By Crystal Silvas

Earlier this week the National Retail Federation (NRF) released a statement regarding holiday sales in 2007. According to the NRF, retail industry holiday sales rose only 3 percent over 2006. That figure excludes automobile, gas, and restaurant sales. When the automotive industries, gas and restaurant industries are taken into account, that figure becomes a weak 3.2 percent. The U.S. Commerce Department showed a 0.4 percent dip in sales from November to December, seasonally adjusted.

This was a major let-down in the retail community as the NRF had originally projected a much stronger 4 percent increase in retail sales over 2006. Chief Economist Rosalind Wells of the NRF blames this slothful holiday growth on economic pressures which “caused deterioration in the sales climate at the end of the year.” This represents the slowest holiday growth since 2002, which occurred in the wake of 9/11 when our entire country was stricken with grief and full of fear and paranoia. At least the retail climate is not as dire as it appeared in 2002 when growth reached a mere 1.3 percent.

Despite the slump in overall retail numbers, some industries made it out of the holidays unscathed. Holiday winners included those in the health and personal care industries (and Wal-Mart). Owners of these types of stores saw growth of 3.7 percent year-over-year from 2006 plus a 0.7 percent increase from November to December seasonally adjusted. Stores that lost out included clothiers, retailers of furniture (for the home or otherwise), and department stores like Target and Kohl’s.

“For many, this was an unsettling season, as customers waited longer and longer to shop, and established selling patterns seemed to shift,” remarked Ted Hurlbut of Inc.com. He also noted that smaller retailers are having a difficult time competing with so-called “Big-Box retailers” in such a climate; they don’t have the ability or the resources to slash prices the way the big guys can. His solution for you little guys of the retail world? Since you can’t compete on pricing alone, try the following: 1) Carve out your own well-defined and highly targeted niche, 2) utilize the Internet (especially for advertising purposes), 3) create an exciting and compelling atmosphere in your brick-n-mortar location (if you have one), and above all, provide stellar, over-the-top-amazing customer service (easier said than done but definitely doable).

The NRF has already made their 2008 Holiday forecast which projects a 3.5 percent increase in retail industry sales over 2007. Rosalind Wells believes, “Consumers will be under financial stress from high energy costs, the fallout from the housing slump, and sluggish employment and income growth.” While the holiday season is nearly a year away, it’s never too early to start preparing. This year take heed of Hurlbut’s advice to make the most of a sluggish holiday season, especially if your name isn’t Wal-Mart.