Frankfort, KY - The results of this year’s Kentucky Retail Federation (KRF) economic survey of membership are in and show that an overwhelming majority – 79 percent - of KRF members believe that their business won’t be financially better off this year than in 2011. That’s a three percent increase over last year’s survey results (76 percent).
“This is clearly the most important question and reflects that state retailers aren’t optimistic about what this year means to them,” said Laura Leigh Goins, Vice President of Communications and Member Relations. “We hear a great deal about sales figures, but without considering the cost of doing business you aren’t getting a complete picture.”
This is the third year that the Federation has asked a random sampling of its 6,000 members to participate in the survey. The seven question survey, mailed to retailers in early September, includes questions about the economy’s impact on their business, employment and workforce, as well as sales projections.
“Since one in four Kentucky jobs and nearly a fifth of all labor income comes from retail, our members see everyday how average Kentuckians are faring in this economy,” Goins said. “With an estimated 51,331 retail establishments across the state, retail is the canary in the economic mine. They’re local, next door to Kentucky families and make their living by serving their neighbors.
This year’s survey also asked members if they have seen an increase in the price of goods. According to results, 98 percent have and over 50 percent have passed along up to half of the cost as an increase to consumers.
“You have to expect that when the cost of doing business increases significantly, a business is forced to pass along some or all of that cost to consumers,” Goins said. “I think the most startling thing we’re seeing is that over a third are not able to pass along any of the increases they’ve seen. Instead they are absorbing the costs and that makes for a very tight bottom line.”
When asked what has had the biggest impact on their ability to grow their business, KRF members overwhelmingly cited taxes, followed by unemployment and credit markets.
According to Goins, “while there are many changes that could be made to the tax code to help spur the economy, we’re hearing our members focus on how many online sales are exempt from the state sales tax. This issue, sales tax fairness, is before Congress now and could go far in leveling the playing field for Kentucky retailers.”
When it comes to sales projections for this year, 54 percent of respondents stated they believed their annual sales figures would decrease compared to 2011. That compares to 51 percent from last year’s survey and echoes the 54 percent who foresaw a decrease in 2010. Only 16 percent believe that their year-over-year sales will increase. When asked why, retailers cited unemployment as the number one reason, with consumer confidence a close second.
According to Goins, only 5 percent of members report creating full time positions, with 9 percent stating they’ve created one or more part-time positions. That’s down from 8.5 percent and 13 percent respectively from the 2011 survey.