 |
Holiday optimism remains despite poor reports Michigan retailers expect their holiday
sales will grow just under 4 percent this year, their lowest forecast
in a decade. The Michigan Retail Index, a joint project
of the Michigan Retailers Association (MRA) and Federal Reserve Bank of
Chicago, reports that 57 percent of retailers believe their holiday sales
will increase over last year, with growth averaging 3.7 percent.
The projections also came during a lackluster
September, which posted the worst sales numbers since last September.
Thirty-three percent of retailers reported increased sales, while 57 percent
said sales declined and 10 percent reported no change. The results create
a seasonally adjusted performance index of 39.0, down from 40.1 in August. “A bright spot is that more retailers
than last year are forecasting holiday increases,” said Larry Meyer,
MRA chairman and CEO. “We continue to see solid retailer optimism,
although it’s tempered by the realities of a slow-growing economy.” Meyer also pointed out that at the time of
the survey, West Coast ports remained closed and the stock market had
not staged its October rally. “Optimism could be higher now than it
was a few weeks ago,” he said. Among those bucking the trend with positive
fall sales numbers and some upbeat holiday season projections is Linda
Lipkin, owner of Earthly Delights in Kalamazoo. “I had the busiest
summer since I opened in 1994, and those sales stayed strong right into
fall. I am looking forward to a busy holiday season, despite what I have
seen about the sluggish retail economy.” Economists are more skeptical. While most
experts said they don’t expect another recession if Christmas sales
falter, they agree that holiday spending is crucial this season to avoid
further erosion of the economy. “The outlook for the holiday retail
season is fairly bleak,” said Lynn Franco, director of the Conference
Board’s Consumer Research Center. “Without the likelihood of
a pickup in consumer spending, an already weak economic recovery could
weaken further.” Economists also point out that the jobless
rate is no help to the struggling economy. In September, there were 8.1
million jobless people in the U.S.—1.1 million more than last year
at the same time. “Unless hundreds of thousands of people
are hired in the month of November, this is going to be an anemic Christmas
season,” said Kurt Barnard, president of Barnard’s Retail Trend
Report, a retail consulting firm in Upper Montclair, New Jersey. Bill Rider, manager of Rider’s Hobby
Shop in Grand Rapids, maintains cautious optimism. “I know it goes
against what I’ve read in the paper, but our fall sales and early
outlook for Christmas are both up from last year, and we did well last
year,” he said. “We’ve found that since 9/11, people
are staying home more and getting into hobbies, which serves this business
very well.” Diane Swonk, chief economist for Bank One
Corporation in Chicago, mirrors that optimism. She predicts holiday sales
will increase 4.6 percent overall. “The upside of this lagging economy
for consumers is that they can expect more bargains this holiday season,”
said Swonk. “Given consumers traditional responses
to promotions, I think sales will be higher than these early and gloomy
projections indicate.” If Swonk is looking to confirm her stance
on positive growth, she need only look to the online retail industry,
which is forecasting 2002 holiday sales to grow 17 percent. Amazon.com
and Wal-Mart Store’s online division, as well as many small niche
shops, are enjoying a nourishing retail climate in what has proven to
be a slowly maturing industry. After toying with misguided business models like excessive discounting, or too much focus on the Internet at the expense of the office channel, retailers are making smarter business decisions that enable them to offer value and convenience online without hurting the bottom line. Complete results of this month’s Michigan Retail Index - including data on sales, inventory, prices, promotions and hiring - are available at www.retailers.com/news/retailindex.html. The website includes figures dating back to July 1994.
|
Last
year’s holiday gains averaged 3.3 percent, less than the 6 percent
that stores had projected heading into the season. But only 49 percent
of retailers last year expected to boost sales.
