February 2013 Michigan Retailer by Michigan Retailers Association

No Sales Tax Increase

We need to fix our roads, but a sales tax increase will harm Michigan businesses, kill jobs and damage our economy. Page 2

Holiday Mix

Sales fell off sharply in December, but most retailers still reported gains for the entire holiday shopping season. Page 3

Credit Card Surcharges

You can now add surcharges to credit card transactions, but you should think long and hard before doing it. Page 7

® February 2013 Vol. 38 No. 1

Court says retailers can add surcharges to credit card buys (Also see Page 7) Businesses that accept credit card payments are now able to add a surcharge to customers’ bills as a way to recover some of the costs of processing those transactions, although few, if any, are expected to start surcharging. That option became available to retailers on January 27 of this year under the terms of a landmark classaction settlement of an anti-trust lawsuit brought by merchants against Visa, MasterCard and payment card issuing banks. A federal judge gave preliminary approval on November 9 last year to the proposed $7.2 billion settlement, even though several major retailers came out against the agreement. Retailers considering adding a surcharge to their customers’ credit card transactions (debit card payment are exempt from surcharges) must meet several requirements in implementing the extra charge, according to MRA Senior Vice President John Mayleben, a national expert on payment processing and the first person in Michigan to be designated a Certified Payments Professional. They should also think long and hard about whether adding a surcharge would drive away customers, he said. MRA is not aware of any retailers that have added a surcharge. The implementation requirements include not surcharging more than the processing fee on the type of card being used and providing Visa, MasterCard and the retailer’s payments processor with 30 days notice before surcharging. In addition, the business must post a notice of the surcharge at the point of entry, the point of sale and on the receipt given to the customer.

The official publication of the Michigan Retailers Association

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House Republicans back Main Street Republican lawmakers in the Michigan House of Representatives say they plan to level the playing field for in-state retailers by enacting Main Street Fairness legislation this session. The potentially game-changing news for Michigan retailers came as

part of the “2013-14 House Republican Action Plan” announced on January 30 by House Speaker Jase Bolger (R-Marshall) and other House GOP leaders. The plan states: “Main Street Fairness’ requires online retailers like Amazon.com to collect and pay sales

State Reps. Eileen Kowall and Rob Ver Heulen (right) and MRA President and CEO James P. Hallan hold a news conference to announce the introduction of Main Street Fairness legislation.

New downtown recruiting retail businesses, shoppers by Doug Henzie

It was slightly more than a decade ago when the City of Auburn Hills forged ahead with plans to create a real downtown – a gathering place for residents to live, work and play and where retailers could thrive. The 30-year-old, northern Oakland County city spent more than $18 million to improve infrastructure in the old Auburn Heights business district, “T”ing off wind-

ing Squirrel Road with Auburn Road to make development easier, and leveling several old houses to create development space. Developers brought in a couple of condominium projects and some retail and office space before investment began to dry up in 2005 – a precursor to the economic collapse of 2008. Now, with the economic “bottom” in the rearview mirror but with growth still sluggish, Auburn Hills has a new strategy: deliver the customers to the retailers. Through a partnership with Lansing-based developer Dennis Burt and several local universities, the city is bringing in 97 student housing units, Continued on page 9

taxes, just like every other business. We will remove the 6 percent competitive advantage that out-of-state online retailers enjoy over Michigan companies.” Michigan Retailers Association immediately hailed the announcement. Passage of Main Street Fairness is the organization’s top legislative priority this year. MRA built a coalition and pushed hard the past two years to increase awareness of the problem and seek legislative passage. Top two The Republicans’ agenda also includes consideration of Electric Choice legislation as a way to reduce long-term energy costs for businesses and families. Providing lower electric rates through greater competition spurred by Electric Choice was also high on MRA’s legislative agenda prior to the announcement. “The House Republicans’ legislative priorities include the retail industry’s top two issues to improve Michigan’s retail business climate and help create jobs,” said MRA President and CEO James P. Hallan. “We applaud House Republicans for their leadership in setting forth this jobs-creating agenda, and we look forward to working with lawmakers to win passage of these measures as soon as possible.” While legislative passage of Main Street Fairness is not assured, the House Republican leadership’s backing of MRA’s chief issue is a giant step forward in the fight for a level playing field, Hallan said. Republicans control the House by a 59-51 margin, as well as the Senate 2611 (and one vacancy). Governor Rick Snyder also is a Republican. Loophole closing Under current law, out-of-state, online businesses enjoy a 6 percent competitive advantage because they are not required to collect Michigan sales and use tax on sales to Michigan residents. MRA has led the fight for passage of the Main Street Fairness Act, which would close the loophole Continued on page 6

Michigan Retailer

Sales tax increase a road to nowhere by James P. Hallan, MRA President and Chief Executive Officer Michigan’s retailers received great news when House Republicans announced plans to pass Main Street Fairness legislation this session (see front page story). GOP lawmakers also said in their “Action Plan” they’ll take a serious look at allowing more businesses and homes to choose alternative electric suppliers, a move that could lower electric rates for more customers across the state. MRA had made those two issues our top legislative priorities this year, so it’s extremely encouraging (and gratifying) to see retail’s agenda merge with the work plan set forth by House Speaker Jase Bolger and his leadership team. We applaud their efforts. However, the legislative process is a many-sided puzzle. For every good public policy proposal under consideration, it seems, there is one equally bad or worse. Such is the case with a plan currently being floated in the Capitol to raise the sales tax by two cents. It would boost the sales tax

from six cents to eight cents on the dollar to help pay for fixing Michigan roads. Let’s all be clear about this. Increasing the sales tax would be a devastating blow to Michigan’s retail industry and put a dagger in the heart of the state’s economic recovery. There’s no dispute from retailers that our deteriorating roads need to be repaired, but a sales tax increase is not the way to get there. A higher sales tax (and a twocent increase is a 33 percent jump!) would reduce consumer spending even if we had a level playing field between Michigan businesses and out-of-state, online-only merchants that don’t collect sales tax. But factor in the unlevel turf, and the drop in retail sales would be multiplied many times over. It would push even more Michigan residents, and more often, to the Internet to buy from out-of-state, online-only merchants. The competitive advantage enjoyed by these non-Michigan

merchants already costs Michigan’s economy thousands of retail jobs and the state treasury hundreds of millions of dollars in lost sales and use tax revenue. Raise the sales tax 33 percent and the number of lost jobs and amount of lost revenue would skyrocket. Moreover, by increasing our sales tax to 8 percent, Michigan would hold the dubious distinction of having the highest state-based sales tax in the nation (even higher than California!), according to the Illinois-based Sales Tax Institute. That distinction would derail efforts to boost Michigan’s competitiveness. Raising the sales tax would run counter to the bold, hard-won moves taken by the governor and legislature to make Michigan more business friendly. The bottom line is that while we need to fix our roads, a sales tax increase that will harm Michigan businesses, kill jobs and damage our economy is not the way to do it. Talk about counterproductive!

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Board of Directors: Thomas Ungrodt Chair Ideation, Ann Arbor

James P. Hallan

President and CEO Michigan Retailers Association

Dan Marshall

Vice Chair Marshall Music Company, Lansing

Peter R. Sobelton Treasurer Birmingham

Jean Sarasin

Secretary Michigan Retailers Association

Barb Stein

Past Chair Great Northern Trading Co., Rockford

Brian Ducharme AT&T

Becky Beauchine Kulka

Becky Beauchine Kulka Diamonds and Fine Jewelry, Okemos

Orin Mazzoni, Jr.

Orin Jewelers, Garden City

Joseph McCurry

Credit Card Group

Larry Mullins

Brandon Tire & Battery, Ortonville

R.D. (Dan) Musser III

Grand Hotel, Mackinac Island

Joe Swanson Target Corp.

James Walsh

Meijer, Inc., Grand Rapids

Two more receive professional certification Michael Dorland, MRA regional marketing representative, and Darcy Gates, MRA inside sales and

new CPP designation last year. The certification from the Electronic Transactions Association, headquartered in Washington, D.C., recognizes professionalism and expertise in the increasingly complex arena of credit card processing and other commercial electronic payments systems. “Our expertise and professionalism have been the foundation of our processing service for more than 40 Darcy Gates Michael Dorland years,” said MRA President support specialist, have earned the and CEO James P. Hallan. national designation of Certified “It’s no surprise MRA stands Payments Professional for their out even more by having the first expertise in credit card processing. and the most Certified Payments They bring the number of CerProfessionals.” tified Payments Professionals at Dorland works with businesses in MRA to three, the most of any orcentral and southwest Michigan to ganization in Michigan. provide the best solutions to their John Mayleben, MRA senior vice credit card processing and other president technology and new electronic payments and business product development, was the first services needs. Gates provides inin Michigan and part of the first side support to MRA’s marketing group in the nation to receive the reps, including preparing detailed

a n a l y s e s o f h o w m u c h p ro spective members can save by switching to MRA processing. Dorland joined MRA in 2008 after spending 10 years in retail and retail management. A Grand Ledge resident, he volunteers his free time to several youth athletic programs. Gates, also a Grand Ledge resident, joined MRA in 2001 and was promoted to her current post in 2008. MRA’s nationally recognized

D. Larry Sherman

Board Member Emeritus

Michigan Retailers Services, Inc. Board of Directors: Bo Brines Little Forks Outfitters, Midland

Bill Golden

Golden Shoes, Traverse City

Lisa McCalpine-Wittenmyer Walgreens

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.retailersmutual.com

Subscriptions: credit card processing program has members and clients in 35 states. Annual processing volume is expected to reach $1 billion this year.

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 2013

MICHIGAN RETAIL INDEX

Weak December hampers holiday season gains The December Michigan Retail Index found that 36 percent of retailers increased sales over the same month last year, while 46 percent recorded declines and 18 percent saw no change. The results create a seasonally adjusted performance index of 46.6, down from 60.2 in November. A year ago December it was 59.1. The Index gauges the performance of the state’s overall retail industry,

Current

based on monthly surveys conducted by MRA and the Federal Reserve. Index values above 50 generally indicate positive activity; the higher the number, the stronger the activity. Looking forward, 40 percent of retailers expect sales during January – March to increase over the same period last year, while 22 percent project a decrease and 38 percent no change. That puts the seasonally

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adjusted outlook index at 63.7, down from 72.8 in November. A year ago December it was 71.8. Complete results of this month’s Michigan Retail Index—including data on sales, inventory, prices, promotions and hiring—are available at www. retailers.com/mra/news/michiganretail-index.html. The website includes figures dating back to July 1994.

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Michigan retail sales fell off sharply in December, but most retailers still reported sales increases for the entire holiday shopping season, according to the Michigan Retail Index, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago. Fifty-four percent of retailers reported better holiday sales than last year, while 30 percent reported declines. Overall, sales at individual Michigan stores and websites were up an average of 2.9 percent, according to the monthly survey of MRA member businesses. However, December’s sales index number fell to 46.6 from 60.2 in November. “It’s fair to call the results ‘mixed.’ December was a disappointment for many Michigan retailers, and it took strong sales in October and November to offset that end-of-year dip,” said Tom Scott, MRA senior vice president communications and marketing. “It’s hard to pinpoint the exact reason. But the unemployment rate was stuck at 8.9 percent in December. And perhaps shoppers became cautious over the inaction in Washington prior to Christmas to resolve the ‘fiscal cliff’ issue and prevent significant tax increases.”

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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Stamas, Graves receive Legislator of Year award MRA named State Representatives Jim Stamas (R-Midland) and Joseph Graves (R-Argentine Township) Legislators of the Year for 2012 because of their outstanding work on key retail issues. The Board of Directors honored both lawmakers at its January 22 meeting in Lansing. Rep. Stamas, the House majority floor leader, sponsored and was instrumental in the passage of legislation (House Bill 5660, Public Act 213) to

exempt certain flexible drink pouches from the state’s bottle deposit law. “Rep. Stamas, a successful small business owner himself, was quick to act when the Michigan Department of Treasury announced that flexible pouches used to package some frozen alcoholic beverages would come under the bottle deposit law,” said James P. Hallan, MRA president and CEO. “There is no automated way to redeem these pouches, so requiring stores to accept the returns would have created an additional burden on retailers. And just as important as the exemption itself was preventing a state department from expanding, on its own, the bottle deposit law enacted by voters.” Rep. Graves sponsored the Organized Retail Crime Act (House Bills 5843 & 5902, Public Acts 45556) to give law enforcement new tools to fight the growing problem of retail theft rings. “Rep. Graves worked with Gov. Snyder’s administration and MRA on passage of the anti-crime legislation, and his determination and hard

work led to the measure being enacted in the final hours of the 2012

honored lawmakers for their work on behalf of the retail industry.

Reps. Joe Graves (second from left) and Jim Stamas (second from right) were honored by MRA as Legislators of the Year for 2012. Flanking them are William J. Hallan, vice president government affairs and general counsel (left), and James P. Hallan, president and CEO.

legislative session,” said Hallan. “Michigan Retailers is pleased to recognize the outstanding work done by both legislators.” It was the second year MRA has

Rep. Lisa Posthumus Lyons (RAlto) received the award in 2011 for her work as sponsor of legislation reforming the outdated and burdensome item pricing law.

February 2013

Hobby retailer recognizes, responds to change by Jean B. Eggemeyer

Customers of Mint on Card, a hobby business based in Traverse City, come from all over the world. But despite not meeting the vast majority of them face-to-face, owners Lindsey and Jim Chan know their customers well. “Mint on Card,” a term that refers to a figure in perfect condition in its original packaging, specializes in ball-jointed dolls and popular culture items. More than 95 percent of the Chans’ sales are captured online through a website and by connecting with customers on Facebook, Twitter and online collectors’ forums, where they actively engage in the doll-collecting subculture. Because of the Chans’ commitment to their customers – wherever they may interact with them – Mint on Card has enjoyed 100-percent annual sales growth since 2008. “We are a micro business with just three employees,” explained Jim Chan. “But within the ball-jointed doll collector community, we have become well known. “We import all of the dolls we sell ourselves from China, which is where our value comes in. Our customers don’t have to deal directly with the doll companies and face miscommunication, currency conversion issues, shipping damage and other headaches.” “It sounds corny, but we really do treat our customers like they are special,” he added. “From the moment they walk in the door or the moment they interact with us online,

we always show them respect and kindness.” And in their niche, customer experience is everything. “The dolls we sell are expensive and the hobbyists are very ‘into it,’ which means we have to be very knowledgeable,” said Chan.

hadn’t expected the increased walk-in business, the Chans quickly responded by bringing back some pop culture

Modern niche Ball-jointed dolls have existed for hundreds of years, but the modern versions have become popular in the United States just within the last decade, Chan explained. They are made of cast resin to mimic the s o f t , s m o o t h t e x t u re of skin and are highly pose-able, with several ball-and-socket points of articulation held togeth- Mint on Card in Traverse City specializes in selling Chinese ball-jointed dolls, which have been in er by one or two internal existence for hundreds of year but are just becoming elastic bands. Each doll is popular in this country. modifiable, too, by adding make-up-like paint or changing wigs products, building a stock of popular and clothing. Collectors can also Star Wars items. change body parts and modify the While the vast majority of sales are surface by sanding or covering them with epoxy. He added, “You can change them any way you want to, so it’s a collecting and crafting hobby combined.” Mint on Card’s impressive growth since it opened in 2007 can also be attributed to the owners’ ability to recognize and respond to change. The couple originally sold pop culture anime products and some comic movie toys from a storefront. But as the financial crisis took hold and sales declined, they had to make predictions about what product lines were going to remain profitable. Recognizing that there was too much competition in the pop culture anime niche, the Chans took a chance and decided to focus on selling balljointed dolls. Their timing was good, as interest in the hobby was about to escalate in this country. They closed their first store, developed a presence online and moved their physical operation to their basement. In 2010 they outgrew the basement and moved back into a store. “We started receiving merchandise and it was everywhere, so, in 2011, I had to start to look for a larger store,” said Chan. Foot traffic They landed on Traverse City’s Eighth Street, which, beginning shortly after their move, has been a focus for revitalization and now enjoys significant foot traffic. Though they

generated online – originating from the U.S., Canada, Australia, Israel, Japan, South Africa and across the globe – the Chans hope to increase the percentage of physical store sales. Today, they are attracting customers from across the region to Traverse City and playing a role in the city’s growth. “People in Southeast Michigan and other areas may order their dolls from us online, but, increasingly, they are coming here to Traverse City to visit and pick up their dolls,” Chan said. He is modest about their good fortune, but clearly the couple has put their experience – both worked for Disney, Jim in information technology and Lindsey in retail – and customer service skills to productive use. “If you know your product and know your customer, you will succeed,” Chan said. “We had to sell online out of necessity since our customers are all over the world. But we really knew our group of ready customers.” Jean B. Eggemeyer is a freelance writer, small business owner and former Michigan Retailers Association employee.

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House Republicans back Main Street Fairness Continued from page 1

that enables many out-of-state online merchants to avoid collecting sales tax. The U.S. Supreme Court has ruled that out-of-state businesses are not required to collect a state’s sale tax unless they have a physical presence in that state. The proposed legisla-

Amazon not only does business through affiliate websites in Michigan, it has a wholly owned subsidiary, Brilliance Audio, in Grand Haven. The two-bill package was first introduced on a bipartisan basis in late 2011. Although the House Tax Policy Committee held hearings on

Independent retailer Dan Marshall of Marshall Music Co., Lansing, tells reporters his seven stores are at a serious competitive disadvantage to out-of-state, online retailers that don’t collect sales tax on their Michigan sales.

tion follows the lead of other states in redefining physical presence to include the use of “affiliate” in-state websites or having a distribution center or wholly owned subsidiary in the state.

the legislation, election-year politics kept the measure bottled up in committee during 2012. The bills died at the end of the 2011-12 session along with hundreds of other bills that were not enacted.

New legislation New Main Street Fairness Act legislation was introduced in the House on February 6 by Reps. Eileen Kowall (R-White Lake) and Rob VerHeulen (R-Walker). House Bills 4202 and 4203 were referred to the House Tax Policy Committee for consideration. At a news conference to announce the introductions, both lawmakers emphasized the need for fairness and removal of the competitive disadvantage Michigan retailers face in their stores. Hallan urged the legislature to take a fresh look at the issue. What’s different now, he said, is that the problem is growing worse as online sales grow at a faster clip than brick-and-mortar sales, more legislators understand the need to act, Congress is demonstrating by its inaction that it is unlikely to provide a national solution, and more states are acting on their own. “It’s time for the legislature to act,” he said. “It’s time to take away the unfair competitive advantage the state has been giving to out-of-state businesses that create no jobs, pay no taxes and support no communities in Michigan.” Retailer Dan Marshall, president of family-owned Marshall Music Co., told reporters the current situation

is a problem every hour of every day for his business and other retailers. He said his seven stores across the state compete on price against outof-state, online merchants but can’t match prices and also make up the 6 percent price disadvantage they face because they’re required to collect Michigan sales tax. Electric competition On the energy front, the Republicans’ Action Plan calls for a review of Michigan’s cap on electric competition. The plan states: “It’s time to review Michigan’s 10 percent cap on the total capacity for electric customers that can shop and choose alternative electric suppliers. Having a discussion would provide a clearer picture regarding Michigan’s regulatory structure and market and could help lower rates for the hard-working taxpayers of Michigan.” “The current cap prevents most Michigan customers from using competition to lower their electric bills,” Hallan said. “As a member of the Energy Choice Now coalition, Michigan Retailers Association looks forward to legislative actions that will lead to widespread electric savings.”

February 2013

RETAIL TECHNOLOGY NEWS

Surcharges on credit cards: the good, the bad, the ugly John Mayleben CPP, is MRA senior vice president technology and new product development and a national expert on electronic payment processing. He is the first person in Michigan and among the first in the nation to receive the Certified Payments Professional designation from the national Electronic Transactions Association. As of Sunday, January 27, 2013, merchants can for the first time elect to pass along the cost of processing a credit card transaction to the cardholder in the form a surcharge on the purchase price. This is a result of a recent class-action lawsuit settlement involving the major card brands (Visa and MasterCard). If you’re a retailer, finally being able to recoup those processing costs probably sounds attractive. That’s the “good” … but there’s more to the story. As a merchant, you need to address a number of issues before you elect to surcharge your customers for their purchases in your store. Here are the main ones. First, and most significant, does your state even allow you to surcharge for a transaction? Ten states currently prohibit surcharging, regardless of the lawsuit settlement: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Simply put, if you have a store in one of these states, you can’t tack a surcharge onto a transaction. T h e re h a s b e e n c h a t t e r i n Washington, DC, about a federal ban on surcharging, but so far that is just talk. The next issue you must address within your store is identifying which cards you can surcharge if you’re inclined to add a fee. You are still prohibited from applying a surcharge to pre-paid cards and debit cards (signature or PIN). That’s not always as easy as it sounds. The challenge is that these cards are sometimes difficult to identify from looking at the face of the card. Most Point-of-Sale systems aren’t able to tell from the card swipe if it is a pre-paid or debit card, so you have to train your staff to identify those types of cards and treat them differently. Obviously, this creates an opportunity for error and for consumer confusion at the point of checkout. In addition, if you elect to surcharge a consumer for the purchase, any return must include the surcharge.

Provide notice If, after considering these points, surcharging is still something you would like to do, you must register with each of the card brands and give 30 days notice to your customers. Each of the card brands has slightly different rules and procedures that you will need to review. Assuming that you run that gauntlet successfully, you need to establish the amount of the surcharge (it can’t exceed 4 percent or the amount of the discount rate from the merchant processor) and provide proper notification to the consumer before the

transaction is processed. And now the ugly. Notification must be at the POS and also on the receipts that the consumer signs. The amount of the surcharge must be a separate amount on the receipt that your credit card terminal prints. If you are using a countertop unit from any of the major manufacturers, none of them (to my knowledge) has programming as of right now that would allow you to enter the amount of the transaction that is the surcharge. Even uglier is the possibility that your customers will object to your surcharge and end up walking out and never coming back. In this highly competitive industry, there are bound to be retailers who advertise they don’t impose surcharges. So, although surcharging might sound good, you’ll need to think through all the bad and ugly details before jumping into it. You also have an alternative. As has been the case for many years, cash discounts are allowed under your merchant contract and are not regulated under this settlement. More information on surcharging can be found at the following websites: • Visa.com/merchantsurcharging • Mastercardmerchant.com.

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RE: RETAILERS

Ideation marks 50 years, predicts more growth Ann Arbor-based Ideation, Inc. is celebrating its 50th anniversary and announcing new offerings expected to provide continued growth this year. “Ideation is 50 and we are changing every day,” said President and CEO Tom Ungrodt. “We give the independent retailer the best marketing opportunities in the business. We offer gift, toy and fashion catalogs along with customized inserts to give them the most professional offering in their community.” The company announced two new catalog options for the Spring 2013 season, including exclusive inserts for Vera Bradley and the newly introduced Charlie Page brand of fashion and apparel and accessories. In addition, it introduced a Mini-Spring catalog and the company’s new I-Select Program at the Atlanta Americasmart Show in January. “The I-Select Program is unique to the industry because it will allow the member to create a catalog by choosing any of the pages from all of our catalogs and inserts,” said Tim Shannon, sales and marketing manager. “This allows them to give their customers a much more personal experience.” Ungrodt also owns and operates two other Michigan gift stores: The Crown House of Gifts in Ann Arbor and Dayspring Gifts in Chelsea. In

addition, he serves as chair of the Michigan Retailers Association Board of Directors and as a director of Retailers Mutual Insurance Company. Ideation was started in 1963 as a way to give gift retailers a better way of planning, purchasing for and promoting their shops. The company created a gift catalog mailed directly to customers’ homes and designed to pre-sell and motivate customers to visit the store. More than 400 stores across the nation currently participate in the Ideation catalog program. Gazelle Spor ts, based in downtown Kalamazoo, was named one of the best running stores in America by Running Insight and Competitor magazine. It won the honor for the seventh consecutive year and also was one of four finalists for 2012 Running Store of the Year. Other Michigan stores on the “best” list were: Elite Feet Running Store, Brighton; Playmakers, Okemos; and Running Fit, Ann Arbor. Gazelle Sports, which also has locations in Grand Rapids and Holland, was founded in 1985 and is owned by Chris Lampen-Crowell. The magazine says the selection process starts with consumers nominating their favorite stores. Then those stores are put through a rigorous evaluation process, including

mystery shopping, credit ratings and assessments about local programs and community involvement. The magazine says the top running stores “offer exemplary customer service for every type of runner, organize training programs; organize group runs and local races; and provide knowledge and insights about the latest trends, the newest gear, proper running form and local trails.” Meijer President Mark Murray becomes co-CEO with Hank Meijer, and J.K. Symancyk succeeds Murray as president this month at the Walkerbased chain spanning five states. The company said Symancyk, at 41, will be the youngest president in Meijer’s 79 years of operations. Symancyk has been at Meijer since 2006, rising from vice president of perishables to chief operating officer last year. As chief operating officer, the former Walmart executive oversaw retail operations, supply chain, manufacturing, merchandising and marketing. Murray, who became president in 2006, served as president of Grand Valley State University prior to joining Meijer. Previously, he was state treasurer, an education policy advisor to Gov. John Engler and vice president of finance and operations at Michigan State University. According to the M-Live news web-

site, Meijer grew from 175 stores to 199 during Murray’s tenure as president while the workforce shrank 18 percent to 62,000 employees. Annual sales rose a reported 21 percent to more than $14 billion in 2011, making Meijer the largest family-owned company in West Michigan. Delux Drapery, a Hunter Douglas Gallery Dealer and important part of Ann Arbor since 1942, has moved to 2215 West Stadium Boulevard (the former Arbor Farms building north of Liberty) in order to increase its showroom area. The third-generation family-owned business scheduled a Grand Reopening on January 16-18 with prizes and a month-long, storewide sale of 20-30 percent off. Ideation, Inc. (also see above) announced the hiring of Shelly Talovich as buyer. She comes to Ideation with more than 15 years of retail experience, most recently as a buyer for ACO Hardware, where she met with vendors to select product assortment in stores and selected merchandise for weekly store ads and seasonal catalogs. Previously, she was a senior project manager in design and sales at Akasha-US, Inc., a company recognized as a leader in the distribution of decor accents in North America. In addition, Dayspring Gifts in Chelsea has hired Melinda Schmidt as store manager. She is a familiar face to longtime customers, because she worked as a part-time associate in the store on two separate occasions. She also has worked at Scrapbook Memories and IHA. Schmidt will oversee Dayspring’s day-to-day operations and staff of eight associates and will be responsible for making the store “the premier destination for gifts and women’s accessories in the Chelsea area.” Schuler Books & Music announced the closing of its downtown Grand Rapids location after a five-year “experiment” with an urban format store. The West Michigan-based bookstore chain has two other Grand Rapids-area locations and two stores in the Lansing area, all much larger than the downtown shop. Owner Bill Fehsenfeld told MLive that he and his wife, Cecile, decided not to renew the lease for the downtown store that opened in 2007 on the ground floor of the Steketee Building on Fountain Street. He described the store’s sales as “steady over time,” but not growing “the way we need to make it worthwhile.” Send your business news to Michigan Retailer at mra@retailers.com

February 2013

IT’S THE LAW

What if associate refuses to get required flu shot? by William J. Hallan, MRA Vice President Government Affairs and General Counsel The dreaded flu season. Did you get your flu shot? Did your employees get flu shots? Can you require them to get one? Can you terminate them if they don’t? All are important questions, especially with the high level of flu activity this year. In fact, the Centers for Disease Control and Prevention (CDC) recently reported that 47 states have experienced widespread flu outbreaks, Michigan among them. Although reported cases are starting to decline in the Midwest, retailers should consider whether they were properly prepared this year and what they can do differently next year. In Michigan, employers may require their employees to get a flu shot. It occurs most frequently in the health care industry, with hospitals in Jackson, Ann Arbor and Holland among the many that require their employees to get flu shots. While vaccines primarily help ensure safety in the health care industry, retailers are usually most concerned with productivity and staffing levels. What happens though if an employee refuses to get a flu shot? Can you terminate the employee? Michigan is an at-will employment state. What that means is that an em-

ployer does not need “cause” to fire an employee, and that an employee can be fired at any time, even for refusing a flu shot. However, like most rules, there are exceptions. Generally speaking, employees who have employment contracts are not at-will employees, and courts would consider whether the termination violates the terms of the contract. Also, many employees are protected by collective bargaining agreements, which often provide that employees can only be terminated “for cause.” Another exception is that employers cannot terminate employees based on race, religion, age, disability or gender. Such an action would violate state and federal law. So, although an at-will employee can be terminated for failure to get a flu shot, the employer must make sure the termination doesn’t violate one of the exceptions. In short, there are some legal risks to taking such an action. Many employers have their employees fill out a declination form specifying the reason for refusal to get a shot, whether it may be for medical, religious or moral reasons. That way, the reason is clear and in writing from the start. In addition, developing a standard protocol and written policy for dealing with flu shot issues – rather than on a case-by-case basis – is one of the best ways to ensure you’re following the law and are prepared for flu season.

Membership Services Corner Quick notes on key services. Call 800.366.3699 for details. Credit Card Processing • This is the second year for an IRS tax-reporting mandate on all merchant processing organizations. Therefore, a 1099K form was mailed to your business in January by Michigan Retailers Services, Inc. Please check it for accuracy and call 800.563.5981 if you need assistance. • If you receive a “Re-Enter or Lost Communication” response when processing a transaction, please contact Customer Service so we can verify the transaction before you continue to process. • Pay close attention to each credit card receipt. If it ever reads “Amount Due,” treat this as a split-tender transaction and collect the remaining balance via another form of payment. • Data security compliance is man-

datory; therefore, you must complete an annual PCI Self-Assessment Questionnaire to verify if your business is PCI compliant. Visit http://www. compliance101.com/ to begin the questionnaire. • Please notify Customer Service of any Tax ID or bank account changes. • To reduce customer disputes, credit card terminals can support your store policies by printing them on receipts. Give us a call to find out about Footer Lines. • These terminals are no longer PCI compliant: Zon Jr., Tranz, Omni and Hypercom T7P. Social Media • For the latest breaking news in retail, business and retail-related legislation, follow MRA on Twitter: www.twitter.com/michretail.

New downtown recruiting retailers Continued from page 1

which are expected to put 135 potential customers in the downtown. “It’s pivotal,” said Assistant City Manager Thomas Tanghe, in reference to the more than $9 million housing project by Burt’s Haussman Construction Co. on Auburn Road. “I’m not trying to suggest that 97 units will create a boom for downtown, but it’s this kind of development that will cause others to stand up and take notice. Money follows money.” The four-story apartment building, under construction since last fall, will target students at Oakland University, Oakland Community College, the Thomas M. Cooley Law School and

log cabin next to the site to a student center. The center will offer free, wireless Internet and a quiet area for students to study from 2 p.m. to midnight and is being called “The DEN” – Downtown Education Nook.

“It’s this kind of development that will cause others to stand up and take notice. Money follows money.” West of the student housing development on Auburn Road, a twostory, TIFA-owned building that once housed a bar will become an educational center operated by Avondale Schools and Auburn Hills’ colleges

Paying retailers to set up shop Auburn Hills not only wants to attract retailers to the new downtown that it’s building, it’s willing to pay them to set up shop. The city’s Tax Increment Fin a n c i n g A u t h o r i t y p ro v i d e s dollar-for-dollar matching grants of as much as $30,000 for business owners wanting to do interior build-outs within existing buildings. On a case-by-case basis, the Authority also will consider providing Baker College. About 35,000 students are enrolled at those schools, together, in Auburn Hills, Tanghe said. “Even though most of these students are commuters, we’re now very focused on downtown as a place for college students,” Tanghe said. Transportation Although the yet-to-be-named project is a private one, it’ll be listed as a housing choice on college websites. A bus will transport students between OU’s campus and the downtown housing, which is expected to be open in September. “There is pent-up demand for [student] housing and the urban setting this provides is going to be first class,” Burt said. “We have a great partnership with the city.” A sandwich shop and a branch for financial institutions are among the users being considered for 6,100 square feet of retail space planned for the building’s first floor, Burt said. The city’s Tax Increment Financing Authority (TIFA), which captures tax revenues from new development, is constructing a four-story, $4.8 million parking garage behind the housing development. Using a security card, students will be able to enter their apartment floor from the garage. The TIFA also is converting an 1836

grants to tenants in the building under construction downtown, said Assistant City Manager Thomas Tanghe. Grants would be given to tenants whose use is considered a significant contribution to the downtown business mix, he said. “The grant program is very userfriendly and takes very little time to complete,” Tanghe said. “We walk applicants through the entire process.” and universities. Called the University Center, the 7,200-square-foot space is being designed by Birmingham-based Glenda Meads Architects, the designer of the log cabin renovation. Avondale will put a virtual academy on the second floor – a space where students can use portable furniture to construct study groups or do online learning. The lower level will feature three classrooms, where an expected 1,000 to 1,200 students will attend day and night classes each week. “It will have the latest and greatest technology for learning,” Tanghe said. “You might be living in downtown student housing and one of your classes might be next door.” Springboard The city is hoping its studentcentered development push is the springboard it needs to get more downtown development going. Although the young city is home to Chrysler World Headquarters and the Palace of Auburn Hills – home court for the Detroit Pistons – it has never had a real downtown to act as a community hub. “We’re starting to create the critical mass to succeed in a downtown,” Tanghe said. “The plan is you’ll see downtown grow to a much more substantial size in the decades to come. If we see a boom in Continued on page 10

Michigan Retailer

www.retailers.com

LOTTERY

Lottery congratulates ‘Million Dollar’ retailers for 2012 by M. Scott Bowen, Commissioner

The Michigan Lottery set a record last year with an incredible $778.4 million transfer to the School Aid Fund. I am pleased to recognize our retail partners for the outstanding job they did in 2012 to make this unprecedented success possible. For two years running, there have been 39 retailers who achieved $1 million or more in Lottery sales. These outstanding retailers are to be commended for not only the service they have provided our mutual customers, but for their hard work in generating money for public education in Michigan. Full congratulations to the following retailers for their 2012 sales: • A&F Mini Mart Inc., Utica • A&L Market, Detroit • Beverage 1, Detroit • Big J Market, Detroit • Big Star Market, Flint • Cherry Belt Party Store, Inkster • Danny’s Fine Wines, Oak Park • Davids Mini-Mart, Sterling Heights

• Duffys of Flushing, Flushing • Glass Bottle Shoppe, Detroit • Gratiot Fairmont Market, Detroit • Great Baraboo Brewing Co., Clinton Township • Greenfield Party Shoppe, Southfield • Hadley Store, Hadley • In N Out Store #31, Detroit • Jamboozies Sports Bar & Grill, Sterling Heights • KS Station Inc., Southfield • Light House Liquor, Oak Park • Liquor Basket Party Store, Saginaw • Luxor Market, Detroit • M C Petro Inc., Detroit • Mario’s Market, Lansing • Meijer #145, Fraser • Monroe Liquor Plaza, Monroe • New Northend Market, Oak Park • Nick’s Party Store, Clinton Township • Oak Liquor and Wine, Oak Park • Oakland Liquor Party Shoppe, Southfield • Sax Discount, Taylor • Scotia Stop Food Store, Oak Park • Seven Star Food Center Inc., Detroit • Stop N Shop II, Saginaw • Sunny Mart, Muskegon • Sutton Market, Southfield • Ted’s Sports Pub & Grill, Lapeer

• Town & Country Liquor, Southfield • United Party Shoppe II, Dearborn • Variety Food Mini Mart, Dearborn • Wine Castle, Livonia. We would not be in business without the efforts of these and all of our other nearly 11,000 retailers! Thank you to our entire Lottery team. Every one of you is important to our success. Mobile app The new Michigan Lottery mobile app is set to launch in early spring. It will have a completely new look and feel as well as added features. Players will still be able to view winning numbers, see the latest jackpots and play Club Keno “To Go.” New features include entering non-winning draw game tickets into the Player’s Club with ticket scanning capabilities, reward catalog access and a retailer finder. Tax-Free Raffle Sales of tickets for the all-new $40,000 Tax-Free Raffle are now in full swing. The $10 tickets are available for purchase through mid-April at all Michigan Lottery retailers. The topprize winner will walk away with $40,000 – tax free! This raffle has the best overall odds of any raffle to date – 1 in 6 tickets will win a prize! On April 15, Tax Day, a drawing will be conducted to select the winning raffle numbers. For every 30,000

raffle tickets sold, 5,001 prizes will be awarded: one $40,000 top prize, 50 prizes of $100, 1,850 prizes of $50, and 3,100 prizes of $15. Remember, time is limited to purchase tickets, so be sure to let your customers know they have to act fast in order to be part of the raffle action. Instants New instant tickets scheduled to go on sale March 5 are Doubling Red Bingo™ ($2) and Diamond Payout™ ($20). The release for these tickets is subject to change. Expiring on March 4 are IG 447 Cash Vault™ ($1), IG 465 Sapphire Blue Wild Time™ ($2) and IG 485 Kings and Queens™ ($2). Retailers are reminded to always activate instant game tickets before putting them on sale, to ensure winning tickets can be redeemed by players. Over 97 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 2012, the contribution to schools was a record $778.4 million. Since its inception in 1972, the Lottery has contributed over $17 billion to education in Michigan. For additional information, please visit the Lotter y’s web site at www. michiganlottery.com.

New downtown recruiting retailers Continued from page 9

the economy, I think we will double what we have here today.” With that in mind, the city acquired 19 acres to the east of the existing downtown. The land may be used for office or residential development when the market is ready. East of that, the city owns another 22 acres, where a developer is considering building rental housing that could be converted to condominiums in the future. “We’re trying to make sure we add as much residential as possible,” Tanghe said. “It’s no good to have thousands of square feet of retail and no one here to use it.” The downtown retail space that exists now is nearly full, Tanghe said. A two-story, 20,000-square-foot office building – vacant but still under lease by Pepsi – has 2,500 square feet of retail space that was never occupied, he said. The downtown has been able to draw several retailers, including the Elwell Grill, a mid-range, casual dining restaurant/bar that opened in December, and Sweets!, which began serving coffee and ice cream in June. Sweets! owner Kathy Genautis said Au-

burn Hills’ developing downtown caught her eye on her daily commute to work. The regular customer base she has developed will get a boost when the student housing opens, she said. “I look forward to it,” she said. “It’ll probably double my business.” Elwell Grill owner Pat Elwell, who first opened a restaurant in the building in 1964 before leasing the space out and then holding it vacant, is expecting good things from the new student housing. “I think it will impact all of us down here very nicely,” he said. “The whole downtown is going to improve dramatically.” A vibrant downtown also improves communities as a whole – giving them character, Tanghe said. “Oftentimes, cities that don’t have a downtown don’t have that sense of place,” he said. “There’s something to be said about getting everybody together in a place that people call their own.” Doug Henze is a freelance writer and former business reporter for the Oakland Press in Pontiac.

February 2013

NEW MEMBERS & NEW MEMBER SPOTLIGHT Pro Med Uniform, Adrian Jamal Enterprises Inc., Adrian Liberty Tax, Algonac The ARK, Ann Arbor Rowley’s Tires & Automotive Services Inc., Bay City Cards of Wood Inc., Belmont Byron Center Chamber of Commerce, Byron Center High Horse Express Inc., Cedar Springs St. Joseph County Grange Fair, Centerville The Chelsea Collection, Chelsea Balmar LLC, Clinton Township Alpine Family Eyecare, Comstock Park Shelby’s, Dearborn Mack & Bewick Market, Detroit Parkside Market, Detroit Hartford Head Start Agency Inc., Detroit Robinson Furniture Inc., Detroit Vehicle Parts Company LLC, Detroit Michigan Safe Company LLC, East Lansing United Online Auctions, Grand Rapids Universal Dermatopathology Lab, Grand Rapids Andrew M Van Haren DDS PLC, Grand Rapids John A Meyer Appraisal Co., Grand Rapids Humane Society of West Michigan, Grand Rapids Accurate Truck Services LLC, Grand Rapids EC Enterprise Inc., Grand Rapids HNI Risk Services of Michigan LLC, Grand Rapids Leo’s, Grand Rapids KJ Land Co., Hamilton Hemlock Pharmacy LLC, Hemlock Camp America, Holland Tenpenny Fine Furniture Inc., Howell Used To Be New LLC, Hudsonville Doug & Dan’s Auto Care LLC, Hudsonville Cottonwood Veterinary Center PC, Jenison OB-GYN PC, Kalamazoo W Pennings & Sons Inc., Kalamazoo Kara Daniel Jewelry LLC, Kalamazoo Hugo Brothers Pallet Manufacturing Inc., Kawkawlin Bud Kouts Services LLC, Lansing Energy Choice Now, Lansing Dan Henry Distributing, Lansing Outdoor Advisory Group Inc., Lansing Alberts Furniture & Appliance Inc., Lincoln Park Master Muffler & Brakes, Ludington Lovewells Corner Store, Lupton Chows Kitchen, Manistee Dallas Cleaners LLC, Marquette Quality Car Care Center of Marquette Inc., Marquette Liquid Haulers Maintenance, Moline Martins Shoe House Inc., Monroe

Reworking nature’s beauty artfully and responsibly by Jean B. Eggemeyer Members of West Michigan’s Lenderink family turned their interest in forestry and wood products into a growing niche product – thin, wood-veneer cards that can be printed upon.

a single log, and the company is careful to source its wood from foresters that practice sustainable yield-harvesting techniques. “It’s always been important to us that we be good stewards of the land,” said Tate Lenderink. “ O u r p ro d u c t i o n processes use very minimal amounts of energy, gas and water as well.” Experiencing 20-percent annual sales increases in recent years, the company is taking advantage of MRA’s credit card processing program to help support its growth. “ O u r b an k re commended MRA Cards of Wood produces and sells business cards, invitations and other products made from slices b a n k c a r d p r o cessing and we’re of natural wood. happy with the low New MRA member Cards of Wood In addition to the uniqueness and rates,” explained Lenderink. was started in the 1960s by the faquality of the products, customers ther-son team of Harold and Tom are attracted to the company for Jean B. Eggemeyer is a freelance writer Lenderink. Since 1990, the company its “green” consciousness. Thoubased in Illinois and a former employee has been owned and led by Tate Lensands of cards can be made from of Michigan Retailers Association. derink, part of the third generation working to expand the business. The Belmont-based company produces durable, beautiful and unique business cards, postcards, wedding invitations, art prints and other products, all made with paper-thin slices of natural, unaltered wood. Several species of wood veneers, including oak, cherr y, Birdseye Stevens Family Chiropractic, Monroe Community Mental Health for Central MI, Mount Pleasant Coin Zone Inc., Muskegon Thomas Eveland Retirement Committee, Nashville Ashcraft Machine & Supply Inc., OH Clark Engineering Company Inc., Owosso Villadsen Tree Farms Inc., Pentwater Plymouth Donut Inc., Plymouth Sanborn Gratiot Memorial Home, Port Huron First Presbyterian Church, Saginaw Blue Water Auto Wash LLC, Saint Clair Sheldon Medical Supply Inc., Sandusky RV School LLC, SD The Storage Oasis, South Lyon Legends 1926 Bar & Grill, Taylor Kay’s, Traverse City Angelina’s Eatery, Ubly Fine Things, Wyandotte Community Legal Services of West MI, Wyoming Zeeland Hardware Etc LLC, Zeeland

maple, sassafras and red cedar, can be ordered. The products are designed and printed in-house and then shipped to customers in the U.S., Canada and around the world.

BEST RAFFLE ODDS! 1 in 6 Tickets Wins! THIS TAX DAY IS ONE TO CELEBRATE!

This raffle offers the best overall odds of any raffle to date – 1 in 6 tickets will win! And the Lottery will pay all of the taxes on each of the $40,000 grand prizes awarded – that’s a nice cash bonus for your lucky players.

THOUSANDS OF CASH PRIZES REDEEMED IN-STORE! All of the $15, $50, and $100 prizes can be redeemed in-store! That means lots of happy players and lots of cashing commissions for retailers!

*Overall odds of winning: 1 in 6. Odds of winning $15: 1 in 10; $50: 1 in 16; $100: 1 in 600; $40,000: 1 in 30,000. If you bet more than you can afford to lose, you’ve got a problem. Call 1-800-270-7117 for confidential help. $40,000 winning ticket holders will receive a net prize amount. To arrive at the net prize value, the Lottery will hold and deposit on behalf of each prize winner the required state and federal income taxes on the gross prize value. The federal income tax rate is subject to change and will be determined at the time a prize winner files their claim. The Lottery is not responsible for additional taxes in excess of the amount withheld by the Lottery that may be due when a prize winner files all tax returns for the year the prize is claimed.