No relief in sight for merchants in '09

Industry sales expected to decline as discount shopping become the name of the game for most consumers.

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By Parija B. Kavilanz, CNNMoney.com senior writer

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NEW YORK (CNNMoney.com) -- If 2008 was brutal for retailers' sales, 2009 will be just as turbulent, or even worse, according to an industry forecast Tuesday.

Retail industry sales - excluding those logged at automobile sellers, gas stations and restaurants - are expected to decline 0.5% this year, the National Retail Federation said in its 2009 economic forecast.

This marks the first time that the trade group has projected a decline in annual retail sales since it started tracking them in 1995, according to NRF spokeswoman Kathy Grannis.

The sales weakness is a result of consumers cutting back in their discretionary purchases as well as many shopping differently in a recessionary environment.

"Most of the consumer behavior we saw in 2008 will continue well into this year," NRF chief economist Rosalind Wells said in a statement. "Shoppers will be seeking value, and trading down to discount and off-price retailers in order to stretch their purchasing power."

The NRF's quarter-by-quarter outlook calls for a 2.5% sales decline in the first half of the year. It estimates sales to decrease 1.1% in the third quarter followed by a 3.6% increase in sales in the fourth quarter.

The fourth quarter is typically the most important period of the year for sellers since it includes the holiday shopping months of November and December.

Those two months can account for as much as 50% of merchants' annual profits and sales.

The NRF had expected last year's holiday sales to increase 2.2%, but the trade group said the final result for the two months combined was a much worse decline of 2.8%.

However, the firm qualified the projected 3.6% increase, saying that much of that improvement will likely be due to "easy comparisons" from the 2008 holiday season, as well as a likely pick up in the economy by the end of the year. To top of page

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