FINANCE

CPG forecasts stellar year for retailers

BY Marianne Wilson

Wage and job growth are expected to translate into good news for retailers in 2019.

Retail sales in 2019 will rise 5.0%, the fastest growth pace since pre-recession 2006, according to consumer research firm Customer Growth Partners. (The National Retail Federation forecast sales predicted that retail sales in 2019 will increase between 3.8% and 4.4%.)

“Maintaining holiday’s stellar 5% growth pace—and up slightly from 2018’s 4.8% rate—retailers are poised to see a stellar 2019, buoyed by rising wages, robust job growth, and plummeting gasoline prices,” said Craig Johnson, president of Consumer Growth Partners.

Johnson noted that wages are up 3.4% from last year, 3.5 million new jobs have been created in the past two years, and average gasoline prices are a steep 65 cents/gallon below their October peak.

CGP’s 2019 Forecast projects direct-to-consumer/online sales will far outpace other sectors, with a projected growth rate of 11.1%. Other strong sectors for 2019 include consumer electronics/appliances, up 4.8%; apparel, up 4.7%; and general merchandise, up 4.1%.

“As we’ve seen for two decades now, the single biggest driver of retail spending is disposable income growth,” said Johnson. “The combination of 3%-plus wage growth and 3.5 million new jobs—including 3.8 million quality full-time jobs—creates its own polar vortex of growth drivers behind the stellar consumer spending. But unlike the debt-fueled bubble economy of the mid-2000s, today’s retail growth is based on strong fundamentals, suggesting that consumers—almost 70% of the economy—will continue healthy spending on a healthy pace at least through 2019.”

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