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News Release

Last modified: Monday, November 1, 2004

IU retail forecast: Fourth quarter to be up by 4.9 percent, but lower than previously expected

BLOOMINGTON, Ind. -- According to a new retail outlook released today (Nov. 1) by Indiana University's Kelley School of Business, fourth quarter sales at traditional department stores are expected to be robust, increasing by 4.9 percent over the same period in 2003.

The forecast, from the Kelley School's Center for Education and Research in Retailing, focused on "GAFO" retail formats, primarily stores which sell general merchandise, clothing, furniture and home furnishings, electronics and home appliances, sporting goods, entertainment products and office supplies. It does not include automobile, grocery or restaurant sales.

"This fourth quarter forecast is approximately the same rate of increase observed for 2003 over 2002 -- which was slightly over 5 percent -- but is substantially lower than predictions of 6 percent or greater increases released by other retail analysts in late summer of this year," said center director Theresa D. Williams.

In explaining the revision from 6 to 4.9 percent, Williams explained that the majority of sales gains for this year have been due to increases of 7 and 8 percent during the first four months of 2004. For the first nine months of 2004, GAFO retail sales are up about 6.4 percent over 2003.

"Since May, month over month increases have been positive, but trending downward," added Frank Acito, professor of marketing and chair of Kelley School doctoral programs. "Assuming that this slight downward trend in the rate in increase continues, the increase in GAFO sales for the entire year should be about 6.1 percent over 2003. Compared to last year's 3.5 percent change from 2003 over 2002, this represents a more positive environment for retail sales this year."

The forecasting method used by the center has been calibrated on more than 10 years of past data and predicts the increase in fourth quarter GAFO sales within plus or minus 0.8 percent using a time series smoothing technique. The latest forecast incorporates the September 2004 Advance Monthly Sales Estimates released by the U.S. Department of Commerce on Oct. 15.

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