The beginning of the year has proved difficult for the stock market which has been reacting negatively to worries about the stability of financial institutions and the uncertainty regarding national health care legislation. But consumers don't seem to be overly concerned. Research shop Retail Forward, a Kantar Retail Company, expects steady improvement in consumer spending levels throughout the year. Retail sales, excluding auto and fuel sales, should rise between 1.5% and 2.0% through June and then growth at a faster rate of between 3.0% to 4.0% in the second half of the year.
Frank Badillo, Senior Economist for the firm, bases part of his optimism on the holiday 2009 spending levels which rose slightly from the previous year. However, Badillo emphasized that continued growth will be closely tied to the jobs and general income picture.
Here are the anticipated growth rates for specific sectors:
FDM (food, drug, mass merchandisers) channel: +2.5% through June, +4% June through December
Soft goods (especially apparel): +0.5%-1.0% through June, +1%-2% June through December
Homegoods: Flat through June, +1.5%-2.5% June through December
This kind of activity in consumer spending may spur marketers to increase ad spending as they reach for new customers during the recovery.[Source: Improving Outlook for 2010, Kantar Retail Forecasts, 1.25.10 release]