Holiday sales expected to fall

First, the bad news: Christmas 2009 is going to be another lean year for the nation's retailers, according to a study released Tuesday by the National Retail Federation.

Next, the good news: the NRF is forecasting a 1 percent drop in holiday retail sales to $437.6 billion, less than the 3.4 percent drop in 2008 in the wake of the national economic collapse.

That's also less than the 3 percent decline in annual retail sales expected for all of 2009.

Growing concern over job security and housing values will cut into consumer spending for Christmas, according to the study.

"Things aren't shaping up real well heading into the holiday season," said Pam Goodfellow, senior analyst at Bigresearch, which compiled the NRF's data.

"We've been hearing a lot about economic indicators pointing to a recovery, but consumers don't appear to be buying it."

Retailers can be expected to promote aggressively to fight the downturn, the NRF said. But certain popular holiday gifts like apparel and electronics may experience deflation due to the aggressive sales.

"The expectation of another challenging holiday season does not come as news to retailers, who have been experiencing a pullback in consumer spending for over a year," said NRF president and CEO Tracy Mullin in a statement.

NRF spokeswoman Ellen Davis said holiday shoppers will spend less on gifts, many with price points lower than $100.

Jeremy Hill, director of Wichita State University's Center for Economic Development and Business Research, agrees that it will be a tough Christmas season for retailers.

Many of the indicators driving the holiday pessimism nationwide are in place in Wichita, Hill indicated.

"Employment is down and we've flagged that. Foreclosures are another good measure and they're significantly higher year over year," he said.

Hill expects that Internet holiday sales will be up again.

"But that really adds to the hurt on the bricks and mortar," he said.

Retailers will be poised to take advantage of sale opportunities early in the season, Davis and Goodfellow said.

"There will be less merchandise on the shelves. It's the season to buy early," Davis said.

"Any hot holiday item that emerges, or any category that's doing well, it would be in shoppers' best interests to make sure they buy that merchandise sooner rather than later."