Retailers Expect Slow Start to 2009

LANSING, MI--(Marketwire - January 28, 2009) - Two of every five Michigan retailers expect their 1st Quarter sales to be the same or better than last year, following a holiday shopping season of mixed results.

According to the latest Michigan Retail Index survey, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago, 20 percent expect to increase sales compared to the same period last year, 21 expect no change and 59 percent expect sales to decline.

For the holidays, a better than expected 44.6 percent posted sales gains, most of those above a 5-percent increase. However, a larger group -- 47.6 percent -- suffered sales decreases, most of those greater than 5 percent.

"Considering all the economic hurdles retailers were facing, it's a pleasant surprise that so many were able to overcome those obstacles and ring up higher sales," said James P. Hallan, MRA president and CEO. "However, no one is losing sight of the fact that most retailers posted significant losses or no gains. Michigan's and the nation's economic problems remain, and the first part of the new year will continue to be a struggle."

The Michigan Retail Index survey for December found that 23 percent of retailers increased sales over the same month last year, while 66 percent recorded declines and 11 percent saw no change. The results create a seasonally adjusted performance index of 30.4, up from 28.8 in November and the second worst month of the year.

Looking ahead, 20 percent of retailers said they expect higher sales during January - March over the same period last year, while 59 percent project a decrease and 21 percent no change. That puts the seasonally adjusted outlook index at 36.6, up from 34.1 in November and also the year's second worst month.

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

December 2008 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        23 (23)      66 (65)       11 (12)      30.4 (28.8)  135 (169)
Inventory    15 (23)      54 (41)       31 (36)      35.7 (40.1)  135 (168)
Prices       35 (38)      19 (16)       46 (46)      58.9 (61.5)  134 (166)
Promotions   39 (48)      11 (11)       50 (41)      61.9 (68.5)  135 (168)
Hiring        5  (2)      27 (29)       68 (69)      39.1 (36.7)  135 (166)

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        20 (17)      59 (58)       21 (25)      36.6 (34.1)  135 (167)
Inventory    13  (8)      58 (61)       29 (31)      32.8 (30.8)  135 (167)
Prices       37 (32)      14 (20)       49 (48)      61.8 (54.5)  134 (166)
Promotions   43 (41)       9 (14)       48 (45)      72.6 (70.3)  135 (166)
Hiring        3  (2)      27 (28)       70 (70)      41.0 (40.2)  135 (168)

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      22 (15)         59 (63)           19 (22)
West       20 (32)         76 (56)            4 (12)
Central    19 (24)         76 (52)            5 (24)
East       43  (8)         36 (69)           21 (23)
Southeast  24 (19)         66 (55)           10 (26)

Question of the Month

For sales this past holiday season, what was the percentage increase or decrease from the previous season?

> 5% gain  Less than or equal to    0%    Less than or equal to  > 5% loss
           5% gain                        5% loss

27.4%      17.2%                    7.8%  11.7%                  35.9%

*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.

Contact Information: Contact: Tom Scott 517.372.5656