Street Talk

Street Talk: Rosy outlook for retail

Food insecurity.

January 24, 2020
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Retailers in Michigan reported higher sales in December and predict stronger winter sales than a year ago, according to the Michigan Retail Index.

The December Retail Index survey came in at 60, an increase from December 2018’s 38, and up from November 2019’s 52.2. The seasonally adjusted performance index is conducted by the Michigan Retailers Association (MRA) in cooperation with the Federal Reserve Bank of Chicago’s Detroit branch.

The 100-point index provides a snapshot of the state’s overall retail industry. Index values above 50 generally indicate positive activity; the higher the number, the stronger the activity.

The December survey showed that 50% of respondents reported sales increases over November. Thirty-five percent of retailers recorded declines and 15% reported no change.

The Retail Index shows that 38% of Michigan retailers expect increased sales through March, while 28% predict a decrease; 34% expect no change. That results in an adjusted outlook index of 70 — a stronger three-month outlook than reported in November, which came in at 63.

“You may recall that a year ago, consumer confidence was shaken by a government shutdown and talk of tariffs — and then the polar vortex further dampened winter sales,” said William Hallan, president and CEO of Michigan Retailers Association. “It’s not surprising that retailers are more optimistic this winter.”

Holiday retail sales rose 4.1% over 2018. Total sales were recorded at $730.2 billion, including online sales, which were up 14.6% from a year ago, according to the National Retail Federation.

In December 2019, Michigan sales tax revenue was up 4.7% from December 2018, but $24.3 million below the expected level. Use tax collections in December 2019 were 9.8% above those of December 2018.

Michigan’s unemployment rate has not been announced for December. November’s unemployment rate was 4.0%. Currently, the national rate is 3.5%.

Hiring outlook

Just over 51% of companies plan to hire this year, according to a survey conducted by global outplacement and executive coaching firm Challenger, Gray & Christmas.

That is compared to nearly 55% of companies that reported they would be hiring in 2019 in the same survey conducted at the end of 2018.

Meanwhile, nearly double the companies reported economic fears and soft demand would negatively impact hiring. Over 18% of companies stated low demand and economic uncertainty would slow hiring, compared to 9% of respondents who reported this in the 2018 survey.

The survey was conducted online in December among 150 companies of various sizes in all industries nationwide.

“The fact that half of companies are hiring this year is a positive for job seekers and indicates companies are continuing to enjoy a solid economy. That said, we are seeing some indicators, such as slow-growing wages, an increase in job cuts and an exodus of CEOs, that may portend rough waters ahead,” said Andrew Challenger, vice president of Challenger Gray.

Fewer companies reported that the economy improved over 2018. Nearly 39% of companies believe the 2019 economy improved over 2018, compared to 63% that reported an improvement over 2017. Another 26% reported the economy has actually not improved, compared to 9% that reported this in 2018.

“Despite low unemployment and continuing economic expansion, most companies appear to foresee a coming slowdown in 2020,” Challenger said.

Employers at U.S.-based companies announced plans to cut 592,556 jobs from their payrolls in 2019, 10% higher than the 538,695 cuts announced in 2018. It is the highest annual total since 2015 when 598,510 cuts were announced. Meanwhile, 1,640 CEOs left their posts last year, the most since Challenger began tracking in 2002.

“Currently, the economy is humming along. Typically, labor is a lagging indicator, meaning companies will continue hiring workers right up to the edge of a recession. It remains to be seen if we will indeed see a downturn in 2020,” Challenger said.

Nonprofit profit

A Grand Rapids-based digital marketing agency is offering to provide $19,000 in value services for free.

LaFleur is now accepting applications for its Nonprofit Website Initiative. The agency is offering to build a custom website for one West Michigan nonprofit for free through an open application process.

In addition to building a website, LaFleur also will provide one year of free web hosting services, five pages of new, optimized content, migration of up to 20 existing pages, and help developing digital content and a contact form. Additional services like graphic design also will be available at a reduced rate.

“At LaFleur, giving back to our community is essential to our mission,” said Sarah LaFleur, the agency’s community relations manager. “We realize how difficult it is to fund and operate a nonprofit organization, which is why we want to help by offering our professional web development services to one deserving organization at no cost.”

Tyson’s Place Animal Rescue and HQ Runaway & Homeless Youth Drop-In Center were past beneficiaries of the LaFleur initiative.

Applicants must be located within 50 miles of Grand Rapids and have 501(c)3 nonprofit status. For more information, including the application, visit www.lafleur.marketing.

Cheap eats

Grand Rapids Community College’s contracted dining company rolled back prices in the Raider Grille and Sneden Café to address food insecurity among students.

Destiny Swanson, campus dining catering manager for Zeeland-based Creative Dining Services, said the company is aware of the challenges facing college students and wanted to see what it could do to support efforts from GRCC’s Office of Student Life and Conduct to make sure students aren’t going hungry.

“We are a part of the campus community, and we care deeply about the people we serve,” Swanson said. “We know it’s difficult to concentrate on studies when students are worried about their next meal. This is a step we can take to help be a part of the solution.”

Creative Dining Services partners with GRCC to operate the Raider Grille, Quiet Café and Sneden Café, as well as provide catering for campus events.

Keaton Krupa, campus dining director, said, “Success in other areas has allowed us to review food and labor costs in student-focused food services and roll back prices on most items.”

The size of the rollback varies from item to item. The price of chicken tenders dropped 35 cents to $5 and now has five strips instead of four. A buffalo chicken wrap dropped $1.25 to $5, and the price of the cheese quesadilla dropped $1.50 to $3.

A Hope Center for College and Community Justice study indicated that 42%-56% of community college students nationally experienced food insecurity.

“Our goal is to do our part in making sure there are affordable options to students on campus,” Krupa said.

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