2015 Retail Sales Will Rise 4.5 Percent, Kantar Says

The outlook for the retail industry in 2015 looks bright, with lower gasoline prices and decreasing unemployment boding well for consumer spending, Kantar Retail is predicting.

Kantar expects retail sales to rise 4.5 percent in 2015, a full percentage point stronger than 2014’s growth of 3.4 percent, the analytics company reported. That number excludes automobile dealers and gas and food service, according to Chain Store Age.

Online retail will be the big growth area as it has been for the past two years. Online currently accounts for about 10 percent of total retail sales, and Kantar expects it to grow 15 percent in volume this year, boosting online’s total share to 11 or 12 percent of the total. (Online grew 15 percent in 2014 and 16 percent in 2013.)

Sales at brick-and-mortar food and drug stores are expected to rise 3.6 percent, up from 3.2 percent in 2014 and just 1.9 percent in 2013. Kantar said the health care reform rollout is sustaining drug-store spending by the newly insured.

Brick-and-mortar apparel and home goods stores should see sales rise by 3.6 percent, up from 2.5 percent in 2014 and 3.3 percent in 2013, Kantar said, noting that the apparel channel will be bolstered by job and income gains, though department stores will lag. The home goods market will hinge partly on subsiding price deflation that dampened 2014 growth.

The retail landscape will remain uneven and fragmented with most of the gains driven by younger people. “Growth continues to be uneven and the particular retailers that will benefit are increasingly fragmented,” said Frank Badillo, chief economist at Kantar, according to the Chicago Tribune.

Most of the growth in retail will be driven by people under age 34, both on the lower and higher end of the income scale, as that age group has seen the greatest employment gains, Badillo said. As a result, smaller stores. from neighborhood convenience stores to upscale specialty stores, will be a key growth category because they appeal to younger people living in urban environments, dine out and shop on an as-needed basis.

Kantar’s projection is not quite as optimistic than that of Moody’s Analytics, which expects core retail sales to increase 6 percent in 2015, up from the 3.9 percent growth rate that Moody’s projected for 2014.