Retailers to lower their outlook for 1st Quarter

Michigan retailers are lowering their expectations for the 1st Quarter of 2003, following a dismal holiday season.

About a third of stores (32 percent) expect to increase sales over the same period last year, while another 32 percent expect no change and 36 expect sales to decrease, according to the Michigan Retail Index, a joint project of the Michigan Retailers Association (MRA) and Federal Reserve Bank of Chicago. The results create a seasonally adjusted outlook index of 61.2—down from 69.3 in November.

On average, retailers’ holiday sales decreased 3.2 percent from the previous year, according to the Index. It was the first time since the Index was established in 1994 that holiday sales fell from the previous year. It was also the third consecutive holiday season with poor results. Retailers had gone into the ’02 season forecasting increases averaging 3.7 percent—also the lowest on record.

For December, the Index survey of MRA members found that 28 percent increased sales from a year ago, while 59 percent experienced declines and 13 percent reported no change. The results create a seasonally adjusted performance index of 33.1, down from 36.1 in November.

“The holiday figures are disappointing, but in line with national figures,” said Larry Meyer, MRA chairman and CEO. “It certainly wasn’t the result of what stores did or didn’t do. Retailers worked harder than ever to sell merchandise, but there were still too many economic uncertainties all around us.”

Kathy Lyons, owner of Accents in Traverse City, agrees that retailers did all they could do to be ready for the holiday season. But she says, the economy just wasn’t strong enough to stimulate shoppers.

“My sales were horrid and so were those of a lot of other retailers in this area,” said Lyons. “I don’t know whether to blame the economy, 9-11 or the threat of war, but I know one thing—my sales this past holiday season were the lowest they have ever been.”

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/news.html. The website includes figures dating back to July 1994.

Return to January/February Michigan Retailer Page one • MRA home