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Michigan Retailers See Positives for Holiday Shopping

Despite economic uncertainty and generally gloomy national predictions, more than a third of Michigan retailers expect to increase sales during the holiday season and throughout the 4th Quarter, according to the Michigan Retail Index, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.

"Reports of the holidays' demise are greatly exaggerated," said James P. Hallan, MRA president and CEO. "Far from it, our retailers see a number of positive signs for the holidays."

Leading the list of positives, Hallan said, are sharply lower gasoline prices. The current average cost of a gallon of gasoline in Michigan has dropped 24 percent from its high in June and is several cents less than it was last November.

In addition, many retailers are offering lines of less expensive merchandise to accommodate consumers' budgets, there's a growing sense of the importance of shopping locally, and holiday shopping can offer some relief to the many who have been holding back on spending much of this year or have been consumed by the presidential election, according to Hallan.

Thirty-seven percent of retailers responding to the MRA survey expect higher sales during October - December over the same period last year, the monthly poll of MRA members found. That puts the seasonally adjusted outlook index at 46.3, down from 53.4 in August. The average projected sales change for the holidays is -1.2 percent

The September Index showed 28 percent of retailers increased sales over the same month last year, while 59 percent recorded declines and 13 percent saw no change. The results create a seasonally adjusted performance index of 40.7, up slightly from 40.0 in August.

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
September 2008 results
Index figures dating to July 1994 are available at
www.retailers.com/news/retailindex.html

September 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 August results)
             % Increased  % Decreased  % No Change  Index*       Responses
Sales        28 (32)      59 (52)      13 (16)      40.7 (40.0)  124 (150)
Inventory    28 (33)      41 (36)      31 (31)      42.8 (44.7)  123 (149)
Prices       47 (53)      10 ( 7)      43 (40)      69.6 (73.4)  123 (149)
Promotions   34 (38)      14 ( 9)      52 (53)      60.9 (64.8)  123 (149)
Hiring        6 (10)      26 (21)      68 (69)      41.1 (44.5)  121 (148)


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 August results)
             % Increased  % Decreased  % No Change  Index*       Responses
Sales        37 (40)      45 (32)      18 (28)      46.3 (53.4)  124 (151)
Inventory    22 (34)      44 (34)      34 (32)      40.8 (45.5)  123 (149)
Prices       47 (46)      10 ( 5)      43 (49)      70.2 (71.4)  122 (150)
Promotions   52 (57)      10 ( 2)      38 (41)      69.3 (73.5)  123 (150)
Hiring       10 (12)      18 (14)      72 (74)      45.7 (47.8)  120 (148)


September 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        15 (11)      74 (81)      11 ( 8)
West         25 (35)      57 (34)      18 (31)
Central      35 (53)      47 (29)      18 (18)
East         33 (34)      50 (58)      17 ( 8)
Southeast    36 (53)      58 (30)      6  (17)


Question of the Month
What is your current expectation for your percentage sales growth or
decline over last year for the holiday season?
                Average
                - 1.2%

*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.