By Eric Kulisch
Americans are expected to spend $17.6 billion on their sweethearts this Valentine’s Day, according to a survey from the National Retail Federation. The average individual who celebrates the holiday will spend 8.5 percent more than last year, it said.
Discount stores will get the most traffic (37 percent), but a third of people will head to department stores, up from 30.5 percent last year , the survey of more than 8,000 consumers by BIGinsight showed.
The positive forecast follows on the heels of a higher-than-expected 4.1 percent sales increase for the winter holiday season to $471.5 billion, year-over-year. Retail sales have increased 18 months in a row following the worst recession in recent memory. Consumer confidence is gradually picking up despite the tough economy and will probably be boosted by the latest Labor Department figures showing that the unemployment rate fell to 8.3 percent in January from 8.5 percent in December.
The NRF said its full-year outlook is for 3.4 percent growth in retail sales in 2012 to $2.53 trillion, which is slower than the 4.7 growth rate in 2011. Many economists predict the overall economy to slow to between 2.1 and 2.5 percent growth this year.
The forecast said consumer spending at retail stores will be constrained by slow income growth, although another extension of payroll tax cuts and unemployment benefits by Congress early this year could give people more spending power, the housing market and rising gasoline prices.
Anticipating high foot traffic in the run up to Valentine’s Day, retailers have replenished their inventories since the holiday season, the NRF said.
But merchants will probably maintain tight inventory levels throughout the year after implementing steps to make their supply chains more efficient in 2010 in response to the recession, Jonathan Gold, the NRF’s vice president of supply chain and customs policy, said during a presentation at a Transportation Research Board panel on imports two weeks ago.
Restocking and higher demand will drive import volumes this spring and through the year, the NRF says. It’s monthly Port Tracker forecasts container volumes to grow more than 10 percent in March, with slower growth rates for April and May.
A new challenge for stocking stores and warehouses is the Department of Transportation’s recent hours-of-service ruling for truck drivers. Gold said retailers are happy the department retained the 11-hour per day maximum driving time, but are worried that a new mandate to take longer rest periods at the end of the week will cut into total available driving time and exacerbate a tight labor market for drivers.
The ruling will have the most impact on night-time driving, which many companies now prefer to avoid congestion on the roadways.
Other transportation analysts have said the impact of the rule on truck capacity will be relatively small, and won’t go into effect until 2013 at the earliest. And that’s not considering any stays in implementation that could occur if any industry lawsuits are filed against the rulemaking.