Retailers Throughout State Project Low Holiday Sales

June 21, 2002
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LANSING — Although retailers across the state have high hopes for a holly, jolly selling season, their actual holiday sales projections are the lowest in eight years.

According to the annual holiday sales index issued by the Michigan Retailers Association (MRA), only 49 percent of its 5,500 members are expecting a sales increase for the fourth quarter and the average gain has been projected at just 6 percent.

“While the outlook is positive, it is the most subdued holiday shopping forecast since we began tracking expectations through our Michigan Retail Index in 1994,” said Larry Meyer, MRA chairman and CEO.

The dreary projections represent a drop from last year’s fourth-quarter expectations when 62 percent of retailers predicted a 9 percent sales gain. But that forecast never materialized, as only a quarter of MRA members reported an increase and the overall sales gain from 1999 was negligible.

Still, all is not doom and gloom for the upcoming sales season, which officially starts in three weeks. Despite a lethargic economy, retailers do see some bright spots.

“These include a new emphasis on home, family and friends in the wake of the Sept. 11 tragedies, plus lower gasoline prices, lower interest rates and lower federal taxes,” said Meyer.

Add to those the MRA’s push to get some sales tax relief.

Meyer, a former director of the Michigan Department of Commerce, recently appeared before the state House Commerce Committee and asked Lansing lawmakers to support a national week-long sales tax break to spur consumer spending during the gift-buying season. The plan, if approved by Congress, would have the federal government reimburse states for sales tax revenue lost during the week designated.

“Consumer spending accounts for more than two-thirds of our country’s Gross Domestic Product. In any considerations of ways to stimulate the economy, increasing retail sales should be first on the list,” said Meyer.

MRA Vice President of Public Affairs and Communications Tom Scott said they haven’t received much feedback from lawmakers yet on the request. He also thought that it would be tough to get such legislation passed in time for the holiday selling season. The MRA hasn’t asked for a specific tax-free week, but Scott noted that waiting until the middle of December might not provide the sales boost retailers need.

“It should be early in the holiday season so it helps set the tone for the shopping season and helps get it off to a fast start,” said Scott.

As for overall sales, Scott said large and small retailers have both been feeling a sales pinch since the fall of 2000. But he felt that the smaller, independent retailer wasn’t at any more risk of failing than their larger, corporate counterparts.

“No. They don’t necessarily have the resources behind them, but they do have the advantage of being more nimble,” said Scott of small retailers.

“They can adjust faster to market conditions. They don’t have to lay off 1,000 people, and if they’re well-established, have good credit, a good location and, perhaps, own their own property, they’re in better shape to weather a downturn than some others might be.”

Most retailers said sales declined sharply in September, as only 27 percent reported a gain from the same month last year. Three-quarters of Grand Rapids retailers had lower sales for the month. Slightly more than half of the city’s store owners said they expect sales to rise for the fourth quarter, while a third anticipate a decrease.

Owners of gift shops and electronic stores across the state had the most optimistic sales projections for the fourth quarter. Both groups usually do one-third to one-half of their annual sales during the month-long, holiday selling season.

“They seem to have come back faster after September 11th,” said Scott. “It’s been slow all year, but everybody stopped shopping those first few days after September 11th. But since then it has come back to more normal levels.”

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