Last updated on August 16th, 2012 at 12:08 pm[gn_note color=”#6666ff”]The 2012 Alabama Profile originally ran in the February 2012 edition of The Shelby Report of the Southeast. Due to reader requests we will be posting our Profiles from each edition of The Shelby Report. The profile will be published on theshelbyreport.com one month after it has run in print.[/gn_note]
by Kristen Cloud/staff writer
Only here in Alabama, says Nancy King Dennis of the Alabama Retail Association.
She’s referring to what she calls the “phenomena” combination of football, shopping and Black Friday.
“…The past two years—prior to (2011)—the Iron Bowl has been on Black Friday and basically people stop shopping when the Auburn/Alabama game is on. Retailers had two pretty bad black Fridays, so this Black Friday was phenomenal for them.
I mean, everybody was reporting big increases for the very reason there was no football game and everybody was out shopping.”
The biggest shopping day of the year contributed to the state’s straight 22 months of reported growth.
“It’s not been double-digit growth but it’s been pretty consistent growth for sales here in Alabama,” says Dennis, adding that this consistent growth is especially welcoming after the state experienced a year and a half of straight decline prior to the uptick.
“All indications are, and I’ve talked to a bunch of different retailers as recently as yesterday, it looks like we’re going to be somewhere between 3 and 4 percent increase this year over November and December of last year,” Dennis reported Dec. 28.
In November, taxed sales in Alabama were up 3.48 percent over November 2010.
“In December, the growth has not been as great but we are going to have some growth in December…I haven’t really heard from grocer folks too much about what their specifics have been, but I know a lot of folks have reported increases in gift cards and I know that a lot of grocers now are selling those. I have reports to anywhere from 11 to 20 percent increase in gift card sales this year. And those sales will actually show up on the books whenever those cards are redeemed. So, that was a good thing, too (for 2011).”
More good news: The growth is expected to continue this year.
Alabama Retail Association President Rick Brown projects retail sales this year should continue at a slow but steady pace.
“Retail employment should pick up slightly and retail development will show improvement in 2012 as well,” he says.
Unemployment down as thousands return to work
Alabama’s November unemployment rate was 8.7 percent, down from 9.1 percent from the same time a year prior and down from the state’s 2011 high of 10 percent in July, according to the U.S. Department of Labor.
Retailers, including grocers across the state, played a significant role in putting residents to work—especially in the fourth quarter of 2011.
“We estimate that probably, during November and December, retail hired between 8,000 and 9,000 people,” says Dennis, noting that some of those jobs were seasonal.
However, she adds, “Some of the folks who ended up getting work during the holiday season will keep those jobs because retailers are in need of good employees and, if they found some help that they feel like is good help, they’re going to keep them if they can.”
The sector saw nice growth prior to the holiday season as well.
In its fourth quarter 2011 economic outlook, the Center for Business and Economic Research at the Culverhouse College of Commerce at the University of Alabama reports that in the service-providing sector of the state, job growth from August 2010 to August 2011 was predominantly associated with retail trade (3,400 added jobs). Leisure and hospitality accounted for 3,700 hires during that period, 3,100 of which were added at foodservice and drinking locations.
Winn-Dixie, BI-LO merger ‘big news’ in Alabama
Two grocers with prominent footprints in the Southeast are joining forces (see story, page 1).
Jacksonville, Fla.-based Winn-Dixie and Mauldin, S.C.-based grocer BI-LO announced in December their plans to merge. Under the agreement, expected to be finalized in the first quarter of this year, privately owned BI-LO will acquire Winn-Dixie for $560 million and take it private as well.
“That’s going to have a big impact on the state, however that plays out, because we do have a lot of Winn-Dixie stores,” says Dennis, mentioning the grocer is a member of the state’s retail association.
BI-LO has no stores in Alabama and, according to a news release from the company, does not plan to change the Winn-Dixie name. Rather, upon completion of the merger, the company will operate its approximately 690 stores in eight states under both the BI-LO and Winn-Dixie banners.
“That’s going to be different for us…because we don’t have any BI-LO stores here,” Dennis says. “I think that one of the reasons they said they’d keep the Winn-Dixie name (is) because that’s what people are used to dealing with.”
The combined company does not expect to close any stores, meaning it should be business as usual for the dozens of Winn-Dixie stores across Alabama.
Piggly Wiggly fined for child labor violations
Fourteen franchisee-owned Piggly Wiggly stores in Alabama and Mississippi have been found in violation of the Fair Labor Standard Act’s child labor and wage provisions.
A total of 31 minor employees at 11 stores were found to be performing hazardous jobs, such as operating compactors or loading or operating power-driven scrap paper balers. A total of $53,037 in civil penalties was levied in the investigation.
An additional 56 employees at seven stores were found to have been denied proper compensation for hours worked and were ordered to receive back wages totaling $12,547.
Alexander City’s Piggly Wiggly was one of the grocery stores fined, according to The Alexander City Outlook.
Gary Robertson, owner of Alexander City’s Piggly Wiggly, confirmed to the newspaper that his company was fined during 2011 when minor employees were found to be operating a trash compactor behind the grocery store. Under federal regulations, operating a trash compactor is classified as a hazardous job. The U.S. Fair Labor Standards Act prohibits employees under the age of 18 from performing hazardous jobs in the workplace.
Robertson told The Outlook that the key-activated compactor is used to reduce the size of cardboard boxes before they are thrown away. He said to operate the machine, employees fill a tube with boxes, close a door and push a button that activates the compactor and squeezes trash before it goes into a large dumpster.
“The kids are not supposed to be back there anyway but, the first thing you know, they think they can do anything and everything,” Robertson told The Outlook. “For somebody to get hurt in this compactor, they would have to crawl in there and somebody else would have to push the button…but we’ve got a book of rules and regulations and it is the law.”
Robertson said the Alexander City Piggly Wiggly was fined a total of $10,000 for a number of incidents, according to the newspaper.
“It certainly wasn’t intentional and we weren’t trying to do anything illegal,” he said.
Alexander City’s store was one of 10 Alabama Piggly Wiggly franchises fined for child labor violations; other Alabama stores are in Ashville, Bay Minette, Phenix City, Troy, Camden, Jemison, Cherokee, Northport and Evergreen, The Outlook reports.
The investigation was conducted by the U.S. Department of Labor’s Wage and Hour Division under a multi-year enforcement initiative focused on the grocery store industry in Alabama and Mississippi. The division made unannounced visits to grocery stores over a period of several years before levying the fines, which were made public Jan. 4.
“The goal of this ongoing initiative is to remedy systemic wage and child labor violations, educate employers about their legal responsibilities and promote sustained compliance throughout the industry,” said Kenneth Stripling, director of the Wage and Hour Division’s Gulf Coast district office.
The division also met with the Alabama Grocers Association (AGA) to encourage its participation in promoting industry-wide compliance. The association had not returned phone calls and email correspondence for this report by press time.
After the storm
The recovery following the April 2011 tornado outbreak that devastated much of Alabama has been both trying and promising.
“There was some frustration for some retailers as to the length of time it was taking them to get through some of the process—with some of the claims they had to do so they could get back to the point where they were rebuilding, but I think things are on pace for that now,” said Dennis. “There was actually an increase in retail related to the storms because people were buying things that they needed.”
And, she adds, “the recovery has been good for retail because there have been a lot of purchases being made.”
Several grocery stores in the state were destroyed by the tornadoes, according to Dennis.
“For the most part, I think, those are going to rebuild,” she says.
One such store destroyed was the Piggly Wiggly in Hackleburg in Marion County, the only grocery store in a town of 1,500 that was practically wiped off the map by the twisters. The store’s manager, Dennis Whitfield, survived by taking cover under a produce rack, according to reports, while some employees huddled in a meat locker as the tornado destroyed the store, a nearby pharmacy and a Dollar General.
According to The Birmingham News, “The Pig,” as most folks call the store, has vowed to rebuild, as has the Dollar General.
In addition, Montgomery-based Calhoun Foods announced in December its plans to expand into Birmingham, including tornado-battered Pratt City.
Calhoun Foods, owned by Greg Calhoun, is taking part in a federal initiative to increase the availability of quality foods in lower-income neighborhoods that are classified as food deserts. The Healthy Financing Initiative provides a mix of tax credits, low-interest loans and loan guarantees to support the expansion of healthy food options in these areas.
Calhoun Foods currently has stores in Montgomery, Selma and Tuskegee. The first two of the four planned stores in the Birmingham area are expected to open late this year. They each will average about 15,000 s.f.
Birmingham’s Ensley community may see an upgrade when it comes to its two Marino’s stores at 2415 Avenue E. and 1965 Bessemer Rd.
The grocer, which has operated in Ensley since 1925, is seeking to modernize and expand its stores as it seeks $500,000 in incentives from the city of Birmingham. The company, according to reports, says the two stores will be able to retain 67 current jobs with the upgrades and add 10 new positions in the future.
Anthony Marino, whose grandfather started the business, told The Birmingham News that the upgraded stores will include community outreach to help educate customers about healthier food options and will include a variety of fruits, vegetables and healthy foods.
Attempting to simplify sales tax system, end online sales tax advantage
Alabama is hoping to create a single administrator for retailers to report and remit sales and use taxes. This, according to Brown of the state’s retail association, will simplify the system.
The Alabama Streamlined Sales and Use Tax Commission—an appointed body of 10 municipal, retail and revenue department representatives—recommended the proposal late last year. It also recommended creating a system to prevent the duplication of audits that both small and large businesses are often subjected to each year, reports The Birmingham News.
Under the current law, an Alabama retailer must report and remit sales and use tax in every city and county where it operates. For example, according to the newspaper, if a Birmingham retailer operates stores in three other cities, it has to file tax returns in four cities and in each of the counties where the cities are located as well as a state tax return. The streamlined proposal would require retailers to report to a single administration set up by the Alabama Department of Revenue.
The proposed legislation is expected to be considered during state lawmakers’ 2012 session. On the national level, lawmakers are expected to consider putting an end to the online sales tax advantage.
Last year, local businesses across the country lost billions in sales because online retailers are not compelled to collect state taxes on purchases. States, including Alabama, obligate consumers to pay state sales taxes on online purchases, but under a 1992 Supreme Court ruling, only merchants who have a physical presence in a state are required to collect those taxes. States, therefore, are collecting mostly from consumers who add up all their uncollected online sales taxes and include them on their tax forms each April.
Now, bipartisan bills in the U.S. House and Senate would allow states to compel internet retailers to collect taxes, but they would require those states to adopt streamlined and simplified rules that make it easier for online retailers to collect from different states. The bills each would exempt smaller online retailers from collecting sales taxes. Companies with less than $500,000 in annual online sales get the waiver in the Senate bill. In the House version, the threshold is $1 million in annual sales.
“(Retailers) are hopeful that Congress will finally end the online sales tax advantage,” Brown says. “If both these legislative measures pass (single tax administrator and the end of online sales tax advantage), 2012 will be a fantastic year for retail.”
Debit card fee reform, E-Verify
Also on the national scope, a 14-member joint delegation of the Alabama Retail Association and Alabama Grocers Association were among more than 200 retailers and grocers who traveled to Washington, D.C., last spring to tell Congress that debit card fee reform should proceed on the schedule set by law. Since Oct. 1, the most retailers should have paid the nation’s largest banks per transaction in debit card swipe fees is 24 cents.
On June 29, the Federal Reserve implemented a provision in the 2010 financial reform law that called for “reasonable” limits on the fees that banks charge retailers for processing debit card transactions. The Reserve set a 21-cent fee cap with caveats that allow some banks to charge slightly more.
The Alabama retail and grocer groups, which represented seven state retailers employing 981 Alabamians, told federal lawmakers that they collectively paid nearly $600,000 in swipe fees in 2010. For some, swipe fees are the second highest cost of doing business, behind labor.
2012 Alabama Retail Association Vice Chairman Mickey Gee told the congressional members that merchants cannot pick and choose which Visa or MasterCard cards they can accept, and they usually cannot tell at the cash register which card carries higher or lower fees.
While the debit card swipe fee cap is expected to save an estimated $7 billion for retailers nationwide, the efforts for reform will continue in Congress in 2012 with similar efforts to address credit card swipe fees, according to the Alabama Retail Association.
The Durbin amendment to the Dodd-Frank Wall Street Reform Act of 2010, which became law in July 2010, requires reform of swipe or interchange fees.
Beginning Jan. 1, employers who contract with state or local governments, or who have received government incentives or grants, had to be enrolled with and use the federal E-Verify system to determine the legal status of all new hires. Employers must provide an affidavit to the governmental entity, verifying the business does not employ any unauthorized aliens and that it is enrolled with the E-Verify system.
Employers also must have on file similar affidavits from any subcontractor that provides services to the business related to the government.
“Others (employers) who don’t have those formal relations don’t have to be enrolled in E-Verify until April,” says Dennis.