly, by 3.9% to $602.1 billion, slightly ahead of last year's 3.5% holiday sales growth.

"Our forecast is a realistic look at where we are right now in this economy -- balancing continued uncertainty in Washington and an economy that has been teetering on incremental growth for years," said Matthew Shay, NRF president-CEO, in a statement. "Overall, retailers are optimistic for the 2013 holiday season, hoping political debates over government spending and the debt ceiling do not erase any economic progress we've already made."

Mr. Shay also had stern words for Congress, on the topic of the government shutdown and the debt ceiling.

"Our forecast is also somewhat hinging on Congress and the Administration's actions over the next 45 days; without action, we face the potential of losing the faith Americans have in their leaders, and the pursuant decrease in consumer confidence," he said.

Meanwhile, the International Council of Shopping Centers is predicting a 3.4% sales increase. And Deloitte's Retail & Distribution practice issued one of the more upbeat forecasts, saying holiday sales will increase between 4% and 4.5%., a division of NRF, is predicting e-commerce sales will grow between 13% and 15%, likewise eMarketer has said online sales will rise about 15%. Sales on mobile devices, in particular, are expected to balloon this season, accounting for 16% of e-commerce sales, according to eMarketer.

Retailers, including Kohl's, Target, Dick's Sporting Goods and Abercrombie & Fitch have expressed caution about the second half of the year. Others such as Walmart, Macy's and American Eagle Outfitters, reported declines in traffic during the second quarter. Generally, consumers appear to be spending more on hard goods, including home improvements, TVs and cars, but less on apparel.

Given the tough environment, it's expected to be a highly promotional season, with retailers looking to grab consumers' attention early on. Already, Kmart launched its first holiday ad promoting its layaway program. Experian Marketing Services recently released a survey noting that 49% of marketers said they would launch holiday campaigns before Halloween.

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