SOURCE: Michigan Retailers Association
Michigan Retailers Says Holiday Margins Reflect Widespread Discounting
LANSING, MI--(Marketwire - December 23, 2008) - More than half of Michigan retailers -- 52 percent -- reduced margins on merchandise at the beginning of the shopping season, a reflection of the heavy discounting that has characterized the entire season. That's according to the latest Michigan Retail Index survey, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.
"Our November survey confirms what we have been seeing throughout the holiday season -- that retailers of all sizes have reduced prices in order to encourage shoppers and spur sales," said James P. Hallan, MRA president and CEO. "We expect the discounting to continue throughout the post-Christmas and early January period."
Final numbers on the holiday season will be available from MRA on January 28. MRA members entered the season projecting, on average, a 1-percent decline in holiday sales compared to last year.
The Michigan Retail Index survey for November found that 23 percent of retailers increased sales over the same month last year, while 65 percent recorded declines and 12 percent saw no change. The results create a seasonally adjusted performance index of 28.8, down from 34.9 in October.
Only 17 percent of retailers said they expect higher sales during December - February over the same period last year, while 58 percent project a decrease and 25 percent no change. That puts the seasonally adjusted outlook index at 34.1, down from 45.1 in October.
The Michigan Retailers Association is the unified voice of retailing in Michigan and the nation's largest state trade association of general merchandise retailers.
Note: William Strauss, Senior Economist and Economic Advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151.
Michigan Retail Index November 2008 results Index figures dating to July 1994 are available at www.retailers.com/news/retailindex.html November Performance Retailers reporting increased, decreased or unchanged sales, inventory, prices, promotions and hiring compared to the same month a year ago (numbers in parentheses indicate October results) % Increased % Decreased % No Change Index* Responses Sales 23 (29) 65 (58) 12 (13) 28.8 (34.9) 169 (162) Inventory 23 (29) 41 (40) 36 (31) 40.1 (40.9) 168 (161) Prices 38 (41) 16 (13) 46 (46) 61.5 (63.1) 166 (162) Promotions 48 (33) 11 (10) 41 (57) 68.5 (58.7) 168 (162) Hiring 2 (6) 29 (29) 69 (65) 36.7 (37.5) 166 (161) Outlook for Next 3 Months Retailers expecting increased, decreased or unchanged sales, inventory, prices, promotions and hiring compared to the same period a year ago (numbers in parentheses indicate October results) % Increased % Decreased % No Change Index* Responses Sales 17 (33) 58 (42) 25 (25) 34.1 (45.1) 167 (163) Inventory 8 (20) 61 (48) 31 (32) 30.8 (40.4) 167 (164) Prices 32 (34) 20 (11) 48 (55) 54.5 (59.6) 166 (164) Promotions 41 (48) 14 (9) 45 (43) 70.3 (65.1) 166 (162) Hiring 2 (5) 28 (24) 70 (71) 40.2 (40.5) 168 (164) November Sales Performance & Outlook for Next 3 Months, by Region (the first number indicates sales performance for the month; the number in parentheses indicates outlook for the next three months.) % Increased % Decreased % No Change North 21 (12) 67 (66) 12 (22) West 28 (24) 59 (52) 13 (24) Central 35 (7) 62 (65) 3 (28) East 11 (5) 72 (67) 17 (28) Southeast 17 (28) 65 (46) 18 (26) Question of the Month Relative to last year, how are your margins on holiday merchandise? Larger Smaller Same 5.0% 52.2% 42.8% *Seasonally adjusted diffusion index. A diffusion index, which is the sum of the percent of respondents indicating increase and half the percent indicating no change, is calculated and then seasonally adjusted using the U.S. Census Bureau's X-11 Seasonal Adjustment procedure. Index values above 50 generally indicate an increase in activity, while values below 50 indicate a decrease.