Holiday sales expected to increase modestly

Holiday retail sales are expected to increase modestly this year, but consumers still face considerable economic uncertainty that could hamper spending, according to the National Retail Federation’s annual holiday forecast.

In the report, released Wednesday, the retail trade group estimated that sales would rise 2.3% to $447.1 billion compared with the same period a year earlier.

A 2.3% increase would be slightly lower than the 10-year average holiday sales increase of 2.5%, the federation said. But it would be a marked improvement from last year’s 0.4% uptick and the dismal 3.9% holiday sales decline retailers saw in 2008.

“Though the retail industry is on stronger footing than last year, companies are closely watching key economic indicators like employment and consumer confidence before getting too optimistic that the recession is behind them,” Matthew Shay, president of the National Retail Federation, said in a statement.

Much as they have in previous years, retailers are expected to focus on supply chain efficiencies and inventory control this holiday season to limit excess merchandise and unplanned markdowns. Many are also expected to leverage new channels, such as mobile technology, to drive sales and provide added service to customers who want to shop on the go.

“Consumers have gotten used to having less cash in their pockets,” the federation’s chief economist, Jack Kleinhenz, said in a call with reporters. “Going into the holiday season, retailers need to convince consumers that the recession is over and convince them to buy accordingly.”

For their part, retail executives said they’re ready to compete during what is shaping up to be a competitive holiday season. Many have rolled out new product lines and opened temporary mall kiosks and pop-up shops to deal with the hordes of Christmas shoppers.

“We do think this is going to be a very good holiday,” said Michael Dobbs, chief marketing officer at Brookstone Inc. “What we’re seeing is a lot of traffic coming into the stores earlier now than we normally would see for the season.”

andrea.chang@latimes.com