Issuu

Small Thaw in Sales

Retail sales and forecasts improved in February, but still have a lot of frozen ground to make up due to the extreme winter. Page 3

Free Samples Welcome

An in-store, free sample, especially if it’s a fresh brewed cup of specialty coffee, is a great way to market a new product. Page 5

Michigan Ballot Mania

2014 elections are shaping up to be full of ballot proposals. Here’s a rundown on what issues could make their way to voters. Page 5

® April 2014 Vol. 39 No. 2

New online directory to help shoppers find Michigan retail stores There will soon be a new, free way for Michigan retail businesses to be found by shoppers looking to “Buy Nearby.” An online, searchable directory of retailers across the state has been built for Michigan Retailers Association’s Buy Nearby campaign by the P u re M i c h i g a n Business Connect program of the Michigan Economic Development Corporation (MEDC). The directory is ready now for all retail businesses to add their information to the search tool, said MRA’s Tom Scott, senior vice president, communications and marketing. “It’s important for retailers to put in their information as completely as possible, as soon as possible,” he said. “We need the directory to be full of great merchants and their specialties before we begin publicizing the directory to consumers. The idea is to drive up traffic and sales at local retailers by helping shoppers find what they’re looking for – nearby, in Michigan.”

The official publication of the Michigan Retailers Association

Continued on page 8

www.retailers.com

Governor adds support for ‘Fairness’ Governor Rick Snyder has provided momentum to Michigan retailers’ push for Main Street Fairness legislation by adding his public support for state action

on the Internet sales tax collection issue. The governor told reporters on February 26 he now supports legislative action on the measure to begin

to level the retail playing field by requiring certain out-of-state online retailers, including Amazon.com, to collect state sales tax on goods sold to Michigan residents. His comments followed similar remarks made the day before to lawmakers by new state Treasurer Kevin Clinton and Lt. Gov. Brian Calley. “The thousands of Michigan re-

Main Street Fairness Now! Download and Mail Back the Form.

Instructions Instructions for adding your retail business information are available online in the Buy Nearby retailer toolkit at www.BuyNearbyMI.com/toolkit. There is no charge for businesses to become part of the directory and no charge for consumers to use it. In addition to inputting basic location and contact information, retailers need to add a comprehensive list of

MRA executive Jean Sarasin is retiring after 33 years of key roles in the Association’s growth. Photo by David Trumpie

Sarasin plans retirement after decades of change by Doug Henze

When Jean Sarasin joined the staff of Michigan Retailers Association in August 1981, it was a far different organization in a far different business world: smaller, less automated and, in a word, “simpler.” After playing important roles in shaping MRA’s evolution and growth over the past 33 years, Sarasin will retire on July 4. Her work over the decades has helped the Association get out in front of change and become an efficient,

tech-savvy, member-oriented business that is the envy of state retail and other membership organizations across the nation. “What really stands out when I look back is how much everything has changed, and how much more complicated everything has become,” said Sarasin, executive vice president and chief operating officer. “Take merchant processing, for example. Back in the day, the only transaction equipment a retailer had was a ‘knuckle-buster’ – a manual imprinter. Then came one type of electronic terminal, and we sold it to everyone. Now, there are so many ways for merchants to process, so many different kinds of hardware and software, and we Continued on page 4

tail businesses that face unfair competition each and every day from out-of-state online companies cheer Gov. Snyder’s support for action,” said James P. Hallan, president and CEO of Michigan Retailers Association. “It’s long past time for the state to remove the serious disadvantage imposed on retailers that invest in Michigan, provide jobs to Michigan workers, pay state and local taxes in Michigan and support their local communities in countless ways.” Court Rulings The governor had said previously that he favored a federal solution to the problem. In his recent comments he indicated that state action is also warranted, following recent legal deContinued on page 6

Driver’s licenses to note veterans It’s not always obvious when a veteran walks into your business. Beginning May 1, that will change. Thanks to a new designation on Michigan’s driver’s licenses, honorably discharged veterans can choose to be identified with a bright red “Veteran” located near the bottom of his or her license or Michigan ID card. The designation will enable retailers to feel good about extending well-deserved thanks, in the form of a discount or promotion, for vetContinued on page 2

Michigan Retailer

Setting a standard of excellence by James P. Hallan, MRA President and Chief Executive Officer In 1981, Jean Sarasin joined the staff of Michigan Retailers Association. On July 4, 2014, Jean will retire after an incredible 33-year career. She retires as executive vice president and chief operating officer, also serving on the boards of Michigan Retailers Association and Retailers Mutual Insurance Company. What a fantastic run! As you will note throughout this issue, Jean has many fans – and you can count me as one of the biggest! Over the years she has shown an extraordinary ability for mastering the details while easily handling complex analytical problems that helped us lead change in an everchanging industry. The Association’s growth is due

in large part to Jean’s ability to not only organize and maintain financial records meticulously, but to prepare and analyze complex financial models that have helped us analyze new business opportunities. Numbers tell a story, and we always know that Jean’s numbers are accurate and that we have an excellent roadmap for decision making. On most days, you’ll find Jean pulling into the MRA parking lot at the early hour of 7 a.m. to tackle the emerging projects of the day. Her work ethic, honesty, personal integrity, organization and leadership have

“Her work ethic, honesty, personal integrity, organization and leadership have set the standard for excellence.”

Driver’s licenses to note veterans Continued from page 1

erans’ service and be confident the discounts are going to deserving veterans. For businesses offering a yearround discount, the Michigan Veterans Affairs Agency says it will

publish a list on www.michiganveterans.com and promote the retailers through social media. Growing Numbers More than 680,000 veterans call Michigan home, and those numbers are growing with the federal troop drawdown. State agencies, community service groups and private retailers will be better able to serve veterans with the services available to them with the license designation. “This is one more way Michigan can honor our state’s veterans and make their day-to-day lives a little

set the standard for excellence. She has always been a trusted advisor to me and earned the respect of every employee and board member at Michigan Retailers.

easier,” said Jeff Barnes, director of the Michigan Veterans Affairs Agency. “I encourage retailers to invite veterans in and participate in this program.” An honorably discharged veteran can add the designation to his or her driver’s license or state I D c a rd a t a n y local Secretar y of State branch by presenting official discharge documents. If re n e w i n g t h e i r license, veterans only must pay the normal renewal fee. Otherwise, they will pay the standard fee for a duplicate or corrected license. “It’s an honor for our department to help our proud veterans get the benefits and discounts they have earned and deserve,” said Secretary of State Ruth Johnson. “I hope every clerk, waitress and bank teller who sees the designation will take a moment to thank that veteran for their service and sacrifice.” Highest Character The designation means retailers can be assured they are dealing with honorably discharged veterans – those with the highest character of

I consider myself to be very fortunate to have worked with Jean since 1985. We always have been on the same page, and I have trusted Jean implicitly. Her razor sharp mind and personal integrity are always guided by the over-arching principle that we should build a business model that serves the members in the best ways possible. One of the most challenging business days in my own career was when Jean announced her retirement. But, as we all know, the only constant is change. So Michigan Retailers will change. New employees have been hired, and with that new energy we will continue to do our very best to run an organization of which you can all be proud. Jean’s leaving is a mixed blessing. A very well deserved retirement looms for Jean and her husband, Tom, while Michigan Retailers can look back and thank her for a job well done. All of us should raise our glasses and clink them in a toast to her for 33 wonderful years of service to us all.

www.retailers.com

Board of Directors: Thomas Ungrodt Chair Ideation, Ann Arbor

James P. Hallan

President and CEO Michigan Retailers Association

Dan Marshall

Vice Chair Marshall Music Company, Lansing

Peter R. Sobelton Treasurer Birmingham

Jean Sarasin

Secretary Michigan Retailers Association

Barb Stein

Past Chair Great Northern Trading Co., Rockford

Brian Ducharme AT&T

Becky Beauchine Kulka

Becky Beauchine Kulka Diamonds and Fine Jewelry, Okemos

Orin Mazzoni, Jr.

Orin Jewelers, Garden City

Joseph McCurry

Credit Card Group

Larry Mullins

Brandon Tire & Battery, Ortonville

R.D. (Dan) Musser III

Grand Hotel, Mackinac Island

Joe Swanson Target Corp.

James Walsh

Meijer, Inc., Grand Rapids

D. Larry Sherman

Board Member Emeritus

Michigan Retailers Services, Inc. Board of Directors: Bo Brines Little Forks Outfitters, Midland

Bill Golden

Golden Shoes, Traverse City

Lisa McCalpine-Wittenmyer Walgreens

service – without having to bother with complex federal forms. For retailers interested in attracting veterans as customers, a discount or value-added service specifically for veterans creates goodwill among veterans. If retailers currently have a discount in place, now is the time to review the policies and update them to include the new license or ID cards and provide training to front-line staff for the best customer service experience. Retailers can contact the Michigan Veterans Affairs Agency with questions about veteran programs or to be listed on the MVAA website. Quality of Life Analyst Lynn Hendges can provide assistance at 517.284.5227 or via email at HendgesL2@michigan.gov.

James P. Hallan Thomas B. Scott Publisher

Editor

Pat Kerwin

Design Manager

Publication Office: 603 South Washington Avenue Lansing, MI 48933 517.372.5656 or 800.366.3699 Fax: 517.372.1303 www.retailers.com www.retailersmutual.com

Subscriptions:

Michigan Retailer (USPS 345-780, ISSN 0889-0439) is published in February, April, June, August, October and December for $20 per year by Michigan Retailers Association, 603 South Washington Ave., Lansing, MI 48933. Subscription fees are automatically included in the Michigan Retailers Asociation membership dues. Periodical postage paid at Lansing, Michigan. POSTMASTER: Send address changes to 603 South Washington Ave., Lansing, MI 48933. The Michigan Retailer may be recycled with other white office paper.

April 2014

MICHIGAN RETAIL INDEX

Retail sales and forecasts improve, but still cool the number, the stronger the activity. Looking forward, 54 percent of retailers expect sales during March– May to increase over the same period last year, while 19 percent project a decrease and 27 percent no change. That puts the seasonally adjusted outlook index at 61.7, up from 58.5 in January but below 67.3 a year ago. Retailers in the central region of the state fared the best in February, with

Current

58 percent reporting increases and 42 percent decreases. The northern region was the only other area in which more retailers rang up gains than saw declines – 39 percent to 33 percent. Across the nation, February retail sales excluding autos and gasoline rose 0.3 percent, slightly better than expected, according to the U.S. Commerce Department. That followed a revised 0.6 percent decline in January.

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671 563 553

522

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300 MAY

Celebrate Michigan and the great local shopping across the state.

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APR

Saturday, October 4, 2014

648

500

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“Get Caught Blue-Handed Day”

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Seasonally adjusted diffusion index, calculated by adding the percent of respondents indicating increased sales and half the percent indicating no change, and then seasonally adjusting the result using the U.S. Census Bureau’s X-11 Seasonal Adjustment procedure. Index values above 50 generally indicate an increase in activity, while values below 50 indicate a decrease.

Get Ready For Buy Nearby

February state sales tax revenues totaled $494.6 million, down 5.2 percent from last year and $21.9 million below the forecasted level. Complete results of this month’s Michigan Retail Index—including data on sales, inventory, prices, promotions and hiring—are available at www. retailers.com/mra/news/michiganretail-index.html. The website includes figures dating back to July 1994.

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Outlook Index

MAR

Sales and short-term forecasts for Michigan retail businesses improved during February, but they still have a lot of frozen ground to make up after the extreme winter, according to the latest Michigan Retail Index, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago. “We saw a small thaw in the numbers, but February’s unrelenting cold and snow continued to hammer most consumers and retailers,” said James P. Hallan, MRA president and CEO. “What we need is a good, warm spring to help everybody get back on track.” The February survey of MRA members showed 42 percent of retailers increased sales over the same month last year, while 46 percent recorded declines and 12 percent reported no change. The results create a seasonally adjusted performance index of 49, up from 42.5 in January but short of the important 50 mark. The 100-point Index gauges the performance of the state’s overall retail industry, based on monthly surveys conducted by MRA and the Federal Reserve. Index values above 50 generally indicate positive activity; the higher

200 (millions)

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Be sure to complete your online survey each month!

Michigan Retailer

www.retailers.com

Sarasin planning retirement after decades of change Continued from page 1

work to find the right solution for every business.” To the Penny The Jackson native and former bank clerk was employed by a local accounting firm when she heard about an opening at Lansing-headquartered MRA. She interviewed for the position and was hired to work as both an accountant and bankcard clerk. In those still-early years of bank-issued credit cards, MRA worked with Michigan National Bank to process the paper slips retailers ran through their credit card imprinters. Each day, she and the other two clerks reconciled thousands of slips with the accompanying merchant summary slips, then reconciled all the slips with the totals. “We didn’t leave for the day if those numbers were even a penny off,” said Sarasin. “Many nights we were there until midnight and beyond, especially during Christmas season.” On the rare months when processing volume hit $1 million, MRA staff celebrated after work with pizza and beer. Merchants were paid every two weeks for their credit card slips and there was only one processing rate.

finances of this organization,” said a lot of business and financial knowlbership database with extensive Tom Ungrodt, chair of the MRA edge and he set the tone right from capabilities. Board of Trustees. He is president the start. “When I started, all the accountand CEO of Ideation, Inc., Ann Arbor, “He saw some capabilities in me ing was manual. I had a part in a leading producer of marketing sothat I didn’t see…and as the job grew, bringing in the first computer and lutions for independent gift retailers I grew.” worked with the software developer across the nation, plus he oversees Hallan, who has worked with Sarato create the database for membertwo Michigan gift stores. sin since 1985, admits one of his most ship, group insurance and workers’ “She also takes ever ything in challenging days was when she told compensation insurance. I’m pretstride,” Ungrodt added. “No matter him she was retiring. ty proud of that. It was like a mini how difficult the task, main-frame, not like she always takes the independent it with a smile and computers we have says, ‘we’ll take care today.” of it.’” In the late 1990s Peter Sobelton, she also led a team chair of the Retailthat reviewed all of ers Mutual Board the association’s of Directors, also computer needs has high praise for and recommended Sarasin. He is ownt h e o rg a n i z a t i o n er-partner in several stay with Apple retail property comcomputers. It was a panies, the former far-sighted move at owner of two retail the time, one that businesses in Birbucked the near mingham and has an universal trend MBA in finance. of businesses op“Her attention to e r a t i n g i n a P. C . d e t a i l … h a s b e e n Jean Sarasin’s oversight of MRA’s finances and accounting have provided environment. without equal,” So- “an excellent road map for decision making.” Photo by David Trumpie belton said. “Her Strong Balance ability to comprehend government “She has always been a trusted adHer love for numbers, order and documents, complete and then file visor to me and earned the respect of efficient procedures has served them has never ceased every employee and board member her well throughout her career. t o a m a z e t h e e n t i re at Michigan Retailers,” he said. Although her chief operating offiboard. Her knowledge He points to her excellent financial cer’s duties also put her in charge of the organization and record keeping and ability to prepare of such areas as human resources its people has propelled complex financial models for analyzand customer service, she favors MRA to a level of efficiening new business opportunities as finances and accounting. cy unsurpassed by any a big factor behind MRA’s robust “That’s the side I have always enother association. growth. joyed the most. Every month when “I am sure I speak for the entire “We always know that Jean’s numyou complete financial statements, board when I say that it has been bers are accurate and that we have an you’ve finalized a job. You always a great pleasure working with her, excellent roadmap for decision makhave that feeling of accomplishment,” and how much easier she has ing,” said Hallan. she said. made our jobs as board members “I like working with, and analyzing, by her ability to explain, in easily More Responsibilities numbers. They make sense, the numunderstood terms, exactly what a Sarasin took on additional responsibers mean something and everything page of numbers truly means.” bilities almost from the start, moving has to balance in the end.” out of the bankcard area and into Seeking greater balance in her life Board Involvement membership and insurance services. is part of the reason she’s retiring, Sarasin credits board members She continued to take on more and she says. Although she is MRA’s with “challenging management to be more, eventually rising to the number most senior employee, she is not the the best we can be.” two executive at MRA. oldest. She will be a young retiree, “I have the highest respect for the She was named staff accountant still in her 50s. board members, because they make in 1984, director of administra“I’m excited. I feel like it’s time us better,” she said. “Throughout tion in 1987 and vice president of to move on to something different, MRA’s history we have had really finance in 1990. She became senior spend more time with my husband, good board members who are dedivice president in 2001, executive vice Tom, and do some traveling. And cated, professional and ask great president in 2008 and added the COO MRA can get some new blood in here, questions.” title in 2011. with new thoughts and energy.” She also praises the only two CEOs She also was named to the Retailers She and Tom, who is already reshe has worked with during her tenFund (forerunner of Retailers Mutual) tired, plan to sell their Okemos ure: James P. Hallan, president and Board of Directors in 1997 and to the home later this year and move to CEO since 2008, and Larry Meyer, MRA board in 2002. Traverse City. Their adult son is now retired, who hired her. Her accomplishments are many. married and lives in Virginia. In “I can’t say enough good things She says she’s proudest of her work Northern Michigan, she expects to about Jim and his management of this in transforming all of MRA’s syskeep up an active lifestyle, full of organization,” she said. “And Larry, tems from manual to computer in walking, hiking, biking, snowshoeContinued on page 5 he was a great mentor to me. He had the 1980s, including adding a mem-

“She’s always a step ahead of the game regarding the budget and finances of this organization.” Today, of course, processing is international in scope and fully computerized, there are more than 700 types of rates (depending on the type of customer card) set by the giant card associations (Visa and MasterCard), merchants’ payments are deposited on a timely basis, and MRA processes an average of $2.7 million in members’ transactions every day – nearly $1 billion annually. “Over 30 years that’s how things have changed,” she said. “Everything has become bigger, faster and more complex. MRA has adapted along with it to serve our members.” Highly Respected Sarasin is most recognized for her tireless, painstaking work to keep MRA’s finances in excellent shape. Board members and outside auditors regularly praise the Association’s financial accounting and the woman behind it. “She is one of the most efficient people I’ve worked with in my career. She’s always a step ahead of the game regarding the budget and

April 2014

Free samples add warm, personal touch to marketing by Doug Henze

Grabbing market share in a mature industry is never easy, and in the coffee business it’s a jungle out there. So when Bruce Block joined The Coffee Barrel in Holt last year to

“I knew we had to create a following,” said Block, an industry veteran who began working for Tim and Shawn Brenner’s specialty coffee roasting business last April.

you’ve released the romance.” Block, who is test marketing the coffee line in six stores, is counting on the made-in-Michigan theme to add further appeal. The 10 coffees in the new line have names such as Sleeping Bear Sunset, White-Tail Morning Blend, Mackinac Fudge and Traverse City Cherry. “They are all presented in a Michigan knotty pine display I had designed,” Block said. “The displays are like furniture.” F o r T h e C o f f e e B a r re l – founded in Lansing in 1983 by a previous owner and later moved to Holt by the Brenners – the campaign represents the evolution of company marketing. The wholesaler ships the 100 coffees it roasts and flavors to customers around the Midwest and as far south as Florida. Beyond a café attached to the roasting facility, where retail customers can Bruce Block of The Coffee Barrel in Holt sets up his sampling station, complete with try the coffee, there was little custom-made display, inside Foods for Living in Okemos. Photo by David Trumpie. effort to market the product, Block said. help with product development “I’d go in and do these two-to“We do a really fine job with the and marketing, he knew getting three-hour greetings. I’d put a coffee and the coffee is outstandsales percolating for a new Michone-pound bag of coffee in shoppers’ ing,” Block said. “The whole Michigan igan-themed line of products in hands – while they were sipping thing gave it a niche.” retail stores would take a special – and more often than not, they blend of good coffee and clever wouldn’t hand it back. Sales were Repeat Samplings marketing. made, as there were a lot of smiles. I Block learned the coffee business He decided the right strategy think people felt welcomed and a bit called for the personal touch to surprised.” compete against all the aisles packed with colorful, appealing packaging. Romance Setting up shop just inside merMass merchandisers may know chants’ doors in September, Block how to catch consumers’ eyes, but drew consumers’ attention to the they miss coffee’s real selling point – Michigan Roasted line with a friendly aroma and taste – Block said. greeting, a free cup of fresh-brewed “The problem is, the romance is coffee and whipped cream for those trapped in the bag. When you’re there who asked. brewing and sampling and talking,

the store, they would be low or out of that product,” he said. The next step will be to convince retailers that it’s worthwhile to staff sampling stations themselves, Block said, adding that he plans to meet with several large retailers who are interested in the concept. The coffee retails for $12.99 to $14 a pound – about $4 to $6 dollars above the store’s cost, he said. “There’s absolutely no reason it shouldn’t be very successful,” Block said of the sampling technique. “For a retailer who is looking for something a little bit different, this is it: a warm greeting, a hot cup of coffee and resulting sales that more than offset the cost of the sampler.” Emotional Appeal Block said sampling could be applied not only to food items but also to other products that have an emotional appeal to consumers. “The cosmetic industry, they live off that,” he said. “They put a cosmetic on a person and the person usually walks out with something.” He also recalled walking through a furniture store and being invited to plop on a bed to try out a mattress. “If I’m a retailer, I’m going to try to appeal to any of the senses I can,” he said. “And I know by doing that, I’m going to sell more.” That personal touch and in-store

Sarasin planning retirement Continued from page 4

ing and cross country skiing. “My guess is I’ll also find good places to do volunteer work. That’s a big thing in my family. And moving into a new community, it’s a great way to meet people. “I’m also looking forward to catching up on all the books I want to read and all the yarn I have that I need to knit.” Reorganization Sarasin announced her retirement date to the board two years in advance to give the organization plenty of time to adjust. Her duties at MRA are being divided among current personnel.

William J. Hallan, senior vice president, operations and general counsel, has added her overall management responsibilities to his plate. Long-time Executive Assistant Amy Jolley will handle human resources, and Cheryl Szczubialka, recently hired as staff accountant, will handle MRA’s financial and accounting duties. Sarasin admits 33 years working for one organization is a long time, even if it has flown by. “Wow, 30-plus years. I’m amazed sometimes when I think about it. It sure doesn’t seem that it has been that long…especially since I haven’t been getting any older!”

A free sample of fresh-brewed specialty coffee adds a warm and personal touch to the company’s marketing campaign. Photo by David Trumpie.

while working for a decade for Paramount Coffee in Lansing, which his father helped found, and later for another industry company. “At different times I was the buyer, the roast manager and later got involved in marketing,” he said. To sell product for The Coffee Barrel, Block did samplings at retail stores two to three times a week. He varied products to give consumers a taste of the full line. “Generally, the next time I visited

experience also give a brick-andmortar retailer an effective strategy to combat Internet competition. “Consumers are really people waiting to be surprised. People enjoy being greeted, and a warm welcome, a savory cup and some compelling product information can make for a win-win situation.” Doug Henze is a freelance writer and former business reporter for the Oakland Press in Pontiac.

Michigan Retailer

Governor adds support for ‘Fairness” Continued from page 1

cisions on the issue. The U.S. Supreme Court on December 2 refused to hear Overstock. com’s and Amazon.com’s appeal of New York state’s Main Street Fairness legislation. New York’s highest court had upheld the constitutionality of that state’s fairness law. Michigan’s legislation is modeled after New York’s, Hallan said. Hallan explained that current Michigan law encourages and rewards online “vapor retailers” such as Amazon by giving them a 6 percent price advantage over Michigan companies on goods they sell to Michigan residents. The price advantage comes from not being required to collect sales tax, because the companies lack a physical presence in the state. The fairness bills would redefine physical presence to include certain out-of-state online retailers – those doing business in the state through subsidiaries or a network of affiliates – to start collecting sales tax on goods sold to Michigan purchasers. Amazon currently collects sales tax in 19 states, an action often prompted by state legislation, according to Hallan. Slow Progress The Senate Economic Devel-

opment Committee held its first hearing on Senate Bills 658 and 659 in late January. Similar legislation, House Bills 4202 and 4203, cleared the House Tax Policy Committee last year but so far has not been scheduled for a vote. “Our state needs lawmakers to support Michigan job providers and local communities by enacting Main Street Fairness legislation this year,” said Hallan. Main Street Fairness is MRA’s top legislative priority. “We have been pushing hard for legislative action and believe there is sufficient support among lawmakers for passage,” said MRA’s William J. Hallan, senior vice president, operations and general counsel. “Not surprisingly, this issue has been caught up in the politics surrounding tax issues, and legislative leaders have been reluctant to put it up for a vote.” In his comments to reporters, the governor made it clear he doesn’t believe fairness legislation can be considered a tax increase. “I don’t view it as a tax increase. I view it as a collection of a tax that’s already due,” Gov. Snyder was quoted as saying.

www.retailers.com

Frequently asked questions about Main St. Fairness What is Main Street Fairness legislation and what would it do? What is Main Street Fairness? Main Street Fairness is legislation designed to ensure a fair and level field of competition for Michigan’s retailers by requiring certain out-of-state online retailers to collect and remit Michigan’s sales tax. How does the legislation work? The legislation creates a new definition of “physical presence” to include companies, such as Amazon, that operate in Michigan through subsidiaries, affiliate networks or other persons that have substantial nexus with the state. Does Main Street Fairness only apply to Amazon? No. The legislation would apply to any out-of-state online or catalog company that has a defined physical presence in Michigan. What is happening in Michigan under current law? Who is currently required to collect and remit sales tax? Only retailers that have a physical presence in Michigan are re-

quired to collect and remit the sales tax. Some online companies exploit this loophole and avoid collecting sales tax on goods sold to Michigan residents by doing business in the state through subsidiaries or through a network of affiliates. Do Amazon and Overstock currently collect Michigan sales tax? No. But they should! Amazon has a wholly owned subsidiary, Brilliance Audio, located in Grand Haven, Michigan. Additionally, both Amazon and Overstock use a vast network of affiliates in Michigan to sell products through their online sites. Amazon also leases space in downtown Detroit for employees, and Crain’s Detroit Business reported that the company was expanding its footprint downtown in July 2013. Aren’t online shoppers already required to calculate and pay use tax on their purchases when they file their income tax returns? Yes, but most do not. The majority of Michigan residents apparently do not know they are required to pay use tax on items purchased from out-of-state online or mail-order

April 2014 companies. This tax is due when an individual files a personal income tax return. In fact, the Michigan Department of Treasury found that only 1.5 percent of the estimated tax liability on remote sales was collected in 2012. How does Main Street Fairness impact Michigan retailers and customers? Why is Main Street Fairness important to retailers? Main Street Fairness levels the playing field for Michigan retailers who are at a disadvantage because they are required to collect the 6% sales tax. Without Main Street Fairness, consumers will continue to use brick-and-mortar retailers as showrooms and avoid paying sales tax by purchasing products online from out-of-state companies. Would all online-only retailers be required to collect and remit sales tax? No. Only retailers that have a defined physical presence in the state would be required to collect and remit sales tax. The defined physical presence includes companies that operate in Michigan through subsidiaries, affiliate networks or other persons that have a substantial nexus with the state. If I have a brick-and-mortar store located in Michigan, how would the

7 legislation affect me? Because you already have a physical presence in Michigan, you are already required to collect and remit Michigan sales tax. The legislation would remove the competitive advantage out-of-state online companies have and would enable you to compete on a level playing field. If I have a brick-and-mortar store in Michigan but I sell products online to other states, would the legislation require me to collect and remit sales tax for other states? No. The legislation only deals with Michigan sales tax on items sold in Michigan. Some other states have passed similar legislation; however, you would not be required to collect and remit sales tax in any of those states unless you have a physical presence in that state. As a consumer, what are my tax obligations for online or catalog purchases? Under current law, consumers are charged a 6 percent sales tax at the point of sale if the retailer has a physical presence in Michigan. A 6 percent use tax is owed on purchases where sales tax is not charged at the point of sale. The use tax must be calculated and reported on an individual’s state income taxes. Main

Street Fairness legislation would simplify the collection process for consumers. Why should we act now? What impact does the legislation have on the state? The Michigan Department of Treasury estimates that $508 million will be lost in FY 2015 due to uncollected sales tax revenue – largely from remote purchases – and the Department projects that number to increase each year. Put another way, that means Michigan retail businesses will lose $8.5 billion in sales (and the jobs that flow from those sales) to companies outside Michigan that don’t invest in our state, don’t employ Michigan workers and don’t pay taxes in Michigan. That is a dagger in Michigan’s economy and our local communities. Schools and local governments receive the majority of sales tax dollars raised, with 73 percent going to the school aid fund and 24 percent going to local governments. Is it constitutional? Yes. On December 2, 2013 – “Cyber Monday” – the U.S. Supreme Court declined to hear Overstock’s and Amazon’s appeal on New York’s Main Street Fairness

legislation. Earlier this year, the New York Court of Appeals, the State’s highest court, held that New York’s Main Street Fairness law was constitutional. Specifically, the New York Court of Appeals held that the affiliate programs of Amazon and Overstock created sufficient nexus for sales tax collection. What are other states doing to address this problem? 24 states have passed legislation to end the unfair advantage outof-state online retailers have over in-state retailers. These states include California, Georgia, Illinois, New York and Texas. And Amazon now collects sales tax in 19 states, an action that was often prompted by legislation. More than 60% of the United States population now lives in a state where Amazon collects sales tax. I’ve heard a federal solution is the only way to really change the law, is this true? No. While Congress is the only entity that can tax interstate commerce, states can levy and address how state-based taxes are collected. While it is good for Congress to focus on a federal solution, it is only doing so because of the actions by the states.

Michigan Retailer

New online directory for MI retail stores Continued from page 1

“keywords” of products, services, brands and any other type of information that will enable their business to appear in the search results for a shopper looking for those specific or similar items. “The retailer is responsible for putting in and updating his or her information about the business and its merchandise,” Scott said. “That means the responsibility for successful results rests with the individual retailer, as it should.” Basic information for members of MRA should already be in the directory because of the work done by MEDC, Scott said. But members will need to correct any information that’s wrong or missing. They’ll also need to add the keywords best suited for their business. Buy Nearby MRA launched the Buy Nearby campaign last year to encourage consumers to buy from businesses in Michigan, as well as to under-

stand the economic benefits from keeping their shopping dollars in Michigan. The campaign runs year round. The first Saturday in October is designated as a fun and festive celebration of Buy Nearby to focus retailer, shopper and news media attention on the campaign. This year’s celebration, branded as Get Caught Blue-Handed Day, is October 4. Shoppers are encouraged to “get caught” shopping at nearby Michigan stores. “We need the directory to be in solid shape for use by consumers well before October 4,” Scott said. He praised the work of Pure Michigan Business Connect in adapting part of its searchable directory of Michigan companies to create the Buy Nearby directory for shoppers and retailers. “Through Buy Nearby we’re encouraging Michiganders to shop at Michigan businesses. So it only makes sense for us to provide consumers with a quick and easy way to find what they’re seeking.”

Membership Services Corner

Quick notes on key services. Call 800.366.3699 for details. by Penny Sierakowski, MRA Customer Service Department Manager Quick notes on key services. Call 800.366.3699 for details. We a p p re ciate your membership. Let us know whenever we can help you with a question or a problem, no matter how large or small. Credit Card Processing • It’s tax time. Please verify your 1099K form for accuracy. Contact customer service if you require a W-9 form. • Please notify customer service of any Tax ID or bank account changes. • If you receive a “Re-Enter or Lost Communication” response when processing a transaction, please contact customer service so we can verify the transaction before you continue to process. • We have cell phone processing available. Call for PayFox information. • To reduce customer disputes, be sure to imprint and obtain a signature for every sale when possible. Also, credit card terminals

can support your store policies by printing them on receipts. Contact us to find out about Footer Lines. • Control access to your credit card processing and only allow authorized people to handle your point-of-sale system. • Data security compliance is mandatory; therefore, you must complete an annual PCI Self-Assessment Questionnaire to verify if your business is PCI compliant. Visit www.compliance101.com to begin the questionnaire. • These terminals are no longer PCI Compliant: Zon Jr, Tranz, Omni and Hypercom T7P. Contact customer service for upgrade information. • To make sure your credit card transactions are processed at the lowest cost, always answer the following prompts on keyed transactions: - Enter AVS (street number and zip code) of the billing address - Enter purchase order number - Enter sales tax amount if prompted - Obtain and pass through a valid authorization number - Make sure authorization and settlement amounts match (except for tip adjustment) - Settle within 24 hours.

www.retailers.com

IT’S THE LAW

‘We the People’ takes many forms this year by William J. Hallan, MRA Senior Vice President Operations and General Counsel Democracy is government by the people. Typically, “the people” exercise their voice through elected officials, commonly referred to as a representative democracy or a republic. In Michigan, we elect our governor, senators and representatives to pass laws on our behalf. We also elect Michigan Supreme Court justices, the attorney general, secretary of state and many other public offices. In fact, all of those offices are up for election in 2014. However, representation in the legislature is not the only way Michigan citizens exercise their voice. Our state constitution provides that the people may enact initiatives, referendums and constitutional amendments. This is often called a direct democratic process. James Madison, our fourth president and an author of the Federalist Papers, cautioned about the dangers of a direct democracy. He was concerned that a faction – a group of individuals united by impulse or passion – could overwhelm the true interests of the community. Madison wrote, in Federalist No. 10: [I]t may be concluded that a pure democracy…can admit no cure for the mischiefs of a faction. A common passion or interest will, in almost every case, be felt by a majority of the whole; a communication and concert result from the form of government itself; and there is nothing to check the inducements to sacrifice the weaker party or an obnoxious individual. Hence it is that such democracies have ever been spectacles of turbulence and contention…A republic, by which I mean a government in which the scheme of representation takes place, opens a different prospect, and promises the cure for which we are seeking. I hope your eyes didn’t glaze over reading that text from 1787, but if they did, I will summarize. Direct democracy (e.g., a ballot proposal) can be dangerous because it lacks necessary checks and balances, and without representation the direction of government can turn on a whim. Growing Popularity Although “dangerous”, ballot pro-

posals have become an increasingly popular form of governance. Since the adoption of the current Michigan Constitution in 1963, 74 constitutional amendments, 21 legislative referendums and 13 legislative initiatives have been presented to the people for a vote. In 2012 alone, we had six measures on the ballot. Each type of ballot proposal has unique characteristics. An initiative is the power of the people to propose or reject a law. A referendum is the power of the people to approve or reject a law enacted by the legislature. A constitutional amendment does exactly what it says: it amends our constitution. Ballot proposals have been used for a variety of reasons. Often, they are used to energize voter turnout. Minority parties may use ballot proposals to advance their agenda when they lack the ability to do so in the legislature. Additionally, our elected officials use the process when they want to punt on an issue and leave it up to the voters. Whatever the reason, ballot proposals have become the soup du jour of political governance. 2014 Preview The 2014 ballot is also shaping up to be full of ballot proposals. A number of referendums, initiatives and constitutional amendments may appear on ballots at 2014 elections, including: 1. A referendum to replace funding lost by elimination of the Personal Property Tax. 2. A referendum on the law that authorizes the hunting of wolves. 3. An initiative regarding abortion insurance. 4. A constitutional amendment to extend the power of referendum to bills containing appropriations (currently, bills that contain appropriations are not subject to referendum). 5. A constitutional amendment to prohibit fracking (a procedure for extracting natural gas from deep underground). 6. An initiative to raise Michigan’s minimum wage. 7. A constitutional amendment to establish a part-time legislature. Most Attention The proposal likely to get the most attention will be the initiative to raise the minimum wage to $10.10 by January 1, 2017. A voter initiative is first presented to the legislature for consideration. The legislature may enact it, reject it or propose an alternative initiative. Continued on page 11

April 2014

After 53 years I know … make ‘rainy days’ pay off by Steve Flaster

Because I came programmed for success and then was given opportunity and motivation by management, I became one of the top sales people in Jacob-

son’s 22 stores. Scott, our exceptional store manager, would stand at the staff entrance in the morning to welcome and wish us a good day, and in the evening to say good night and ask how our day went. I remember a particularly mean winter day (much like those in 2014) when there were few if any customers in the store. Evening came, and Scott took his position. One by one he asked his staff how the day went, and one by one they attacked him with, “How do you think it went? No customers, no business, it was just awful.” … as if it were all Scott’s fault! When it came time for Scott to ask about my day, I smiled and simply told him the truth: “My day was wonderful!” Because there were no customers

in the store, I had time to get on the phone and call women I hadn’t seen recently. I rhapsodized about wonderful new arrivals I had for them and wanted to ship them while I still had their size. They gave me lots of business, so much that I couldn’t get it all packed and shipped. Scott’s expression turned from sad to glad. He looked at me and simply said: “Thank you, Steve, for making my day.” I felt very good and appreciated both his comments and continuing support. I had no control over the weather, but I did have some control over my success. Timeless Lessons 1. Jacobson’s had to train me to ring a cash register, but I came with a selling attitude that generated plenty of sales to ring. Managers should define what they are looking for before they start interviewing, and then use techniques and measures to get the right man or woman. My store manager said he decided to hire me after I waved to him from the waiting room and then talked about why I would be proud to be a sales person for Jacobson’s. He figured I was a people person who

would put my skills to good use for the company. 2. In addition to hiring the right people, management should help staff be ever more successful. Those with the right attitude usually welcome ideas for being more successful. Those with a bad attitude, unfortunately, usually don’t change. Instead, they find ways to reinforce their bad attitude. Best solution: try never to hire people with bad attitudes. 3. If you make the mistake of hiring doom and gloom staff or have the misfortune of inheriting them, try to isolate them and keep them from spreading the disease. There may even be a right place for such people; if not out of your company, then certainly a place where interaction with people has minimum importance. 4. Successful people are those who achieve their goals. Management needs to help staff build individual plans with goals that will be rewarded when they are achieved. Staff members are more likely to succeed if they have ownership in their plans and a say in setting their goals.

5. It is management’s responsibility to create the right environment and organization for success. There are some stores where success is in the air, and others where it is not. The key is to hire for success, talk about success, reward success, share ideas for success.

“The key is to hire for success, talk about success, reward success, share ideas for success.” Final Thought While sunshine is nicer, we do need some rain to fertilize our minds. In both a practical and symbolic way, small, retractable umbrellas are a necessity for retailers. Tuck one away in your purse or man bag and pretend it contains your arsenal of ideas for “rainy day” situations. When you need that umbrella … remove, release and make your day pay off! Steve Flaster is a retailer, adjunct professor of advertising and marketing at Michigan State University, speaker and consultant. You can reach him at srflaster@gmail.com.

Michigan Retailer

NEW MEMBERS Ruttkofsky Enterprises Inc., Adrian Myers Fashions Etc., Alpena Tamara Garwood for Judge, Ann Arbor Gus’s Eatery & Saloon, Ashley Bob’s Welding & Fab, Avoca R Bar & Grill, Bay City Boys & Girls Clubs of the Great Lakes Bay, Bay City Sawmill Saloon, Big Rapids Paul Rigda Excavating, Birch Run Bridgeport Standard Service Inc., Bridgeport Cheboygan Brewing Company LLC, Cheboygan Durand Pools & Spas, Chesaning Detroit Store Fixture Co., Detroit DJCB Inc. dba 3 Nick’s Bar & Grill, Detroit Hector’s Mens Wear, Detroit Community Papers of Michigan, East Lansing Abie Bar Ltd., Eaton Rapids Empire Outdoors, Empire Bad Axe Pest Control Inc., Filion Z Club, Flint Hutchinson Food & Drug Inc., Flint American Legion Otto Miller Jr. Post #396, Garden City Comet Cuts, Grand Ledge J and D Electronics, Grand Rapids Grand Rapids Triathlon, Grand Rapids Michigan Titanium, Grand Rapids Dash Down Division, Grand Rapids

Wipeout Cancer Foundation, Grand Rapids Becker & Scrivens Concrete Products, Hillsdale Holland Medi-Center, Holland Spartan Tire, Howell Easton Security LLC, Howell Michigan Association for Justice, Lansing Turf Care Mole Man, Ludington Northern Michigan University Foundation, Marquette Copper Bar, Marshall Shannon’s Salon Spa, Midland CHS Group LLC, Monroe J & M Holdings Inc., Monroe Borley Hanel Post 3033 VFW of US, Mount Pleasant Jeffrey D Vanderstelt PC, Muskegon Village Pizza Inc., Naubinway River Valley Carpet, Newaygo Genoa Healthcare, OH Safe Haven Assisted Living LLC, Okemos Rainbow Inn, Perrinton Food by Clint LLC, Port Sanilac Hot Shot’s Tavern Inc., Portland Yoga Shelter, Rochester Hills Pappy’s, Rodney YMCA of Saginaw, Saginaw Todd’s Bar, Saginaw St. Ignace Greenhouse & Florist, Saint Ignace LaJoie Truck Service & Fab Inc., Sault Sainte Marie

www.retailers.com

Close attention to claims keeps RMIC’s costs down As a Grand Rapids businessman and Retailers Mutual Insurance Company board member, Jeff Joyce appreciates his up-close view of the fast growing insurer’s operations – especially the regular reviews of workers’ compensation claims. “ I h a v e e n j o y e d s e ei n g h o w m u c h c a re f u l consideration goes into screening each claim,” said Joyce, vice president Jeff Joyce and co-owner of Mieras Family Shoes, a long-time Retailers Mutual policyholder. Joyce represents the fourth generation in the family owned footwear business and has spent 30 years working in it. His work with Retailers Mutual also is rewarding, he says. “It is rewarding to provide for the care that helps injured employees return to productive work. It’s also rewarding to help keep costs down for our member companies by making sure all claims are legitimate and handled efficiently.” Claims Committee Joyce was named to the Retailers Mutual board in 2010 and currently serves as vice chair. He also chairs the board’s Claims Committee. The committee meets five times a year and reviews all active claims to determine whether a claim is legitimate or fraudulent. If it is a legitimate workplace injur y, the committee will authorize a settlement amount. Large claims are decided by the full board, acting on a recommendation from the committee.

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If the claim is suspicious, it will be investigated further and litigated if believed to be without merit. “Board members are business men and women, the same as our policyholders, and are policyholders themselves. All of this business experience helps while reviewing claims and challenging suspicious ones,” Joyce said. “The purpose of workers’ compensation is to properly pay loss wages and medical when an employee is legitimately injured in the course of employment. Unfortunately, we do see some soft tissue injuries, and it’s our responsibility to help determine whether those injuries are the result of the normal aging process or occurred out of the workplace setting.” Worksite Visit A claim also could be the result of a workplace safety issue. In that case, the committee would recommend that a loss control specialist visit the worksite and make safety recommendations to the owner to help avoid future claims. The committee receives assistance from an experienced claims manager at Sedgwick Claims Management Services, Retailers Mutual’s highly respected third-party administrator (TPA). “The continuity from working for years with the same experienced representative helps us deliver cost-effective claims and risk management,” Joyce said. “Because of the circumstances and nature of the injur y, some claims can take years to resolve… Sometimes, the best way to work through a questionable claim is to wait and monitor the situation. We can ask for assessments that give us an outside opinion regarding what types of employment a worker is capable of handling and what the appropriate actions are for us to take.” Right from its start as Retailers Fund in 1981, Retailers Mutual took the position that it wouldn’t throw policyholders’ money at a bad claim simply to make it go away. The ongoing work of the Claims Committee helps the insurer keep its commitment.

April 2014

LOTTERY

Lottery to enhance two favorites with ‘add-on’ game by M. Scott Bowen, Commissioner

The Michigan Lottery is going to make Fantasy 5 and Classic Lotto 47 players do a double take with a new “add-on” game, EZmatch. Starting April 15, players will be able to add EZmatch to a Fantasy 5 or Classic Lotto 47 wager for just $1. Five EZmatch numbers will print on the player’s ticket below the Fantasy 5 or Classic Lotto 47 numbers. If an EZmatch number matches a number in the Fantasy 5 or Classic Lotto 47 wager, the player instantly wins the prize amount printed next to the EZmatch number. The EZmatch instant add-on game will offer 11 tiers of prizes, so players can instantly win prizes of $2 up to $500. EZmatch prizes are in addition to the prizes that Fantasy 5 and Classic Lotto 47 already offer through their respective drawings. We expect players will respond positively to a new chance to win instantly on their favorite draw games and that the EZmatch add-on option will provide opportunities for increased sales. $40,000 Tax-Free Raffle Sales of tickets for the all-new $40,000 Tax-Free Raffle are now in full swing.

The $10 tickets are available for purchase through mid-April at all Michigan Lottery retailers. Winners of the top prizes will take home $40,000 – tax free! This raffle has the best overall odds of any Michigan Lottery raffle to date: 1 in 6 tickets will win a prize. On April 15, Tax Day, a drawing will be conducted to select the winning raffle numbers. There will be one $40,000 prize (net) for every 30,000 tickets sold. There will be 17 prizes of $100, 616 prizes of $50, and 1,033 prizes of $15 for every 10,000 tickets sold. New Cash for Life Cash For Life instant games are extremely popular with players and have been since they debuted in 2012. The April 1 launch of the All New Cash for Life family of games includes the following enhancements: • New ticket design • The $1 ticket offers four “$400 a week for life” top prizes and more than $15 million in total cash prizes available. • The $2 ticket offers four “$800 a week for life” top prizes and more than $30 million in total cash prizes available. • The $5 ticket offers three “$2,000 a week for life” top prizes and more than $34 million in total cash prizes available. • The $10 ticket offers three “$4,000 a week for life” top prizes and more

than $38 million in total cash prizes. New Pull Tabs These tickets go on sale April 7: • MI # 527, Hot Streak, $2 • MI # 529, $1,000,000 Bonus, $5. New Instants These tickets go on sale April 1: • IG # 684, Cash For Life, $1 • IG # 685, Cash For Life, $2 • IG # 686, Cash For Life, $5 • IG # 687, Cash For Life, $10.

About 97 cents of ever y dollar spent on Lotter y tickets is returned to the state in the form of contributions to the state School Aid Fund, prizes to players and commissions to retailers. In fiscal year 2013, the contribution to schools totaled $734.3 million. Since its inception in 1972, the Lottery has contributed over $18 billion to Michigan’s public education. For additional information, please visit the Lottery’s website at www.michiganlottery.com.

‘We the People’ takes many forms Continued from page 8

If enacted by the legislature, the initiative becomes law without going to the ballot. If rejected by the legislature, the initiative is submitted to the people for consideration. If the legislature proposes an alternative (for example, an increase in the minimum wage to $8.25 by January 1, 2017), both initiatives appear on the ballot. If voters approve both initiatives, the one receiving the most votes becomes law. With a minimum wage ballot proposal likely to drive up Democratic voter turnout, the Republican-controlled Michigan Legislature must determine its best strategy. Should the legislature enact the initiative in an effort to stymie turnout? Will lawmakers propose a smaller

“There is a reason why we have been helping retailers succeed for 100 years!” Judson Lynch, Co-CEO, Lynch Sales Company Since 1914, the family-owned Lynch Sales Company has delivered on our promise to help our retail clients succeed through Lynch promotional sales. I am particularly proud that many of those storeowners reward us with their repeat business, time and again. Contact us for details and receive a special, limited edition 100th anniversary commemorative as our gift. Plus, retailers who hold a Lynch ‘Sale of the Century’ during 2014 automatically become eligible for our Grand Prize of a trip for two to Ireland!

minimum wage increase? Or will they take their chances on turnout and reject the initiative, in hopes voters will do the same? Keeping Informed As the elections draw near, Michigan Retailers Association will alert our members on how certain proposals will affect the retail industry, such as Personal Property Tax reform and minimum wage hikes (as you might guess, we’re less likely to take a position on non-business issues such as wolf hunting and abortion insurance). With so many ballot measures to consider, I question whether ballot proposals are the best way to pass additional laws. I think James Madison might agree with me.

NEW CASH FOR LIFE ON SALE APRIL 1 Give Your players a chance to turn an instant into a lifetime! Cash for life® is back with a new look and over $128 million in total cash prizes. That means there are over $13 million to be earned in retailer commissions. Last year, the Cash for Life® series of tickets accounted for 18% of all Michigan Lottery instant game sales. With four different tickets and chances to win up to $4,000 a week for life, stocking these instant tickets could help you turn a profit almost instantly. Top prize Cash For Life® winners will receive their prize payments in annual installments over their lifetime or over 20 years, whichever is greater, unless within 60 days from the date they claim their prize, they request the Cash Option method of payment. Overall odds of winning $1 Cash For Life: 1 in 4.53. Overall odds of winning $2 Cash For Life: 1 in 4.25. Overall odds of winning $5 Cash For Life: 1 in 4.04. Overall odds of winning $10 Cash For Life: 1 in 3.99. If you bet more than you can afford to lose, you’ve got a problem. Call 1-800-270-7117 for confidential help.