Retailers of Massachusetts Post-Holiday Survey Shows Season Sales Down 2.6%

Marking Third Straight Year of Decline

Boston, MA – A survey of the 3,100 retail business members of the Retailers Association of Massachusetts (RAM) concluded that 2009 holiday retail sales declined this season 2.6% over the same period in 2008.  The decline was significantly less than the 7% decline that occurred in 2008, but more than the 1% decline in 2007.  The 2.6% decline marks the 3rd straight year holiday sales have decreased in Massachusetts according to the RAM survey.  The 2009 results were in line with the RAM holiday sales projection of a 3% drop for November and December.

"The decline of 2.6% in holiday sales marks the third straight year holiday sales have been down in Massachusetts,” said Jon Hurst, President of the Retailers Association of Massachusetts.  “While our businesses were certainly better prepared for conditions this year than they were in 2008, the holiday season is a critical time and the continued reduction in sales during this period really continues the profitability challenges.”

The holiday sales declines in Massachusetts stores may exceed those in other states, which appear to be flat to slightly up.  The only segment of the retail sector to experience any strong growth over the past several years has been online sales where most shopping is tax free.

“The tax-free internet continues to take sales away from Main Street employers,” said Hurst.  “Unfortunately, that trend will likely continue until Congress fixes the problem and levels the playing field so that all sales receive the same tax treatment.” 

A 25% sales tax increase in Massachusetts passed into law last August may have made a competitive problem even worse for local stores competing with New Hampshire and the Internet.   A poll released today by the Boston Globe showed that 36% of the respondents indicated either having shopped out of state or spent less due to the 2009 sales tax increase.

In fact, the Commonwealth’s Department of Revenue sales tax collection reports for August through November have reflected retail sales drops versus prior year each month since the tax took effect in August, with double digits drops in both August and September.  

Retailers in Massachusetts face a particularly challenging business environment compared to those in other states.  Health care costs for Main Street businesses in the Commonwealth are higher than for their big competitors and for out of state firms due to the prohibition on small business cooperative purchasing.  Massachusetts is one of only two states in the nation that has an outdated and costly food store item pricing requirement still on the books.  In addition, 2009 was the first year since 2003 without a sales tax holiday weekend.

“Massachusetts continues to be a challenging place for retailers to operate,” said Hurst.  “In addition to a sluggish economy, our members are dealing with double digit health insurance premium increases and a very difficult regulatory environment.”  

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