Labor shortages impacting product lead times and prices
MRA Reports Michigan retailers’ June sales continue to climb showing an upswing over May numbers.
LANSING, Mich. – As Michiganders return to their pre-pandemic lifestyles, Michigan retailers continue to see a rebound in sales noting an uptick in June over the previous month. Michigan retailers have experienced a steady climb in sales for seven consecutive months in spite of labor shortages, supply chain challenges, and now, price increases.
The June Retail Index survey came in at 71.4, an increase over May’s 68. Sixty-seven percent (67%) of Michigan retailers reported an increase in sales over the previous month; 21% reported a sales decline; and 12% reported no change. The categories experiencing the largest gains include miscellaneous and specialty retail, personal services, and department stores.
The seasonally adjusted performance Index is conducted by Michigan Retailers Association (MRA) in cooperation with the Federal Reserve Bank of Chicago’s Detroit branch. The 100-point index provides a snapshot of the state’s overall retail industry. Index values above 50 generally indicate positive activity. The higher the number, the stronger the activity.
Sixty-seven (67%) percent of retailers predict their sales will continue to rise as Labor Day approaches and the back-to-school shopping season kicks off; 21% expect a sales decline; and 12% anticipate no change. That results in a 75 three-month expectation index rating.
“We are happy to see sales continue to climb for Michigan retailers in spite of ongoing labor shortages,” said Bill Hallan, President and CEO of Michigan Retailers Association. “We see retailers limiting store hours to maintain good customer service and to not overburden or burn out their existing staff members. Retailers in all categories report that the ripple effects of labor shortages have translated into longer product lead times among manufacturers and suppliers. This is causing product prices to rise on everything from back-to-school supplies to local produce.”
According to MRA’s most recent member survey measuring the effects of the pandemic, 60% of retailers are experiencing supply chain issues with 50% of them expecting shortages to continue through the holidays.
The National Retail Federation (NRF) predicts that back-to-school spending across all levels from elementary school through college will set records. The NRF reports families with children in elementary through high school plan to spend $848.90, $59 more than last year on average back-to-school items. Total back-to-school spending is expected to reach $37.1B, up from $33.9B last year. College students and their families are also starting to spend more. The NRF is predicting back-to-college spending to reach $71B up from $67.7B in 2020.
“With back-to-school shopping starting to happen now across the country, we hope Michiganders direct their dollars locally to help fellow retailers,” said Hallan. “As encouraging as the news has been, local businesses still need your support.”
Note: Paul Traub with the Federal Reserve Bank of Chicago, can be reached at 313.964.6297.
Click here to read previously reported monthly MRA Retail Index reports.
