Retail sales are projected to increase 4.1% in 2014 as the economy continues to improve, the National Retail Federation said.

The projected rise from 3.7% growth in 2013 excludes automobile, gas station and restaurant sales. The retail group also said it expects online sales to grow between 9-12%.

"Measured improvements in economic growth combined with positive expectations for continued consumer spending will put the retail industry in a relatively good place in 2014," Matthew Shay, CEO of NRF, said in a statement.

"Though headwinds in the form of the looming debt ceiling debates, increased health-care costs and regulatory concerns still pose risks for both consumers and retailers, we are cautiously optimistic and hopeful that the economic tides will change in 2014," Shay said.