Retail Sales: Expiration of Payroll Tax-Cut Holiday May Impact Your Business
By Ryan Melton
According to a recent survey conducted by the National Retail Federation, over 70% of Americans are planning to adjust their spending due to the recent expiration of the payroll tax-cut holiday. In fact, 46% of consumers indicated they will be spending less overall in 2013 because of the bite out of their take home pay, while others say they’ll delay purchases and watch for sales more often. This may clearly affect tennis retail, too.
The tax-cut holiday expiration will impact consumers’ take-home pay by roughly 2%. For the average household income earning $50,000, that’s a direct impact of $1,000 a year, and even more in households with higher annual incomes.
“A smaller paycheck due to the fiscal cliff deal early last month, higher gas prices, low consumer confidence and ongoing uncertainty about our nation’s fiscal health is negatively impacting consumers and businesses across the country,” said NRF President and CEO Matthew Shay. “We cannot grow the nation’s economy until consumers consume. Every day we hear about building the middle class. We can only do that if we tear down barriers that prevent consumers from investing their hard-earned money back into our nation’s economy. It’s really that simple.” (Visit nrf.com for more details.)
Some key points from the NRF report relative to retailers include:
- Of those who say they will spend less in 2013, 25% say they’ll do so by "comparison shopping" more.
- 36% say they’ll watch for sales more often.
- 24% say they’ll delay major purchases.
- 25% say they’ll delay the purchase of luxury items.
- 46% indicate they will simply spend less overall.
What does this mean for tennis retailers? Chances are, your business is likely to see some impact from the payroll tax-cut holiday expiration in one form or the other. But the key to reducing its impact is to plan ahead.
If you are planning to put products on sale prices in 2013, consider extending how long those sales run. Also keep in mind that ultimately, your shoppers have less money to spend on discretionary purchases, so they will be more attentive to when sales are running. You can also capitalize on this heightened attention to retail sales by effectively communicating your sales to your customers through various marketing channels and media.
In addition, think about the competitive advantages you may have over other retailers. Keep in mind, a quarter of all shoppers will comparison shop more in 2013. You need to focus on your competitive advantages during these times and capitalize on them to ensure that consumers complete the sale at your store.
Another key factor to consider are your inventory levels. Considering that 46% of consumers plan to spend less overall in 2013 to help offset the impact of the payroll tax-cut holiday expiration, appropriately monitoring your inventory levels will become extremely important.
See all articles by Ryan Melton
About the Author
Ryan Melton 
is the Project Coordinator for the Tennis Industry Association in Hilton Head Island, S.C., in charge of the coordination, management, and development of the Careers In Tennis (CareersInTennis.com) initiative, among other projects. He graduated top of his class from Francis Marion University in 2009 with a BBA in Management.
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