Much of the gloom and doom in retail seems to be lifting at last but the industry’s main association says politics could rain on stores’ parade.
The National Retail Federation, an industry group, raised its annual sales forecast on Tuesday, saying that the improving housing market, more jobs and better wages would spur more customer shopping.
The trade association now expects 2016 retail sales to rise 3.4% over last year, rather than its previous forecast for 3.1%. And e-commerce should continue its torrid growth: online and other non-store sales (like catalogs) are expected to grow 7.1%, up from its previous forecast of 6.9%, the NRF said.
“There are many factors that could prove to be hurdles but our overall outlook is optimistic,” NRF Chief Economist Jack Kleinhenz said in a statement. “Uncertainty surrounding the presidential election could make consumers more cautious, and the combination of a rising dollar and global slowdown have impacted exports.”
This forecast will be music to the ears of executives at retailers like Macy’s (M), Kohl’s (KSS) and Gap Inc (GPS), which have dealt with sales declines as consumers shift their spending toward big ticket items like home improvement or by going on vacation or to the restaurant more often.
The raised forecast comes just a few days after the NRF forecast spending for back-to-school, often an early read of consumer mood heading into the key holiday season, would rise 11%. Back to school is a particularly important period for retailers like Kohl’s, J.C. Penney (JCP), Target (TGT) and Walmart. (WMT)
Wall Street seems to have renewed its faith in the retail industry: after shares in most major retailers took a beating in the spring because of a slew of awful results reports, the S&P Retail Select Industry is up 7% so far this quarter.