As major retail chains gear up for the holiday season, analysts and trade associations are projecting that year-end sales will increase more than 4 percent, with seasonal hiring comparable to last year.
However, one expert warned that concerns over the so-called fiscal cliff and the recent downward revision to second quarter 2012 U.S. gross domestic product (GDP) growth add up to a “mixed” holiday season for Westchester County retailers.
The National Retail Federation (NRF) said it expects holiday sales will increase 4.1 percent to $586.1 billion, compared with average annual holiday sales increases of 3.5 percent over the past decade.
After retailers hired 607,500 temporary employees during the 2011 holiday season, the NRF said it expects seasonal hiring to be between 585,000 and 625,000 this year.
Several of the country’s largest retail chains have revealed plans to hire more temporary workers than a year ago.
Kohl’s said it would hire 52,700 seasonal employees this year, up 10 percent from 2011, while Toys “R” Us will increase seasonal hiring to 45,000, up more than 12 percent from 2011.
Over the past two weeks, Macy’s has said it would hire 80,000 seasonal workers, Walmart said it plans to hire 50,000 seasonal workers and Target said it would hire between 80,000 and 90,000 seasonal workers.
BDO USA L.L.P., a national financial advisory and consulting firm with offices in New York City and Valhalla, projected total sales will increase 4.5 percent. It based its forecast on an annual survey of 100 retail CFOs.
Al Ferrara, BDO’s national retail and consumer product industry practice leader, predicted Westchester County retailers would likely see even larger gains.
“Most of your major retailers are stationed in malls that act as anchors,” said Ferrara, who is based in BDO’s New York City office. “So if they (CFOs) are predicting traffic is going to be such that the sales are going to increase four and a half percent, that traffic flows into the malls they are anchoring … and Westchester obviously has some of the best malls in the region.”
Ferrara added that the strong market for high-end products in Westchester would further boost holiday sales and total 2012 sales for area retailers.
“Westchester is primarily upper-end, higher-ticket items, with more boutique specialty stores,” he said. “Optimism being what it is and considering where the stock market has gone, you expect the Westchester market to do better than the national average.”
However, retail expert Howard Davidowitz said the current economic slowdown, coupled with fears over how the possible expiration of the Bush-era tax cuts and the scheduled defense and discretionary spending cuts could impact capital markets, would likely act as a drag on 2012 holiday sales.
“For consumer spending to really get rolling, here’s what you have got to have: jobs,” said Davidowitz, chairman of Davidowitz & Associates Inc., a national retail and investment banking consultant based in New York City. “If unemployment and underemployment are somewhere between 16 and 17 percent – which everyone agrees they are – that’s a real problem.”
Davidowitz said that if holiday season retail sales were to increase 4 percent or more, the result would be fourth quarter GDP growth of close to 4 percent, assuming that consumer spending accounts for roughly 70 percent of the U.S. GDP.
“Would you tell me one person in America who thinks the GDP is going to grow 4 percent in the fourth quarter?” he said. “GDP growth is at 2 percent. That’s why we can’t add jobs.”
While he acknowledged Westchester is buoyed by a strong luxury goods market, Davidowitz said he has observed “some ripples in luxury sales.”
“We’re starting to see a few ripples and the reason for that is wealthy people are getting very concerned about this fiscal cliff,” he said. “They’re worried. Will luxury be OK for the holidays? Yes. They’ll be fine. But it’ll be less robust than it was.”
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