January 18, 2019
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Why have Maine holiday retail sales lagged behind national figures since the recession?

PORTLAND, Maine — As more Mainers shop online, the impact on the state’s retail sector is hard to track. But not if you’re Katie Clark.

Like a 21st-century Santa making her list and checking it twice, Clark keeps an elaborate spreadsheet to track her online gift-giving.


“People have seen the spreadsheet, and it’s epic,” Clark said.

Clark of Portland is a techie in a variety of respects, including her holiday shopping, which she does almost entirely online. Last year, for family mostly in other states, she counted 76 gift entries in that spreadsheet, which includes tracking codes for every package.

“I’m probably hyper-organized,” she said.

Clark may be in an elite category of online retail shoppers in that respect, but she’s not alone in wanting to avoid the crowds and do holiday shopping on her own time, maybe in her pajamas. While much of her shopping is at major online marketplaces, she said the list does include Maine-based retailers as well, like Stonewall Kitchen and Sea Bags.

Nationally, online retail sales have grown year-over-year by double-digit percentages from about 2000 through 2012, when online sales made up an estimated 5.2 percent of all retail sales, according to the U.S. Census Bureau.

In 2012, a 14.7 percent rise in online shopping came with an increase in total retail sales. But Maine sales last year remained 5 percent lower than 2007 and slightly lower than 2008, not counting holiday-related food store spending.

For state coffers, sales in October, November and December don’t punch sale tax collections much higher than other months, but state economic forecasters view that season as one predictor for the year ahead.

Mike Allen, associate commissioner for tax policy at Maine Revenue Services, said lower heating costs this year — with all else remaining equal or better in the economy— give him good expectations for sales tax revenue generated by holiday shopping at the state’s retail outlets.

“I don’t think we’re going to break any records, but I think we’ll have a much better performance than the last couple of years,” Allen said.

Another way of shopping

The rise in online, global retail doesn’t necessarily come at the expense of smaller stores, especially those that are able to find a particular niche.

Zeth Lundy, who with his wife owns Central Street Farmhouse and Maine Cloth Diaper Company in downtown Bangor, said increasing online sales provide opportunities and challenges for the store that sells supplies for home brewing, cheesemaking and other homesteading gear aimed at do-it-yourselfers.

“There are so many national stores that have more competitive shipping costs… it’s one of those necessary evils,” Lundy said. “But it’s about building up exposure for Central Street Farmhouse.”

Lundy said the leap into online sales came after a string of people from outside the Bangor area said they wished they were able to buy from Central Street but could not travel to the Queen City to do so. Maine Cloth Diaper Company, which Lundy and his wife bought in 2013, already had an online retail arm with a national reach, he said.

“The natural parenting market tends to be a bigger market for us online,” Lundy said. “I’m not sure what the answer is, but I think it’s an important model to have if you want to expand your reach beyond people who can visit in the shop.”

For last year’s holiday season, sales at both specialty retail and general merchandise stores remained about 5.5 percent lower than in 2007, the year before the recession took hold, as the holidays made up slightly less of those stores’ total annual sales.

But over the whole year, specialty retailers are making out better than larger stores.

“I think that really reflects the impact the recession had on lower- and middle-income households,” Allen of Maine Revenue Services said.

Sales for general merchandise retailers were still 2.6 percent lower last year than 2007 while the category of other retail, such as sportings goods stores or antiques dealers, was about 1.7 percent higher than before the recession.

The general merchandise category typically includes big-box stores selling everything from tires to food and clothing, “where you’re typical household is going,” Allen said, “and they’ve been having a hard time.”

Allen attributes that in part to stagnant wages in the state in recent years. Median household wages have mostly fallen in Maine since 2007, landing 7 percent lower in 2013 than before the recession.

Niche and easy

Curtis Picard of the Retail Association of Maine cited successive years of double-digit online sales growth, proximity to tax-free New Hampshire and a temporary increase in Maine’s sales tax from 5 percent to 5.5 percent as possible contributors to an overall decline in general merchandise and other retail sales volume during the past two holiday seasons, not including food purchases.

Picard said consumer shifts toward shopping for specific brands factored into a movement toward specialty stores and drove up sales in places like Kittery and Freeport.

Those areas were among the fastest-growing for holiday season retail sales from 2008 to 2013, with that category of spending growing in Kittery and neighboring areas by about 5.5 percent and sales in suburban Portland, including Freeport, rising the fastest at about 13 percent for that period.

In contrast, the metropolitan area including Portland and the Maine Mall in South Portland saw sales drop for that period by a little more than 1 percent, in line with holiday-season spending in Bangor, Lewiston-Auburn and Augusta.

 


Correction: An earlier version of this story had an incorrect spelling of Zeth Lundy's name.


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