DED will keep close watch on shopper confidence this season

Joseph L. Driskill is the director of the Missouri Department of Economic Development.

The 2002 holiday shopping season is definitely in full swing. For many retailers, it will mean feast or famine as the largest percentage of sales occurs in the fourth quarter, particularly in November and December. But with consumer confidence slipping for the fifth consecutive month in October to its lowest level in nine years, what can retailers expect this year?

The National Retail Federation has forecast 2002 holiday retail sales to increase 4 percent from the same period last year, the smallest increase in five years. The organization, which is the world's largest retail trade association, defines holiday retail sales as sales in November and December for retail stores that sell general merchandise, clothing and accessories, furniture and home furnishings, electronics and appliances, sporting goods, hobby items, and books and music.

The retail association's prediction is moderate, as consumers remain cautious about the nation's sluggish economic recovery. And October's drop in consumer confidence raises more concern for the strength of consumer spending, particularly as we move toward the important holiday shopping season.

Several other factors are also adding to consumers' caution. Soft labor market conditions are restraining incomes; consumer and business confidence wavers due to corporate governance concerns and stock market conditions; and threats of terrorism and war with Iraq persist.

On the other hand, some consumers are finding that they have more money to spend this holiday season. Many individuals have been able to take advantage of low interest rates to refinance loans, thus giving them more spending power.

The Missouri Department of Economic Development's Economic Research and Information Center has recently developed a "mood survey" in an attempt to gauge the confidence of Missouri consumers. In September, the results suggested Missouri consumers, in general, are likely to delay spending on large items, as they remain skeptical of economic conditions in the upcoming 12 months.

Unfortunately, these results point toward continued sluggishness in the state's economy and suggest taxable sales in Missouri will continue to grow at a lackluster pace in the near future.

While it is difficult to predict what the holiday shopping season will hold for Missouri retailers, the Show-Me State often mirrors the economic happenings of the nation.

A consumer survey conducted on behalf of the National Retail Federation indicates that nearly 63 percent plan to spend the same amount on holiday shopping in 2002. Only 8 percent of consumers plan to spend more, while almost one-third plan to spend less this year.

Regardless of the weak expectations for holiday sales in retail stores, economists are anticipating e-commerce holiday sales to rise. Many shoppers will gladly avoid crowds and potential bad weather conditions by shopping online. Economists are forecasting fourth-quarter e-commerce sales in the United States to increase more than 15 percent over last year's sales to nearly $13 billion.

Regardless if you choose to spend money online or in line this holiday season, the DED will once again be closely monitoring retail sales during this period to gauge consumer confidence about Missouri's economic conditions. And we will remain hopeful that 2002 holiday sales will outperform analysts' predictions as they did last year.