Area Economy

Storms, competition wreak havoc on retail sales in Michigan

January 31, 2014
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Hurt by damaging winter storms and outdated government policies that favor out-of-state, online companies, Michigan’s retail industry suffered a poor holiday shopping season, according to the Michigan Retailers Association.

Retailers posted only a 0.1 percent average increase over last holiday season, according to the Michigan Retail Index, a joint project of MRA and the Federal Reserve Bank of Chicago.

“Retailers were hit by arctic air, snow and ice storms that knocked out power across the state during the critical final days of the holiday shopping season, when stores should have been full,” said James P. Hallan, Michigan Retailers Association president and CEO.

“At the same time, they continued to be hurt by badly out-of-date laws that give out-of-state online merchants a price advantage over our Michigan companies that invest in Michigan, employ Michigan workers, pay taxes in Michigan and support their Michigan communities.

“Lawmakers cannot let another Christmas go by without enacting ‘Main Street Fairness’ legislation to enable Michigan businesses to compete on an equal footing with out-of-state ‘vapor’ retailers and put an end to government picking winners and losers on the retail playing field,” Hallan said.

The latest Michigan Retail Index showed 38 percent of retailers increased sales during the holiday season, and 41 percent experienced declines; 21 percent reported flat sales.

Retailers went into the already compressed shopping season with cautious optimism, their forecasts averaging a modest 1.3 percent gain over last year. The results, however, were even weaker.

December sales were slightly better than November’s. The Michigan Retail Index found that 39 percent of retailers increased sales over the same month last year, while 44 percent recorded declines and 17 percent saw no change. The results create a seasonally adjusted performance index of 50.5, up from 46.7 in November.

The 100-point index gauges the performance of the state’s overall retail industry, based on monthly surveys conducted by the Michigan Retailers Association and the Federal Reserve.

Index values above 50 generally indicate positive activity; the higher the number, the stronger the activity.

Looking forward, 42 percent of retailers expect sales during January through March to increase over the same period last year, while 25 percent project a decrease and 33 percent no change. That puts the seasonally adjusted outlook index at 63.3, up from 58.4 in November.

 William Strauss is senior economist and economic advisor with the Federal Reserve Bank of Chicago. He can be reached at (312) 322-8151.

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