Kantar Retail Predicts Holiday Sales Growth

Overall fourth quarter holiday sales will grow the most since 2006, according to retail consultant group of Columbus, Ohio, which forecast 2010 fourth quarter sales would grow 2.5 percent in 2010 from 2009.

The last time it grew that much was 2006, when sales grew 3.2 percent. Last year, sales grew 0.5 percent after falling 4.9 percent in 2008.

Still, Kantar suggests that the growth will feel week in comparison to relatively strong sales growth in the first three quarters of the year.

"Prices and uncertainty will weigh heavily on the holiday outlook," said Frank Badillo, senior economist at Kantar."Ongoing price competition among retailers, led by Walmart, is more likely to take a toll on sales gains than boost unit demand among shoppers who remain value conscious. We expect shopper demand to remain modest as job and income gains remain constrained by reluctance among firms to invest and hire amid an uncertain outlook."

Badillo said that holiday sales could climb more than forecast is confidence in the economy increases in the coming weeks.

Retailers' promotional activities may be key for the fourth quarter as consumers remain cautious with their spending, according to Kantar's ShopperScape Survey of holiday buying intentions.

"Results indicate that cautious shoppers who are hanging onto deal-seeking tactics from the recession and are still cautious about spending create a backdrop for a highly promotional holiday season," said Mandy Putnam, vice president of Kantar and director of ShopperScape. "Getting shoppers to loosen the clench on their wallets will largely depend on how well retailers align promotions to when and where key shopper groups are shopping this holiday season."

Kantar expects the relatively soft sales growth to continue in the first half of 2011 and accelerate in the second half.