TOP N. AMERICAN SHIPPERS 2005- Retailing picture mixed

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Early 2006 sales strong after robust holiday season, but higher energy costs may compromise consumer spending power this year.By Peter A. Buxbaum, AJOTThe holiday season extended into January for many retailers, as consumers flooded stores to take advantage of clearance sales. According to the National Retail Federation, retail sales for January increased an impressive 7.6% over last year. This followed a 2005 holiday shopping season which saw sales increase by 6.4% over the year before.
Retailers are wary, however, about 2006. While annual retail sales enjoyed 6.1% growth in 2005 over 2004, the NRF projects only 4.7% growth this year, as higher energy costs eat away at household budgets.
“The spectacular growth we saw in January was an unexpected surprise for the industry,” said NRF Chief Economist Rosalind Wells. “While our 2006 outlook for the retail industry remains cautious, consumers responded well.” Retailing categories showing the strongest growth in January, according to Wells, included home and garden improvement materials, up a whopping 17.6% over January 2005, and home furnishings, up 9.5%.
Overall, US retailers enjoyed sales of $4.4 trillion in 2005 and $438.6 billon during the 2005 holiday shopping season, according to the NRF. The National Retail Federation is an industry umbrella group representing more than one hundred state, national, and international retail associations that include over 1.4 million US retail establishments and over 23 million employees.
The encouraging January figures came on the heals of a holiday shopping season that, in the face of high energy prices, actually beat the NRF’s original projections. Combined November and December sales brought the retail holiday sales growth rate to 6.4%, slightly higher than NRF’s forecast of six percent. Strong year-over-year gains for November and December were seen at clothing and clothing accessories stores (9.7%), health and personal care stores (8.1%), and sporting goods, hobby, book and music stores (6.5%). Figures for December alone demonstrated strongest growth in building materials and garden equipment, with sales up 8.2% over 2004; clothing and clothing accessories, up 7.6%; and electronics and appliances, up seven percent. On the downside, department store sales in December 2005 were down three percent from the same period the year before, thanks to stiff competition from discount outlets and luxury stores.
Valentine’s Day also proved successful for retailers, according to a survey conducted by BIGresearch for the NRF. According to the National Retail Federation 2006 Valentine’s Day Consumer Intentions and Actions Survey, 61% of consumers celebrated Valentine’s Day and the average consumer spent over one hundred dollars on the holiday, up 4.5% from around $97 last year. Total 2006 Valentine’s Day spending was estimated to reach $13.70 billion, an increase of four percent from $13.19 billion in 2005. Men spent twice what women did on Valentine’s Day, an average of $135.67. Jewelry fared better this year than last year as the gift of choice for men, while flowers fared poorer than for Valentine’s Day 2005. A greater proportion of men bought jewelry for their significant others this year: 22.4% versus 18.1% in 2005; while 52.3% bought flowers, as against 57.8% in 2005.
“A more challenging sales environment in 2006”Despite the good news from the holiday shopping season and the encouraging numbers from the beginning of this year, Wells expects relatively sluggish retail growth this year as opposed to 2005. “While 2005 ended on a very positive note, we certainly expect to see a more challenging sales environment in 2006,” she said. The NRF’s quarterly Retail Sales Outlook Report released in mid-January 2006, projected that a slowdown in the economy would restrain consumer spending and industry sales gains. The NRF blamed the expected subdued retail sales growth in 2006 on rising energy costs and a slowdown in the housing market.
“With the housing market beginning to slow, consume

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Peter Buxbaum has been writing about international trade and transportation, as well as security, defense, technology, and foreign policy, for over 20 years. Besides contributing to the AJOT, Buxbaum's work has appeared in such leading publications as [em]Fortune, Forbes, Chief Executive, Computerworld, and Jane's Defence Weekly[/em]. He was educated at Columbia University.