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Holiday sales this year will be the weakest in 17 years, TNS Retail Forward forecasts. The TNS Retail Forward forecast is for 1.5% growth—compared with 1.2% in 1991—for the holiday fourth quarter in the key holiday retail segments combined.

Included in the forecast are the key retail sectors—where many holiday gifts are traditionally purchased—known as GAFO (general merchandise stores such as conventional and discount department stores, supercenters, warehouse clubs, apparel stores, furniture, home furnishings, consumer electronics and other specialty stores) as well as home improvement stores, catalogs and online sales.

"The holiday sales forecast represents a weakening from modest third-quarter growth as the boost from tax rebates runs out," comments Frank Badillo, Senior Economist for TNS Retail Forward. "The benefit from a letup in gasoline prices will be overwhelmed by the impact of rising unemployment, tighter credit and other hardships on households. And, unfortunately, the trends in economic conditions offer no sign of an impending recovery," he adds.

Holiday Retail Sales Results* (Fourth Quarter Year-over-Year Growth)

• 1997 - 4.70%
• 1998 - 6.80%
• 1999 - 8.20%
• 2000 - 3.90%
• 2001 - 2.20%
• 2002 - 2.80%
• 2003 - 6.00%
• 2004 - 6.50%
• 2005 - 7.00%
• 2006 - 3.80%
• 2007 - 2.70%
• 2008FC - 1.50%

"Our top-line forecast separates into two distinct groups—the leaders and the laggards," Badillo states. "Sustaining above-average growth will be non-store and mass retailers. They will see combined growth near 6.0% in the fourth quarter. Continuing to troll the depths will be the homegoods and softgoods retailers where growth is expected to decline 1% or more," he adds.

Anticipated key retail sector holiday sales performance:

• Mass retailers will see a pickup in performance this holiday season as a result of a shift among shoppers toward value formats and the impact of higher food prices. TNS Retail Forward forecasts 5.6% combined growth, nearly a full percentage point stronger than last year. Supercenters and warehouse clubs will remain among the best retail performers while discount department stores will be the laggard of the channel.
• This year's letup in retail sales among apparel and accessory retailers as shoppers become increasingly value-oriented will continue to take a toll on the softgoods sector this holiday season. Sales at apparel and accessories channels are forecast to decline 1.3% in the aggregate in the holiday period compared with flat growth in 2007. Department stores, including the upscale players, will remain the biggest drag as upper-income households become increasingly vulnerable to economic pressures. Apparel and other specialty stores are expected to register flat growth this holiday season.
• Homegoods channels will see sales decline this holiday by 1.0%. Furniture and home furnishings stores will experience the biggest deterioration reflecting the lagging impact of the housing market on demand. Home improvement store sales also are forecast to decline 1.0% amid persisting weakness in the housing and mortgage markets. Consumer electronics stores are the exception in the channel with holiday sales growth forecast at 4.0%. Sustained buying to prepare for the conversion to digital TV signals could make consumer electronics stores an even stronger holiday performer than expected.

Online sales across retail channels are forecast to grow 9% this holiday season compared with 19% in 2007. This represents the first single-digit growth rate for online retailing during the holiday shopping season since 1999. TNS Retail Forward forecasts online sales to reach $42.5 billion in the fourth quarter up $3.5 billion from the prior year.

"The letup in online shopping reflects the spreading impact of the economic downturn since the last holiday season, particularly among upper-income shoppers," Badillo notes. "These shoppers, who are more likely to shop online, have turned increasingly value-focused in recent months as they have felt worse off with regard to investments, home values and other economic measures," he concludes.

About TNS Retail Forward
TNS Retail Forward, Inc. is a global management consulting and market research firm specializing in retail intelligence and strategies. The company's syndicated research and executive development program, the Retail Forward Intelligence System, provides members with an authoritative perspective on the retail and consumer products industries.

About TNS
TNS is a global market information and insight group.

Its strategic goal is to be recognised as the global leader in delivering value-added information and insights that help its clients make more effective business decisions.

TNS delivers innovative thinking and excellent service across a network of 80 countries. Working in partnership with clients, TNS provides high-quality information, analysis and insight that improves understanding of consumer behaviour.

TNS is the world's leading provider of customised services, combining sector knowledge with expertise in the areas of Product Development & Innovation, Brand & Communications, Stakeholder Management and Retail & Shopper. TNS is a major supplier of consumer panel, media intelligence and audience measurement services.

SOURCE: TNS Retail Forward