Holidays jolt local economy
Ever thought of buying a gift for the local community? Most people consider their holiday shopping personal. But, according to Bryan Hisel, executive director of the Mitchell Area Chamber of Commerce, every dollar spent buys much more than a necklace for Mom or a toolset for Dad.
"The holiday shopping period is a critical period in Mitchell's retail," Hisel said.
That period, which Hisel said typically extends from November through January, brings in a large portion of the Mitchell community's total taxable sales for the year.
According to the South Dakota Department of Revenue, Mitchell brought in about $384.7 million in taxable retail sales during the last fiscal year, which extended from July 2011 to June 2012. Mitchell sells about $512 million total in taxable products and services per year, Hisel added. Retail, though, is what sees the strongest surge during the holiday season.
Hisel said the holiday shopping uptick typically starts in November and often continues through January. Tracking that through taxable sales can be tricky, he said, since retailers have 30 days to file their tax returns.
"There's always a 30-day lag," he said. Still, there's a strong showing in the months leading up to and following the holiday season. According to the state Department of Revenue, in November 2011 there were $33.1 million in taxable retail sales in Mitchell, $35 million in December and $34 million in January. Just those three months equal nearly $103 million in retail sales -- about 27 percent of the year's total taxable retail sales for Mitchell.
"It's just a huge chunk," Hisel said. The retail sales dropped sharply in February, down nearly $10 million to $24.6 million in Mitchell.
"When you look at that difference, it's a remarkably sharp difference," Hisel said. "That first quarter of the year, the sales economy really drops." He said a number of factors likely contribute to that drop, including everything from post-holiday debt to bad weather to looming tax deadlines. Hisel said the slump typically continues until summer's tourism numbers begin to ramp things up.
"Every community in our state goes through that cycle where the Christmas shopping season is a very large number of the total," he said. What will help that cycle, he said, is a little bit of threatening weather. Hisel said the threat of bad weather helps keep people close to home.
"If the weather is a little threatening during the key shopping weeks, people say, 'Let's not go all the way to Sioux Falls, let's just drive to Mitchell,' " he said. "It's just very human behavior." Conversely, clean roads and clear skies -- like those forecast for this week -- make shoppers more brave.
"Bright, blue-bird, sunny, open days are not useful to us," Hisel said with a laugh. "Especially on the weekends."
While retail may see the lion's share of the holiday spending profits, Hisel said other services, like movies and restaurants, benefit from the seasonal spikes. That may be why local merchants and organizations like the Chamber of Commerce push shopping locally, rather than heading to larger venues like Sioux Falls, which many view as competition. Hisel, however, said he doesn't see South Dakota's largest city as a threat.
"Sioux Falls is a retailing Goliath," Hisel said. "I have never believed you win customers by shaming them. People are going to run to Sioux Falls to get some things, but we have some uniqueness and some good retailers and value."
Besides, Hisel said, there's other competition to worry about. "We have new sheriffs in town, and they're called the Internet," Hisel said. He said there continue to be more web-based sales, which cut into local retailers' business.
"It's not just about Mitchell folks shopping in Mitchell," he said. "The dot-com phenomenon, it impacts every retailing entity in the nation, and the disadvantage that the retailing community would talk about is they're not collecting state sales tax the way our local merchants do."
Not even that is enough to dampen local retailers' spirits, though. Hisel said many local retailers have taken advantage of the Internet, offering online coupons or Facebook updates.
"We have smart retailers," he said. "They are good at what they do." Plus, Hisel said people are discovering that some things, particularly large-scale items, are not worth the extra cost and hassle of shipping.
"For larger items, household items, etc., the shipping costs are just taking their breath away," Hisel said. "There are certain things they have found there is no bargain on the Internet." Not only that, but Hisel said Mitchell's retailers can offer a shopping experience that Sioux Falls, Rapid City or even Google can't.
"We have the best specialty shopping, I think, in South Dakota," Hisel said. "There are unique and one-of-a-kind gift and specialty shops in our downtown."
Interstate 90 and Cabela's also contribute to a strong overall "retailing experience," Hisel said. "We have positioned ourselves well in the last 10-15 years to really maintain ourselves well as a strong retail base," he said.