Retail

Holidays are shaping up well for Michigan retailers

Consumer confidence fuels retailers’ enthusiasm.

November 3, 2012
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LANSING— Snowy weather and holiday cheer might seem far off for most shoppers, but Michigan retailers are already optimistic about a shopping season that experts say could be the most fruitful in more than a decade.

October, November and December make up a key sales period for retail businesses, often accounting for at least 20 percent to 30 percent of total annual sales, said Tom Scott, senior vice president of the Michigan Retailers Association.

Scott said the past few years have gone well for retailers, but projections from the latest Michigan Retail Index by the association and the Federal Reserve Bank of Chicago indicate retailers are much more confident about sales increases than in the past.

The report indicated 43 percent of the state’s retailers on average expect an increase of more than 5 percent from last year, and another 32 percent expect increases lower than 5 percent.

An increase in confidence among shoppers likely correlates with an increase in consumer confidence as the economy improves, said Paul Isely, chair of the economics department at Grand Valley State University.

Although the state hasn’t completely bounced back to economic levels seen in the early 2000s, Isely said Michigan as a whole is steadily climbing out of the recession, prompting consumers to be freer with their holiday spending.

“What we’re seeing right now is more people with jobs who are secure that their job is going to continue to exist,” Isely said. “People are in better shape to spend money going into the holiday season — they feel more comfortable.”

A survey of more than 25,000 U.S. consumers conducted by Nielsen Co. indicates a similar trend nationwide. The firm’s consumer confidence index is the highest it’s been since before the recession, and researchers expect this year’s holiday shopping season to add up to $100 billion to the nation’s economy, said Raleigh Floyd, media relations director at the company.

Scott said retailers in the central and southeast regions of Michigan, including communities such as Midland, Clare and the Detroit area, expressed the highest confidence in increasing holiday sales, with 79 percent and 78 percent, respectively, noting likely increases from October to December.

“There’s always room for improvement, and there are some retailers that are still struggling, but this has been a positive year overall,” Scott said.

Even though the atmosphere is positive as retailers and consumers enter the holiday season, Isely said some aspects of the economy still cause concern.

“We see a little bit of weakness in the orders for manufacturing — people who order from these manufacturers are slowing down what they think they’re going to need,” Isely said.

“Layoffs are happening at a faster rate than we’ve seen in two years, and the uncertainty of the presidential election and how the nation will handle the fiscal cliff could put businesses on a cautious track,” he said.

Scott said out-of-state online retailers that draw Michigan customers without the requirement of collecting sales tax also have the potential to damage the economy and dampen sales by businesses that must comply with the tax laws.

“It’s no secret that online sales are increasing faster than brick-and-mortar stores,” Scott said. “The retail success could be even better if they didn’t have unfair competition. When government policy favors the out-of-state retailers over the in-state retailers, that really can damage the economy.”

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