The retail industry will grow by 5.1% in 2011, the strongest growth in five years, according to Customer Growth Partners 2011 Forecast and Outlook. The New Canaan, Conn.-based consulting and research firm projects that the industry will create over half a million new jobs in 2011, the most of any employment sector, and that retail sales will reach a record level of almost $2.9 trillion.
“Retail is the Rodney Dangerfield of industries -- getting little respect compared to the tech and other sectors,” said CGP president Craig Johnson. “But in fact, retail is by far the nation’s largest employer, with over 18% of total payrolls, more than tech, media and health combined.”
CGP’s forecast uses an econometric model with variables such as personal income growth, savings rates, employment data, household wealth and credit data, inflation rates and energy prices; and on CGP’s proprietary retail database of the largest 100 retailers. [Retail sales forecast data are derived from DOC/Census data, excluding autos/gasoline/restaurants; and employment forecasts are based on DOL/Bureau of Labor Statistics data.]
CGP’s estimated 5.1% year-over-year growth rate for 2011 would be the fastest growth since the 5.3% reached in 2006, the last full year pre-recession, and the $2.87 trillion 2011 sales forecast would top the total sales record of $2.73 trillion set in 2010.
According to Johnson, 2011’s 5.1% is not record growth, especially coming off a deep recession, which are usually followed by growth of over 6%. But it is just above retail’s long term growth rate.
“With three years of pent up demand, normalizing savings rates, a turn in the job market -- and a more balanced view from Washington -- it’s little wonder we’re seeing strong growth, despite 9.4% unemployment and high energy prices,” he said.
The CPG report also predicts that the strongest growing retail sectors in 2011 will be home-related, including home-furnishings retailers such as Bed Bath Beyond and Williams-Sonoma, and home-improvement players such as Home Depot and Lowe’s -- reflecting four years of pent-up demand and depressed sales levels during the housing slump.
Other highlights included in CGP’s 2011 Forecast and Outlook include:
- E-commerce will continue to be the fastest growing channel in 2011, growing double digits, but mall-based retail will see its best year since before the recession;
- Luxury retailers, particularly jewelers such as Tiffany and Signet, will continue their stellar holiday growth, again reflecting several years of pent-up demand;
- Deep discount retailers, from Aldi to the dollar stores, will see continued strong growth as they expand distribution, particularly in urban areas, and expand food and consumables; and
- Fourth quarter GDP growth, driven by strong consumer spending, will reach 5.2%, well above consensus estimates.