State’s retailers expect smaller holiday gains

Most Michigan retailers are projecting sales gains for the upcoming holiday shopping season, but the increases are some of the smallest on record, according to the Michigan Retail Index, a joint project of the Michigan Retailers Association (MRA) and Federal Reserve Bank of Chicago.

Their forecasts follow disappointing September sales, after four months of generally positive performance by the state’s overall retail industry.

Fifty-two percent of retailers see their holiday sales rising, with overall growth averaging 2.2 per cent above last year. That’s the most subdued prediction since the Index was established in 1994. Last year’s forecast was 4.5 percent, although less than 40 percent of retailers hit it.

The National Retail Federation is forecasting modest holiday gains across the U.S. It predicts sales will rise 4 percent—the smallest increase since 2002’s 1.3 percent.

“Fall sales have been hurt by warm weather, uncertainty over auto contract negotiations and state budget talks, and general economic challenges,” said MRA Chairman and CEO Larry Meyer. “But given the momentum of recent months, most retailers are looking forward to a positive, although subdued, holiday season.”

The Michigan Retail Index for September showed that 35 percent increased sales over the same month last year, while 47 percent recorded declines and 16 percent saw no change. The results create a seasonally adjusted performance index of 46.5, down from 52.4 in August.

Looking ahead, 52 percent believe their sales will increase for the 4th Quarter over the same period last year, while 27 percent say sales will decline and 17 percent expect no change. The results create a seasonally adjusted outlook index of 62.2, down from 65.2 in August.

Sales tax receipts totaled $505.9 million in September, which was down a slight 0.4 percent from last year’s level. So far in FY 2006-07, sales tax revenue is down 1.3 percent, which is very close to the 1.1 percent decline estimated for this fiscal year.

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.

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