Local retailers see 'tax holiday' sales, traffic jump

As the first sales tax "holiday" in Illinois heads into its final three days, retailers at suburban stores and malls are crowing that it produced Christmas-caliber crowds this week.

"It has been like the holidays here at Gurnee Mills. The only thing missing was the snow and Santa," said Director of Marketing Michelle Rice.

Stratford Square Mall in Bloomingdale reported that traffic was up 12 percent last week compared to a year ago.

Rice, like many retailers, expects consumers to continue shopping strong through the final weekend of the back-to-school sales tax holiday, which ends Sunday. The 10-day tax break kicked off Aug. 7, cutting 5 percent off the ultimate cost on qualifying school items. Everything from pencils to socks to winter jackets are included. And no, you don't have to be a student or parent to take advantage of the savings. They're for everyone.

Critics complain that the holiday is an election-year political gimmick costing the state millions of dollars at a time when it already is facing a budget deficit in the billions of dollars. But many retailers say it is helping them.

Officials at Gurnee Mills said the mall has been packed with crowds similar to what it sees during the Christmas shopping season. In fact, for many retailers the back-to-school period is second only to the Christmas holiday in generating sales and profits.

Because this is the first year Illinois is offering the tax break, retailers were not sure what to expect. Cash-strapped shoppers making their way through a tough economy are showing they think that the tax break is worth the trip to the store. Many stores are supplementing the tax savings with sizable discounts on school clothing or using amped-up online marketing to lure shoppers back to the stores.

"People are living on a budget. The money they save through the tax break encourages them to buy that extra pair of shoes," said Anita Blackford, senior vice president of mall operations at Stratford Square in Bloomingdale.

While retail sales figures are not available, mall officials say they are hearing anecdotally that sales at many stores are up.

"Our retailers are singing the praises. They are dancing to the sounds of the cash register," Rice said at Gurnee Mills. Area Walmart stores are also reporting large crowds over the past week.

"Our traffic has been way up all week long compared with last year," Blackford said. "And we are expecting another busy weekend," she added.

Office supply stores, popular places to find items on back-to-school lists, have also seen a busy week.

"The tax holiday has been well received," said Jennifer Rook, spokeswoman at Naperville-based OfficeMax. She has watched the tax break work well in other states and is hoping for the same in Illinois.

Blackford watched how the tax break was well received in Texas at a mall she works with there. "I saw how sales lifted in Texas. I was pleased that we now have the tax holiday here," she said.

Blackford believes that saving 5 percent is helping with consumer confidence. However, she believes shoppers are more price conscious than ever and are keeping a close eye on their pocketbook.

The National Retail Federation agrees. "We are encouraged by the fact that parents are eager to start their back-to-school shopping this year, but the industry still remains cautiously optimistic about recovery," said Matt Shay, president and CEO of the NRF.

The federation survey found that families with children of school age are expected to spend an average of $606 on apparel, supplies and electronics this year, compared with $548 last year.

The holiday was designed to get consumers back into the stores, according to Democratic Gov. Pat Quinn and other lawmakers. However, Republicans opposed to the idea say the measure comes as the cash-strapped state tackles a $13 billion budget gap.

Illinois families spend between $800 million and $1.2 billion on school clothes and supplies, according to the Illinois Department of Revenue. Therefore, the sales tax holiday would cost the state between $40 and $60 million.

State Sen. Dan Duffy, a Lake Barrington Republican who operates a computer consulting company, is against the tax holiday.

"As a small-business owner for 17 years, it's just a gimmick. It makes it look like things are better than they are," he said.

Duffy says the tax holiday is taking money the state does not have.

"It's fiscally irresponsible," he said.

WHAT WE BUY

Back-to-school spending is expected to reach nearly $21.35 billion this year.

Item

Total in billions

School supplies $3.29

$3.29

Shoes

$3.62

Electronics & computer-related equipment

$6.39

Clothing & accessories

$7.94

Source: National Retail Federation