Q&A talks about holiday sales with Tim Phelan, president of the Connecticut Retail Merchants Association.
Q: How did the retail market fare among your members during the most recent holiday shopping season?
A: I think our members felt it generally was a pretty good season. It wasn’t record breaking, but it was good. Our sense is we beat last year, which is always the first goal of retail. It was a solid season but there are no final numbers yet.
Q: According to the National Retail Federation, shopping was up across the board. How does that compare to what Connecticut retailers saw?
A: I think that s pretty consistent with what we’ve been hearing. Games and DVDs are always strong. They have always been strong. With regards to clothing this year, we saw more of an uptick than we have in recent years. That was a surprise. The trend had been electronics. We were consistent with what the NRF was reporting on these categories.
Q: What made clothing popular?
A: I’m not sure there is a good answer for that. It could be a combination of a lot of factors — price points, advertising, promotion. It could just be consumer trends. It’s hard to explain. Consumer behavior and attitudes evolve and things develop and you can’t always pinpoint why. Retailers sometimes sense where consumers are heading and will adjust for that. If there was sense there was going to be a breakthrough in clothing, they may have skewed things in the clothing area. We will see if this trend continues throughout this year and into the next holiday season.
Q: You represent the brick-and-mortar retailers. What’s helping them stay competitive with online shopping outlets?
A: I could spend a whole day talking about the challenges the brick and mortar retailers face. They face an unfair burden from state taxes and price. What keeps them competitive is they are great entrepreneurs and have strong relationships with their customers. In most cases, it is the ability to come into the store, talk with them, look at the product and talk with somebody who is knowledgeable. It’s a real strong effort to stay connected. That loyalty keeps customers coming back. The purely online retailer doesn’t have to collect sales tax. But what sometimes gets lost is brick and mortar retailers have online presences that get counted as online sales. The online retailers with no presence don’t have to collect sales tax, which is a big advantage. An online place like Zappos doesn’t while a Stackpole Moore Tryon in Hartford or Shoe Mart in Norwak does. Sometimes it’s convenient to make that purchase online. That’s commerce and we applaud that. We don’t like that there are different rules that are skewed against us. The local brick and mortar retailer has to work that much harder. They have to be in touch with their customer and build that loyalty to overcome that disadvantage.
Q: What can be done about the sales tax advantage? Is there any way to collect it?
A: My members call and ask about that almost as much as health care. What we need is Congress to take action. We need a federal bill to pass. We were hopeful as an industry that we could get something in the federal cliff legislation but we haven’t seen anything. On the state level, we’re limited. We did pass a bill that affiliate sales with an actual presence in the state have to pay sales tax. Each state is feeling the pinch because of the unfairness in the system. We wish we could pass a bill that would require it but with respect to the federal law we can’t. We have to hope online retailers will respect Connecticut and start collecting sales tax or we have to get congressional action.
Q: How robust was gift card and gift certificate buying in Connecticut?
A: We’re going to see that. You will see strong January sales based on redemption of gift cards. It has grown in popularity because of the ease and variety that people can translate them into. Gift certificates are still around but they’re almost interchangeable with the new point of sale systems that just take the gift cards and load them. The local merchant is promoting them more and more. A lot of people redeem them immediately because of the good sales in January. One of the important things in Connecticut is those gift cards never expire. There will be no penalty for waiting. That’s a good consumer law. They’re tremendously popular.
Q: Let’s look ahead to the upcoming legislative session.
A: One of the big ones that may be obvious is the issue of taxes and the state’s fiscal condition and whether or not the General Assembly will have to consider increasing taxes and if that leads to increase sales taxes, elimination of sales tax break or new fees that we consider taxes that are forced on our customers and we have to collect. We’re going to keep a very close on taxes and other types of fees. After that, it’s one of those “you never know” because once the legislature’s in session, you never know. There are issues like paid sick live, minimum wage increase, privacy issues that could come back. We have new committee chairs. We’re going to have a busy year.
