WASHINGTON, DC: Retail sales in the US will rise by 2.5% this year, boosted by an improvement in consumer confidence in the country, the National Retail Federation has predicted.

The industry body reported that retail sales declined by 2.5% over the course of 2009, but added that "positive signs" in the housing and employment markets should cause trading conditions to stabilise.

According to the NRF's estimates, the holiday season delivered an uptick of 1.1% in revenues, to $446.8 billion (€316.9bn; £276.9bn), a trend that should be sustained going in to 2010.

Rosalind Wells, the organisation's chief economist, did sound a note of warning, however, arguing that shoppers would "continue to be frugal with discretionary spending."

"Retailers will soon be able to reap the benefits of leaner, smarter inventories and a year and a half of pent up consumer demand," she added.

"As we continue to see signs of improvement throughout the US economy in 2010, overall sentiment will begin to lift, making way for slight increases in consumer spending."

Gregg Steinhafel, ceo of Target, recently told investors that "consumers are still buying with caution and considering each purchase more carefully than they once did."

The discounter has announced plans to open ten new stores this year, but will spend a more substantial $1bn on renovating over 300 of its existing outlets.

In contrast, Tesco, the UK-based chain, is aiming to expand its Fresh & Easy franchise in the country at a reasonably rapid pace.

Terry Leahy, its chief executive, said "we are opening a store a week, and as the US recovery picks up I am sure that rate of opening will increase."

Dollar General has also outlined plans to unveil 600 small stores this year, with Family Dollar set to launch 200 new sites of its own in the same timeframe.

Data sourced from Financial Times/Wall Street Journal; additional content by Warc staff