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Holiday Sales
December numbers confirm holiday shopping was the best in more than a decade for Michigan retailers. Page 3
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New Designs
Credit cards are sporting new looks, and the changes are more than cosmetic for some retailers. Page 5
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Communicate
Retailers must always communicate with consumers, but communication is broader than advertising alone. Page 7
® February 2011 Vol. 36 No. 1
Scholarship program accepts applications now through April 1 Michigan Retailers Association’s annual competition will award at least 34 college scholarships this spring for the 2011-12 academic year. The scholarship program benefits the employees and families of MRA member businesses. It is funded by the Michigan Retailers Foundation, which pays for the awards out of the earnings on foundation assets. Scholarships are $1,000 for students attending public or private four-year universities and colleges, $500 for those attending community college. Recipients are selected for their average to above-average academic performance and extracurricular activities, which can i n c l u d e part-time employment. Financial need is not a consideration. Those eligible to apply are high school seniors and college freshmen, sophomores and juniors who are dependent sons and daughters of owners or full-time employees of MRA’s nearly 5,000 member businesses. Part-time employees who are full-time students may also apply. Applications must be submitted by April 1, 2011, to International Scholarship and Tuition Services, Inc., of Nashville, Tennessee, which coordinates the application and selection Continued on page 4
The official publication of the Michigan Retailers Association
www.retailers.com
Item pricing reform moves forward Michigan retailers would gain pricemarking flexibility and consumers would enjoy an improved shopping experience under legislation being pushed by a coalition formed by
Michigan Retailers Association. The proposed Shopping Reform and Modernization Act has gathered strong support from Governor Rick Snyder, legislators and newspaper
‘How-to’ webinar series slated for March – June How to deal with employee theft, how to get the most sales from your marketing dollars, how to get control of your inventory, and how to run your business using key financial numbers are the topics for a free series of monthly webinars starting March 24 and sponsored by Michigan Retailers Association. MRA is teaming up with state retail associations in New York and South Dakota to be able to offer the four-webinar series. The online seminars are a member benefit and there is no cost to participate.
Registration information will be mailed and emailed to MRA members. Or you can enroll online at www.retailers.com. You can sign up for all four or only one, two or three. All the webinars will be held at 9:30 a.m. Eastern time.
editors across the state, signaling that this could be the year retailers achieve the long-sought goal of item pricing reform. “Michigan’s 35-year-old item pricing law is the worst in the nation,” said MRA President and CEO James P. Hallan. “If Michigan is going to move forward and reinvent its economy, it can no longer stick out like a sore thumb by discouraging business investment, jobs and innovation.” Modern technology House Bill 4158, sponsored by Rep. Lisa Posthumus Lyons (R-Alto) and backed by the broad-based Coalition for Retail Pricing Modernization, would bring the state’s antiquated and costly item pricing law into the 21st Century by allowing retailers to use modern technology to communicate prices of general merchandise and groceries to shoppers. Current law requires that a price sticker or tag be affixed to virtually every item in a store, a costly mandate that discourages investment in modern pricing technologies. “Michigan’s current item pricing law was enacted in 1976. It is older than I am, and it forces Michigan retailers to use pricing technology that became obsolete when the briefcase phone was considered the wave of the future,” said Rep. Lyons, a first-year lawmaker, shopper and mother of four.
THE SCHEDULE: March 24 Dealing with Stealing Employment law expert Chris Hoyme will explain what you can do to deal with the serious threat to your bottom line from employee theft. You will learn employer rights and restrictions when dealing with employee theft, including legally compliant investigation steps when an employee is suspected of internal theft; appropriate discipline; avoiding liability; and other do’s and don’ts.
$2.2 billion cost “Worse,” she continued, “according to a recent study by the Anderson Economic Group, the item pricing law results conservatively in a $2.2-billion hidden tax on Michigan’s economy each year…By cutting red tape and reforming Michigan’s pricing laws, we will finally provide retailers with the flexibility they need to deliver the most competitive prices, most convenient shopping experience, and the best technology to Michigan consumers.” MRA began to put together the coalition last fall, Hallan said, in advance of the huge change in leadership taking place January 1 throughout state government. Former Governor Jennifer Granholm, who was prevented by
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2
Michigan Retailer
Leadership matters by James P. Hallan, MRA President and Chief Executive Officer To mark MRA’s 70th anniversary, we rounded up photos of all of the Association’s past board chairmen and chairwomen. Then we put them on permanent display on the walls of our headquarters’ front lobby and up the stairs leading to our conference room. It’s an impressive group dating back to 1940. The photos serve as an excellent reminder every single day that good leadership matters — not just to MRA, but to every business, organization and government on this planet. Good leadership is the difference between an excellent organization and a mediocre or failed one. MRA has been blessed with wise and dedicated boards of directors. Their oversight and guidance to the professional management team have helped MRA become the successful organization we are today. It is why we have grown to become the nation’s largest state trade association of general merchandise retailers. It is why we have been able to serve as a trusted business resource for thousands upon thousands of companies. I mention that because Michigan has an entirely new group of state government leaders after the elections of last November. The new chief executive, of course, is Governor Rick Snyder. We also have new legislative leaders — Senate Majority Leader Randy Richardville and House Speaker Jase Bolger — dozens of new legislators and new Attorney General Bill Schuette, among the many dozens of new officials. Gov. Snyder has been in office for little more than a month now, but he’s already demonstrating that he understands leadership. He knows it’s more important to rally people to focus on the future and solve the toughest problems rather than debate whose fault it is that we’re in the mess we’re in. Retail By Norm Feuti
Perhaps Exhibit A that he “gets it” is that he singled out, in his State of the State Address, Michigan’s antiquated item pricing law as “Exhibit A” on the list of burdensome and unnecessary regulations our state must modernize or repeal in order to be competitive again. For the sad fact is that Michigan has the most restrictive law in the nation, a law that costs retailers and consumers more than $2 billion a year (according to an independent study MRA commissioned). That’s an economic load no other state has to carry. Which is why we heartily support Gov. Snyder’s call for reform — and his desire to do it right now, no more delay — of the 1976 law that was enacted back when scanning technology was new and unfamiliar. The
governor understands we live in a different world today, a world in which scanners are proven and familiar and electronic technology is part of everyone’s daily life in ways we couldn’t imagine 35 years ago. MRA has been working to fix the item pricing law for many years. This year, because of new leadership in state government — from the governor right down to freshman lawmaker Lisa Posthumus Lyons, the sponsor of the Shopping Reform and Modernization Act (House Bill 4158) — we believe reform finally has a strong chance of being accomplished. This new willingness to take on Michigan’s problems head-on is not only vital, it’s energizing for our state. It also proves, once again, that leadership matters.
Item pricing reform moves forward Continued from page 1
term limits from running for re-election, opposed item pricing reform and blocked earlier attempts at modernization. Gov. Snyder, however, gave reform a big boost in his State of the State Address in January when he mentioned item pricing as “Exhibit A” on the list The Shopping Reform and Modernization Act (H.B. 4158) will: • Create a climate that attracts new jobs, investment and innovation • Improve the shopping experience for consumers • End a $2.2 billion hidden load on Michigan’s economy • Include popular consumer protections such as “bounty” and “rain check” provisions • Reinforce Attorney General oversight and tough penalties.
of unnecessary regulations that need to be scrapped or modernized for Michigan to improve its economy. “We have welcomed the governor’s support with open arms and pledged to do all we can to help achieve this critical reform,” said Hallan. In addition: • It will not mean consumers won’t know the price of an item. The legislation requires retailers to clearly communicate prices • It will not prevent retailers from continuing to item price if they think that’s a good marketing strategy • It will not result in lost retail jobs in Michigan’s economy, according to the Anderson Economic Group study.
www.retailers.com
Michigan Retailers Association Board of Directors: Barb Stein
Chair Great Northern Trading Co., Rockford
James P. Hallan
President and CEO Michigan Retailers Association
Thomas Ungrodt
Vice Chair Ideation, Ann Arbor
Peter R. Sobelton
Treasurer Sundries Plus, Birmingham
Jean Sarasin
Secretary Michigan Retailers Association
Joe Swanson Past Chair Target Corp.
Dan Marshall
Marshall Music Company, Lansing
Orin Mazzoni, Jr.
Orin Jewelers, Garden City
Joseph McCurry Dovetail Alliance
Larry Mullins
Brandon Tire & Battery, Ortonville
R.D. (Dan) Musser III
Grand Hotel, Mackinac Island
D. Larry Sherman
Sherman Investments, Birmingham
John Smythe Lansing
James Walsh
Meijer, Inc., Grand Rapids
Michigan Retailers Services, Inc. Board of Directors: Becky Beauchine Becky Beauchine Kulka Diamonds and Fine Jewelry, Okemos
Brian Ducharme AT&T
James P. Hallan Thomas B. Scott Publisher
Editor
Pat Kerwin
Design Manager
Publication Office: 603 South Washington Avenue Lansing, MI 48933 517.372.5656 or 800.366.3699 Fax: 517.372.1303 www.retailers.com www.mallofmichigan.com
Subscriptions:
Michigan Retailer (USPS 345-780, ISSN 0889-0439) is published in February, April, June, August, October and December for $20 per year by Michigan Retailers Association, 603 South Washington Ave., Lansing, MI 48933. Subscription fees are automatically included in the Michigan Retailers Asociation membership dues. Periodical postage paid at Lansing, Michigan. POSTMASTER: Send address changes to 603 South Washington Ave., Lansing, MI 48933. The Michigan Retailer may be recycled with other white office paper.
February 2011
3
HOW’S BUSINESS
Holiday season was best in more than decade 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.
Current
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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 out-
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look index stood at 57.1. Sales tax receipts totaled $590.5 million in December, up 4.7 percent from the year-ago level. Complete results of this month’s Michigan Retail Index—including data on sales, inventory, prices, promotions and hiring—are available at www.retailers. com/news/retailindex.html. The website includes figures dating back to July 1994.
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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 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.
Seasonally adjusted diffusion index, calculated by adding the percent of respondents indicating increased sales and half the percent indicating no change, and then seasonally adjusting the result 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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Be sure to complete your online survey each month!
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Michigan Retailer
www.retailers.com
Webinar series to begin in March Continued from page 1
April 20 Explode Your Sales! How to Get the Maximum Bang from Your Marketing Bucks Retail trainer Bob Negen will demonstrate exactly how to dramatically increase customer loyalty and foot traffic to turbocharge sales. You’ll learn the secrets of an organized, consistent system to generate significant sales increases. May 17 Run Your Business by the Numbers Entrepreneur and author Lisbeth Caladrino will provide the solution to the situation when your financial statement looks strong but you can’t seem to get ahead. You’ll learn how to take control of your business’ finances from pointers to improve your bottom line by decreasing operating costs while increasing sales and profit margins. June 22 Control Your Inventory (Don’t Let it Control You!) Retail management expert Susan Negen will show you how to reduce your markdowns to raise margins and increase profits. She’ll also help you make that POS system you bought really pay for itself. You’ll learn what it takes to finally get control of your inventory and open up many new and profitable opportunities. THE PRESENTERS: Chris Hoyme is a partner in the Omaha, Nebraska, office of Jackson Lewis LLP, where he serves as the litigation manager. He represents management nationwide in all facets of employment law. He has successfully defended employers in state and federal courts and various local, state and federal administrative agencies, including Department of Labor investigations and audits, including wage, hour and FMLA compliance. He also routinely advises management on issues surrounding FMLA, ADA, WARN Act, Title VII, FLSA, workers’ compensation, NLRA, the Fair Credit Reporting Act, privacy issues, and state law, as well as counsels employers on proactive strategies to avoid litigation. Bob Negen, of Grand Haven, is the founder of the Mackinaw Kite Co., a
chain of specialty toy and kite shops. When Bob opened his store he was only 23 years old. Over the next 20 years Bob developed the critical business skills he needed to turn the Mackinaw Kite Co.’s first pitiful annual sales of $17,000 into a successful multi-million-dollar business. In 1999, Bob formed WhizBang! Training with his wife, Susan Negen, an accomplished retailer in her own right. Bob now shares his hard-won knowledge so that other retail storeowners can more quickly and easily turn their passion into profit. Lisbeth Calandrino started her first business at nine years old after learning the basics working with her grandfather and dad. In 1972 she joined up with two partners and parlayed $5,000 into a chain of furniture and carpet stores in New York and Massachusetts. She was the managing partner in two of these stores and was responsible for hiring, training, merchandising and pricing. She sold her interest in 1990 and went off to consult with small businesses and create an international flooring publication where she is now associate publisher. She recently published her book Red Hot Customer Service as a tribute to her dad. Susan Negen began her retail career at large department stores. She held a number of positions at Lord and Taylor, Bloomingdale’s and Macy’s California, including department manager, buyer and group sales manager. Her experience at these large firms has given her an extensive background in all aspects of retail management. After joining the Mackinaw Kite Co. as a store manager and later as director of merchandising, she was able to transfer her acquired skills to the specialty retail environment. Susan and her husband, Bob, co-authored the bestselling book Marketing Your Retail Store in the Internet Age and also recently completed the Retail Mastery System. This system is the most comprehensive training resource ever created for independent retailers and teaches all 11 critical business skills that store owners need to be successful.
Scholarship program accepts applications Continued from page 1
process for MRA and many other associations and companies. Students are encouraged to complete the application process online at MRA’s website, www.retailers.com. Students may also contact MRA’s Laura Schilling at 800.366.3699 or lschilling@retailers.com by March 15
to request an application by mail or to check eligibility. Recipients are selected by an independent panel of educators chosen by International Scholarship and Tuition Services. The MRA program has provided 286 scholarships to students since 1999.
February 2011
5
RETAIL TECHNOLOGY NEWS
New look for credit cards more than a fancy facelift John Mayleben, MRA’s senior vice president, technology and product development, writes a regular column on retail technology. Contact jmayleben@retailers.com. What is happening to credit and debit cards? After many y e a r s o f f o rc ing banks to adhere to standard formats for designing cards, the card brands (Visa, MasterCard) have loosened up on their requirements. This has allowed issuing banks to get a little more creative in the way they design the “look” of a card. If you accept cards though, the changes can be more than just cosmetic. First, Visa now allows a card to be printed vertically (portrait) instead of the more traditional horizontal (landscape) orientation. While this by itself is cause for little more than a minor discussion about design, another change has a significant impact on merchants who accept cards. That’s because Visa also allows an issuing bank to laser print the cardholder name and information on the front of the card. If you, as a merchant, use an old style imprinter (aka, “knuckle buster” or “zip zap” machine), you will not be able to accept these cards without handwriting the card information. Similarly, if the magnetic stripe is damaged and you have to hand key the card information into your electronic terminal, you will not be able to complete the manual imprinter slip properly. While you will still be able to get an authorization code in either of these two scenarios, the failure to collect an “imprint” of the card information opens you up to a possible chargeback, which you will lose every time. Since these non-embossed cards do not allow for manual imprinting, businesses without terminals, or with cards that can’t be swiped, should ask the consumer for another form of payment. In these cases the cardholder will probably not understand why the card is being refused. The cardholder should be directed to the issuing bank to get a replacement card. The bank’s phone number is located on the back of the card. The other change that has been happening slowly over the last few years is the migration of the hologram to the back of the card. The
hologram is an important fraud protection device on each card. In the past, the card brand hologram was located along the line of the account number so that the number was embossed right through the hologram as a way to deter counterfeiting of the cards. With the changes noted above, this is no longer needed, but the card hologram still ser ves as a way to make counterfeiting harder. As always, businesses that process through MRA should call our customer service department with any questions brought on by the new-look cards.
Offer Gift Cards, Increase Sales.
800.366.3699
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Michigan Retailer
www.retailers.com
LOTTERY
Lucky Lines gets new look by M. Scott Bowen, Commissioner
An all-new Lucky Lines game is scheduled to go on sale February 27. This improved version of the game will create m o re w i n n e r s and redistribute prize money to low-tier prizes that are awarded most frequently. Some notable changes include: • New Prize Level – Players can win double their money back when none of the Player’s Numbers is touching on the Player’s Game Board. For example, a player with a $2 wager and zero numbers together on the game board wins $4. The additional prize level also improves a player’s overall odds of winning to 1:4.37 • Fewer Wager Amounts – The number of available wager amounts has been reduced to four. The most popular wager options of $1, $2, $3 and $5 will remain, while the $4, $10 and $20 options are eliminated. • Higher Match-Three Prizes – When a player places a $1 wager and match-
es three numbers, he or she will win $1; a $2 match-three wager will win $3; a $3 match-three wager wins $5; and a $5 match-three wager wins $9. You should have received point-ofsale materials announcing the change and new bet slips. If you haven’t received them, make sure to contact your Lottery district sales representative. Second Chance Several new instant games are featuring great second chance contests. Cash Tournament™ is a $5 game that launched on February 14 and features a second chance contest to award one winner a $250,000 cash prize! Also a $5 game, Single Double Triple Play Bingo™, launches on February 28 and features a second chance contest to award five winners with $500 worth of Single Double Triple Play Bingo™ tickets. Over 94 cents of every dollar spent on Lottery tickets is returned to the state in the form of contributions to the state School Aid Fund, prizes to players and commissions to retailers. In fiscal year 2010, the contribution to schools was $701.3 million.
February 2011
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Retailers must ‘communicate, communicate’ Seventh in a series on “Managed Common Sense” by Steve Flaster In the retailing text for my course at MSU, Sam Walton of Wal-Mar t fame makes the following memorable comment concerning how a good retailer must operate: “Communicate, Communicate, Communicate. What good is figuring out a better way to sell beach towels if you aren’t going to tell everybody about it.” What impresses me most about the comment is that Walton uses the word “communicate” instead of “advertise.” And he is right, because retailers must always communicate, but they don’t necessarily have to advertise. Communication is a much bigger issue than advertising and involves how retailers send their message to all the parties that affect store success. Advertising is one important form of communication, but it is not the only one. In our consulting organization, we can show clients more than 50 different ways to communicate. Smaller stores without an advertising budget
can effectively communicate in other ways, provided they understand their target market and its needs. In the end, the most effective form of communication is not necessarily the most expensive, but instead the one that does the best job of getting the needed message to target customers and builds business. Understanding your task Many retailers responded to the recent recession by thinking they had to advertise more. In actuality, what they had to do was communicate more — and more effectively. I was str uck by a parochial school system in Michigan that was obviously experiencing declining enrollments. The school officials began advertising on prime-time television, and I believe this was probably an expensive error. If they had thought about communicating instead of advertising, they would have realized that the most effective route was to send teachers and school officials to Sunday church services, where they would find their target market. That way they would not be paying for wasted circulation and, instead, could form an effective communi-
cation network with the churches, which would surely support the school’s objectives. The cost would be very little and could be the most effective form of communication. Recognizing opportunities Very often, stores do not recognize the many ways in which they can communicate their message. If done properly, effective communication can be a residual benefit of other store activities. It all starts with a store name. Every store must pick a name, but not every store wisely chooses a name that communicates its story and competitive edge. Two of my favorite store names right now are Bras That Fit and Signs By Tomorrow. These names are short, understandable, memorable and communicate something that is important to the customer. Every time the customer passes the store and every time the store uses its name, the customer gets the message. Packaging Every store must provide a package for its products, but the package is also a great communication opportunity.
Just a few weeks ago in New York, I was attracted to an upscale pet store called The Canine Country Club. The name certainly suggested a great place to board or groom your pets (as well as indulge them). I selected a very handsome new coat for Renoir (my standard poodle) but was thoroughly disgusted when the store put the coat in the cheapest generic plastic bag with not even the store name on it. I wondered if the store didn’t want me to remember where I bought the coat and why it wasted the opportunity to have me promote the name whenever I carried the package. Every retailer should make a list of all the ways in which his or her store can and does communicate to customers, and to make sure that each way is properly utilized and works in concert with the others. Of course, you must also recognize the message you want to communicate and what your claim to fame is, which will be the subject of my next blog. Steve Flaster is a retailer, instructor of retailing and marketing at Michigan State University, speaker and consultant. To reach him at Yes For Success Retail Consulting, call 517.655.6979 or e-mail srflaster@gmail.com.
Lottery Ad
You deserve a little credit, too. Because of your hard work selling Lottery tickets, last year $701 million was contributed to the state School Aid Fund — a good thing for our kids. You also helped players take home $1.38 billion in prizes, making good things happen for local communities. And because 10,000 local businesses earned $170 million in commissions last year, you’re making good things happen for yourself. So thanks for all the work you do and all the good things you help make happen for Michigan. If you bet more than you can afford to lose, you’ve got a problem. Call 1-800-270-7117 for confidential help.