U.S. retail sales in the coming year could see modest growth, according to a recent report by Fitch Ratings.
The 2015 outlook on the domestic retail marketplace predicts growth of 3% to 4% (excluding autos), with Fitch noting a variety of challenges will continue to constrain the performance of several retailers and retail segments
According to the report, a gradual increase in the U.S. employment rate and real wages along with near-term benefits from lower gas prices will support retail sales growth. Industry challenges include online competition, reduced store traffic — particularly for department stores — and persistent economic pressure on lower-income consumers.
Fitch noted that while online accounts for just 13% of retail sales, it now accounts for almost 50% of retail sales growth. Fitch projects that online sales will grow in the low teens over the next several years and surpass $300 billion in 2016, while sales excluding online will grow at a modest 1.5% to 2% over the same period. An intense promotional environment is therefore a permanent reality as retailers fight for a share of this modest growth, Fitch said.