Retailers forecast stronger holiday shopping

LANSING – In its most positive forecast since 2012, Michigan’s retail industry sees a stronger holiday shopping season ahead.

Two of every three Michigan retailers expect to increase sales over last year’s holiday season, and the average projected gain is 2.0 percent, according to the Michigan Retail Index, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago. The Chicago region includes the Federal Reserve’s Detroit branch.

“Improved economic conditions point to improved holiday sales,” said James P. Hallan, MRA president and CEO. “Unemployment is down, gasoline prices are down and consumer confidence is up.”

Michigan’s unemployment rate in September was 5.0 percent, down from 6.7 percent a year ago. Gasoline prices on October 1 were down 26 percent from a year ago, according to the AAA Fuel Report, dropping from $3.36 to $2.48 a gallon. The University of Michigan’s latest survey of consumer sentiment shows confidence is up 6 percent from a year ago.

Hallan said Michigan’s new Main Street Fairness law also will help boost sales by removing an incentive for consumers to buy online from out-of-state companies. Hallan was the strongest advocate for the new law, which took effect October 1 and requires many out-of-state online retailers, including Amazon, to now collect sales tax on their Michigan sales.

“This is the first holiday season for Main Street Fairness, and we expect it to help cut down on ‘showrooming.’ Michigan retailers now have a more level playing field on which to compete,” he said.

“Showrooming” is the term applied to shoppers who look at and handle merchandise in a store and then order it online from an out-of-state merchant that doesn’t collect sales tax.

This year’s survey found that 67 percent expect to increase holiday sales, 24 percent anticipate sales the same as last year and 9 percent expect sales to decline. The largest group, 39 percent, expects sales to increase by 5 percent or less.

Last year, 63 percent of retailers expected to increase holiday sales, with gains averaging 1.6 percent. In a post-holiday survey, 52 percent of retailers reported increases, with gains averaging 1.1 percent.

In 2012, Michigan was shaking off The Great Recession in a big way. That year, 75 percent of retailers forecast gains, and the average projected increase was 13.4 percent – the biggest jump since the Michigan Retail Index was established in 1994.

The National Retail Federation predicts holiday spending across the nation will rise 3.7 percent to $630.5 billion this year. The International Council of Shopping Centers forecasts a 3.3 percent increase.

Note: William Strauss, senior economist and economic advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151.