SOURCE: Michigan Retailers Association

Michigan Retailers Association

January 26, 2011 14:01 ET

Michigan Retailers Upbeat to Start 2011 After Best Holiday Season in More Than a Decade

LANSING, MI--(Marketwire - January 26, 2011) - The latest Michigan Retail Index survey confirms what many believed: the 2010 holiday shopping season was the best in more than a decade for Michigan retailers.

More than three out of four retailers (76 percent) reported sales gains over the previous year, with more than half reporting increases greater than 5 percent. The average gain for survey respondents was 11 percent, highest since 1994, the first year of the survey conducted by Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.

Retailers remain upbeat coming off the holiday season. Their short-term sales projections rose for the fourth consecutive month.

"The season started strong, posting excellent numbers in November and good numbers in December," said James P. Hallan, MRA president and chief executive officer. "This was the year shoppers' spending exceeded even retailers' optimistic projections."

Retailers had gone into the season projecting sales increases averaging 6 percent, a figure some thought was overly optimistic. It was retailers' highest forecast since 2004.

The Michigan Retail Index for December-only found that 48 percent of retailers increased sales over the same month last year, while 34 percent recorded declines and 18 percent saw no change. The results create a seasonally adjusted performance index of 61.9, down from 68.1 in November. It was the best December since 1998. A year ago December, the sales performance index was 47.8.

Index values above 50 generally indicate an increase in overall retail activity.

Looking forward, 48 percent of retailers expect sales during the First Quarter to increase over the same period last year, while 14 percent project a decrease and 38 percent no change. That puts the seasonally adjusted outlook index at 77.2, up from 73.2 in November and 67.4 in October. A year ago December, the sales outlook index stood at 57.1.

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
December 2010 results
Index figures dating to July 1994 are available at www.retailers.com/news/retailindex.html

December 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 November results)

  % Increased % Decreased % No Change Index* Responses
Sales 48 (54) 34 (26) 18 (20) 61.9 (68.1) 128 (76)
Inventory 28 (37) 28 (26) 44 (37) 57.0 (50.7) 128 (75)
Prices 24 (25)   9 (11) 67 (64) 58.8 (57.7) 128 (75)
Promotions 35 (47)   7 (4) 58 (49) 61.3 (68.3) 128 (75)
Hiring   8 (10) 11 (13) 81 (77) 50.1 (50.6) 128 (75)

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 November results)

  % Increased % Decreased % No Change Index* Responses
Sales 48 (40) 14 (17) 38 (43) 77.2 (73.2) 130 (77)
Inventory 21 (20) 27 (31) 52 (49) 55.0 (55.9) 129 (75)
Prices 30 (26)    5 (8) 65 (66) 63.0 (58.4) 129 (74)
Promotions 34 (42)    4 (7) 62 (51) 68.3 (73.3) 128 (75)
Hiring    7 (8)   8 (12) 85 (80) 54.5 (53.2) 128 (74)

December 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 52 (37) 30 (7) 18 (56)
West 56 (57) 25 (16) 19 (27)
Central 53 (39) 41 (11) 6 (50)
East 30 (40) 40 (0) 30 (60)
Southeast 39 (52) 43 (27) 18 (21)

Question of the Month
What was your sales increase or decrease, compared to last year, for the holiday season?

Average More Detail        
+ 11% > +5% +0.1% to +5% 0 -0.1% to -5% ≥ -5%
  56% 20% 11% 6% 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.

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