Economic growth in the retail sector anticipated for 2020, according to Moody's, due to beneficial investments.

The retail industry is gearing up for the new year, with a mix of optimism and caution. According to analysts, the sector is expected to remain stable in 2021, despite the lingering risks and challenges.

One of the key concerns for the industry is the trade tension with China, which has the potential to escalate into a recession. High levels of debt for many retailers and the risk of tariffs also pose threats. However, Moody's analysts predict more than half of the retail sectors to have operating income growth of over 4%.

Operating income in the off-price segment could rise by 7%, making it a potential bright spot in the industry. Profit growth for apparel retailers is estimated to be up to 5% next year, provided companies work towards sourcing transparency and invest in sustainable supply chains.

Climate change and consumer awareness of environmental impact are other risks for apparel sellers. As consumers become more conscious about their carbon footprint, retailers will need to adapt their practices to meet these growing concerns.

In a positive development, the retail industry continued growing its sales despite the sluggish November with shopping holidays. Industry-wide operating income growth is projected to be 3% to 4%.

The growth of e-commerce is another trend that is expected to continue. Analysts anticipate e-commerce growth to outpace the rest of retail, reaching 25% of total sales in the next four to five years.

However, not all segments of the retail industry are expected to fare equally well. Department stores' operating income is projected to fall about 1% next year, while major pockets of distress and decline are observed, particularly among retailers tied to lower-tier shopping malls.

The retail sector has already seen significant changes in the past year, with thousands of store closures occurring in 2019. Despite these challenges, dollar stores' operating profits are expected to increase more than 9%.

In conclusion, while the retail industry faces several challenges, analysts remain generally positive about its prospects going into the new year. Companies that can adapt to changing consumer preferences, invest in sustainable practices, and leverage e-commerce effectively are likely to thrive in the coming years.