The National Retail Federation on Wednesday released its 2020 retail growth forecast, sticking with its estimate that sales this year will rise 3.5% to 4.1% to more than $3.9 trillion, despite "uncertainty" around the trade war, the COVID-19 outbreak (a disease caused by a member of the coronavirus family) and the presidential election, according to a press release.
The organization also released its preliminary findings for last year, saying that 2019 retail sales rose 3.7% year over year to $3.79 trillion, just short of its forecast for 3.8%. That calculation suffered from uncertainty due to the government shutdown late in the year, the NRF said.
NRF's calculations exclude automobile dealers, gasoline stations and restaurants, and include online and other non-store sales. Separately, NRF expects online sales this year to rise 12% to 15%, to between $870.6 billion and $893.9 billion. Last year, e-commerce rose 12.9% to $777.3 billion, exceeding NRF's estimate of up to 12%.
Generally speaking, the American consumer has remained confident in recent years and will continue to carry through for retailers this year, according to NRF President and CEO Matthew Shay.
"The nation's record-long economic expansion is continuing, and consumers remain the drivers of that expansion," he said in a statement, citing wealth gains and low interest rates in addition to consumer sentiment. "There are always wild cards we cannot control like coronavirus and a politically charged election year. But when it comes to the fundamentals, our economy is sound and consumers continue to lead the way."
The NRF's dismissal of major disruptions to retail growth arrives as other analysts warn of the consequences of the coronavirus. As reports mount and more cases are diagnosed, people are avoiding gathering in public, according to research released by Coresight on Friday. "US consumers could dramatically change habits to reduce the risk of infection, and this could hit retailers hard," Coresight said in a report.
So far this year, the outbreak has come up in 66 retailer earnings calls, as tracked by Refinitiv. It's also spurring negative guidance: to date, negative earnings guidance for the first quarter has outpaced positive guidance 16 to five, and negative revenue guidance has outpaced positive guidance 16 to eight, according to Refinitiv Director of Consumer Research Jharonne Martis, in a Feb. 28 statement.
In China, where the outbreak began and is having the greatest impact, luxury brands have been particularly affected, according to a Feb. 27 report from CB Insights emailed to Retail Dive. Chinese shoppers last year contributed some 40% to global spending in high-end retail, according to CB Insights, citing numbers from Jefferies and the Financial Times. That growth is also why coronavirus is set to have a greater impact than the SARS outbreak did in 2003, according to that report.
But some retailers, notably department stores, could have a relatively pleasant spring, amid signs that several players in that segment have tackled previous inventory issues, according to a Feb. 20 note from Morgan Stanley analysts led by Kimberly Greenberger.