Cape Business Trends newsletter December 6, 2006
The holiday retail season
Retailers across the state are predicting a 4.3 percent increase in holiday sales over last year. But that may prove overly optimistic, based on preliminary research from the Federal Reserve Bank of Boston.
However, William Rennie, a spokesman for the Retailers Association of Massachusetts, which made the prediction, acknowledges that sales so far are disappointedly flat.
The Federal Reserve’s November Beige Book reports that sales in September and October had dipped to as low as 15 percent below year-earlier levels. Respondents in the home-improvement trade said sales continue to be “way below plan.”
Reasons for caution: sluggish home sales and higher energy costs.
At the same time, the Fed reports positive news on the tourism front. The fall shoulder season appears to have been particularly robust.
Beige Book respondents say fuel costs and oil-related products have stabilized, although they express some concern about their already-high levels.
Other indicators for holiday sales:
Nationally, 32 percent of consumers say they will spend less this holiday season, 15 percent expect to spend more and half will spend the same, according to the Consumer Federation of America and the Credit Union National Association.
Zogby Interactive reports that 55 percent of potential shoppers plan to spend the same amount this year as last. Younger shoppers were more likely to increase spending, while those aged 35 to 54 were “most likely to take a more cautious approach” to holiday spending.
More consumers using debit cards
About one out of every three consumers will be using their debit cards more than any means to pay for holiday fare this season.
TD Banknorth’s Director of Corporate Communications Jeff Nathanson tells Banker and Tradesman that “convenience and acceptance” are driving the increase. “Virtually every retailer accepts debit [as a form of payment],” he notes.
Banks are capitalizing on the trend. Many are allowing their card customers to swipe and sign rather than punch in PIN numbers. Citizens Bank lets its customers earn points toward restaurant and retail gift cards.
The growing appeal of debit cards can be attributed to growing sensitivity about high credit card interest rates. But the Massachusetts Bankers Association does note that debit cards may be used less at restaurants. Diners are uncomfortable about a debit card leaving their sight while payments are processed.
“Some thieves have been known to attach ‘skimmers’ [devices that record card information] so that they can steal your card info,” the MBA warns. A debit card is directly connected to a customer’s bank account, so it’s more vulnerable. “Perhaps a credit card would be better in this instance,” MBA notes.
Measuring economic activity
“Massachusetts employers were more positive in November about business conditions within the Commonwealth, and foresee no more than a slight softening of national conditions over the next six months.”
That’s the assessment of Raymond Torto of the Associated Industries of Massachusetts, as he released the latest monthly business confidence index.
The Massachusetts Index has recorded small gains in five consecutive months, and nine out of 10. “Survey respondents expected Massachusetts conditions to improve slightly in the six months ahead,” says John W. Bitner, Chief Economist at Eastern Bank.
“The future index for expected conditions six months ahead added two-tenths to 59.9 – up over one, two, three, and four years, and near the tops of recent ranges.”
Reading the housing tea leaves
The numbers continue to be ugly, but there is growing sentiment that the housing downturn may be reaching bottom. However, movement up might not occur until the third quarter of 2007.
A positive sign is the continuing drop in housing inventory on the Cape. As of this week, there are 1,000 fewer properties on the market than in early September. To view the latest inventory trends, click here.
Here are the latest November numbers from the Barnstable County Registrar of Deeds:
• 2006 sales volume: 5,830 vs. 2005 sales volume: 7,659
• 2006 median sales price: $367,500 vs. 2005 median sales price: $365,000
• 2006 mortgage volume: 20,356 vs. 2005 mortgage volume: 24,903
• 2006 median mortgage amount: $218,200 vs. 2005 median mortgage amount: $217,800
The Cape Cod market remains relatively resilient when it comes to pricing despite the significant drop in sales volume. Note the actual increase in November’s median price over a year earlier.
Basically, fewer people have to sell their homes on the Cape; so they would rather take them off the market or maintain their price.
The real impact of the sluggish market is hitting Realtors, builders and contractors.
OpenCape receives funding
OpenCape has been selected to receive $50,000 in first round project funding from the Barnstable County Commissioners and the Cape Cod Economic Development Council. The funds are directed towards the first phase development of a critical regional broadband data network.
“Broadband data networks are essential to our region’s health and future development,” said Teresa Martin, executive director of the Cape Cod Technology Council. “Much like roads and highways helped us grow and prosper in the last century, data networks are critical infrastructure for both economic development and public safety in this century. OpenCape is the data equivalent to Route 6 or Route 495.”
The OpenCape collaborative is spearheaded by Cape Cod Community College, Cape Cod Technology Council, UMass-Dartmouth and the Woods Hole Oceanographic Institution. Its goal is to install a high-speed wireless broadband network from Bourne to Provincetown with links to Plymouth and Dartmouth. The network addresses both public safety and economic enterprise needs.
For more details, click here.
Cape Chamber launches redesigned Web site
The Cape Cod Chamber of Commerce has announced the launch of its redesigned business-to-business Web site at www.eCapeChamber.com.
Features of the new site include updated demographic and statistical information, an event calendar and online event registration, a downloadable version of the chamber’s membership directory and Annual Report, public policy updates on such topics as the new health care laws, and links to such resources as free business counseling, business assistance and elected officials.
The Web site redesign project was led by member company Webfodder of Hyannis. www.eCapeChamber.com is the companion site to the Chamber’s visitor site, www.CapeCodChamber.org.
Business Connect follow-up
Thanks to everyone who helped make Cape Business Connect 2006 a success! We had more than 1000 attendees, a dozen workshops, 30-plus luncheon roundtables and more than 80 exhibitors. It was a great day to learn, market and network. If you missed a workshop session or simply want a refresher, click here, where you can find many of our speaker’s presentations posted online.
And if you want to follow-up with someone you met at the event, or learn more about the companies involved, go to www.capebusinessconnect.net, our online networking portal, where many of the companies involved in the conference have posted information.
Upcoming events
It’s nearing the end of the year, when many businesses turn their thoughts to tax issues. On Friday, December 8, the Harwich Chamber of Commerce is hosting a roundtable on “Financial Management & Taxation Issues for Small Businesses.”
Two accoutnatns, Brian Michaelan, Brian Michaelan Accounting & Tax Services and Charles Vernon, CPA, CFP and SCORE Counselor, will discuss the development of financial plans for the coming year, development of systems/tools to manage the finances of a business, explanation of major financial reports (and how they should be used) and tax implications of various business activities.
For more information on this event and other upcoming business events, check the Cape Business Calendar.
To submit events, send information to news@capebusiness.net.
Cape Business Newsletters
Keep up with the latest issues affecting your business and your life! To sign up for any of the Cape Business newsletters, click here.