MA Holiday Sales Disappoint with 1% Drop

January 9, 2017  By Jon Hurst

Despite seeing consumer confidence levels unmatched for the last 15 years, retail sales in Massachusetts dropped 1% among the 4000 members of the Retailers Association of Massachusetts this holiday season (Nov-Dec).  The RAM survey exclusively measures small, locally based sellers, and does not reflect either national chains or online sellers.  RAM had previously projected a 3.9% increase over the prior year.  The disparity in the projection coupled with the strong consumer confidence levels raises the question whether consumers truly spent less this holiday season, or sent more of their dollars out of state to online sellers.

The slight reduction in sales breaks a string of 6 years of sales growth (’10-’15), which followed 3 years of sales reductions (’07-’09).  Although national figures will not be released until the end of this week, some national measures indicate another double digit increase for internet sales this holiday season, with as much as 18% of all purchases for gift giving going online.  The last minute shoppers this year may have also felt more confident in online shipping performance reliability than in prior years.

The concern for local stores is the fact that sales for most may be flat or down, yet costs are up—in some cases significantly.  From unfair application of the sales tax, to state mandated labor costs, rising health insurance premiums, commercial property taxes, and rents, the trends are truly troubling.    

The Retailers Association of Massachusetts believes it is time to have an important discussion of what we can do to save our Main Streets, our local employers, our jobs, and tax revenue as more consumer dollars continue to be attracted out of state.   Following are the central issues we must collectively focus and act on in 2017.

Action Steps to Save Main Street Massachusetts:

  1. Establish more effective and coordinated messaging to our consumers reminding them that they represent 70% of the economy, and it is increasingly important that they think about where their dollars are going.  They should be reminded throughout the year that they should #BuyInMA and shop like jobs depend on it, because they do.  Are their consumer dollars staying local, or are they going out of state to internet vendors with no stake in our Main Streets or our state’s economy?  That messaging should come in a coordinated fashion from the industry, our communities and from the state.
  2. End state government imposed discrimination which raises the price of goods sold from local merchants versus those out of state companies engaging in mobile commerce.  The most obvious form of state government discrimination against local stores is the application of the 6.25% sales tax, which is not only easily avoided by going to NH, but increasingly by countless sellers marketing directly to our consumers on their smartphones.  The sales tax is not only regressive, it is completely avoidable.  Reducing the sales tax level and/or creating a permanent Sales Tax Holiday is an investment we can’t afford to not make.  The other form of state government imposed discrimination is the only in Massachusetts antiquated Retail Blue Laws, which increases the per employee cost for a local store by $4800 per year vs online sellers and stores in 48 states, thus putting Main Street in the no win dilemma of raising prices or lowering service quality—both of which mark the beginning of the end of that small business.  In the age of the smartphone, the Commonwealth simply should not be stacking the deck against the home team, and clearly they unwittingly are hurting local employers by incenting our consumers to send billions of dollar out of our economy to the lowest cost seller.
  3. Educate Main Street merchants on affordable mobile commerce options for promoting their businesses and for serving their customers.  A RAM survey last summer found that 94% of our members consider online sellers to be their direct competitors, yet only 42% of them were themselves online.  Many small businesses must catch up very quickly to what is happening with the consumer and with larger retail companies.


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