The National Retail Federation today released its 2018 economic forecast, predicting retail industry sales growth between 3.8 and 4.4 percent over 2017.
Online and other non-store sales, which are included in that projection, are expected to increase between 10 and 12 percent. (The numbers exclude automobiles, gasoline stations and restaurants.)
Retail sales grew 3.9 percent in 2017 over 2016 to $3.53 trillion, according to the U.S. Census Bureau’s preliminary estimate for the year. While that number is subject to revision, it exceeded NRF’s forecast for growth between 3.2 and 3.8 percent.
“A robust holiday season for retail sales is just one of many barometers that points to a consumer that is clearly feeling positive about their financial health,” NRF president and CEO Matthew Shay said. “Despite headlines to the contrary, the retail industry is strong, growing and meeting consumer demand with the products they want at the prices they expect and the shopping experience they want to have, online or in-store. With consumer confidence high, unemployment low and wages growing, there is every reason to believe that retail sales will be robust throughout the year.”
For the better part of four years, brick-and-mortar retailers have faced enormous pressures from the rise of digital and consumer shifts toward experiential spending — leading dozens of big names to file bankruptcy, shutter stores and lay off workers. While the industry continues to digest headline-making bankruptcies such as The Sports Authority, Payless ShoeSource, The Limited and BCBG Maz Azria Group, a largely successful 2017 holiday season and improved omnichannel initiatives at many major firms have signaled that better days are ahead. Still, brick-and-mortar fleet rationalization is likely to continue in 2018. At least six major department stores have already announced store closings since the start of 2018 — JCPenney, Sears and Nordstrom among them.
“The underpinnings of the economy are very good, and consumer spending is at the center of our outlook,” NRF chief economist Jack Kleinhenz said. “The push and pull of forces both external and internal to the U.S. economy will continue to provide challenges, but on balance, we expect a good year. And as the retail industry continues to transform, retailers will leverage the new tax plan to invest in their employees, stores and new formats that engage with the ever-evolving and demanding consumer.”
The past week has seen the U.S. stock market suffer significant declines amid concerns new Federal Reserve Chairman Jerome Powell will accelerate interest rate hikes.