Michigan retailers are facing a challenging economic environment marked by inflation, tariff-related disruptions and fluctuating consumer behavior, according to Vic Veda, VP of communications with the Michigan Retailers Association.
“The best specific data that I have on this topic here really does talk about the impacts of tariffs,” Veda said. “We did a member survey in May and had pretty good feedback coming from our members.”
MRA’s diverse membership – ranging from grocery and business-to-business (B2B) retailers to service-based companies – has seen significant disruption from not just existing tariffs but the looming threat of new ones.
“The threat of tariffs and the inconsistency with how the tariffs have been applied [are] really causing a lot of disruptions in not only Michigan’s business community but across the country,” she said.
Businesses also have been impacted by reduced Canadian travel.
“Some retailers, especially in border cities, have shared that they’re seeing less Canadian foot traffic in their stores,” Veda noted. “If [Canadians] are not coming here, those businesses are certainly feeling that.”
Index swings, outlook declines
Michigan’s economic outlook has been turbulent in 2025, as illustrated by the MRA’s Retail Index. Veda pointed out a surprise jump in January to 62.2 – the highest for that month in some time – but subsequent months showed a notable drop.
“February and March were both in the 40s. April did rebound back up to 59.4, which we’re happy to see it cross back over the 50-point threshold,” she said.
More concerning is the dip in MRA’s three-month outlook, which has consistently fallen below 60 for the past two months – 59.9 in April and 59.3 in March.
“Retailers were feeling very optimistic about what 2025 had to hold, but we’re seeing that optimism fade a little bit, especially as the tariffs have continued to cause more uncertainty and administrative stress, especially among the small businesses,” she said.
Veda also pointed to prolonged inflation as a key issue. “The cost of goods is going up, wage costs are going up, insurance costs are going up. Everything is getting more expensive,” she said. “It really is kind of a perfect storm for businesses to be hurting.”
While there was no specific explanation for January’s strong numbers, Veda noted severe storms and power outages across the state in February and March as key factors in declining sales during those months.
Impact runs deep
Tariffs and their ripple effects are clearly weighing on Michigan businesses. From MRA’s May survey:
- Sixteen percent of members had already canceled orders;
- Twenty-five percent changed orders;
- Twenty-eight percent delayed orders due to tariffs or their threat;
- Over 50 percent considered changing inventory; and
- Thirty-six percent were considering new suppliers.
Veda noted those concerns also involve “the administrative burden of trying to keep up to date and know what’s going to be impacted, and when, always trying to find new suppliers or different cost-effective ways …”
Service-based businesses are also feeling the impact, not in what they sell but in what they need to operate. Manufacturing sectors in the state have been hit particularly hard due to tariffs on steel and lumber.
However, not all retailers are equally affected.
“Members that are thrift stores or locally made, if they’re selling local produce or locally made goods, they’re not as impacted,” she said. “They’re really trying to leverage that during this season.”
According to Veda, 69 percent of members surveyed believe tariffs or their threat will negatively impact business over the next three to 12 months.
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Grocers grapple with inflation, consumer shifts
In the grocery industry, Michigan hosts a robust market with more than 11,000 grocery stores statewide. Major players include Meijer, Kroger and Walmart.
The industry contributes significantly to the state’s economy, with supermarkets generating about $16.2 billion in annual revenue and employing more than 61,000 people, according to information from iWeb Data Scraping, Axios and IbisWorld.
While MRA no longer tracks grocery-specific data, it remains in close contact with its independent grocer members. Inflation remains a top concern.
“Our grocer members have shared that it has been an interesting season to navigate with a demand standpoint,” Veda said. “You have consumers who are panic buying or buying things in advance to try and avoid the tariffs when they come on.”
Others, however, are pulling back spending. “They might not be buying the bulk items, instead they’re buying the smaller packages because they aren’t sure what the future holds,” she added.
This unpredictability complicates planning for the holiday season. “Retailers are looking now, if not already, on what kinds of orders and inventory they’re looking to stock for that holiday season,” she said.
Cage-free eggs, avian flu
Michigan’s new cage-free egg law, enacted in late December, also generated early-year challenges.
“That was a very, very hot topic at the beginning of the year,” said Veda, noting that the legislation coincided with rising egg demand and an avian flu outbreak.
She also noted that with a cage-free egg, “the consumer should be getting a higher quality product, which does tend to come with a little bit higher expense.
“The timing of this law going into effect certainly amplified things a little bit in Michigan,” she added. “But the price increases … were largely more due to the avian flu, not the law.”
Push for local goods, manufacturing
Retailers are increasingly turning to locally made goods, especially amid global supply chain uncertainty.
“We definitely encourage our members to try and carry as many local goods as they can,” Veda said. “We want to encourage them to support more Michigan makers in manufacturing where they have the opportunity.”
She acknowledged that sourcing locally isn’t always feasible. “A lot of the goods that we import are imported because it’s significantly more cost effective … or we might not have the infrastructure in the U.S.”
Still, independent grocers often offer more Michigan-made items, and Veda noted positive collaborations, such as a baker selling scones and dessert-type baked goods in multiple Michigan grocery stores.
Events such as the “Making It In Michigan” Trade Show support local food entrepreneurs, offering opportunities to connect with retailers and expand their market presence.
The state is promoting local food systems through initiatives like the Farm-to-Family grant program, providing up to $50,000 to farmers and food producers to enhance access to fresh, local food.
Bottle bill expansion concerns
The MRA is watching closely as state lawmakers discuss expanding Michigan’s bottle deposit law.
“Michigan is currently the only state that has retail as the only option for your returnables,” Veda said. “We have a lot of pushback against this.”
Retailers are particularly concerned about the impact on their stores and customers. “You’re pouring in your cans that are full of spit and bugs and dirt and put them in a cart, and then you return that cart and someone puts their toddler in there or fresh fruit,” she said.
While open to reform, MRA opposes expansion if it continues to burden retail operations.
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Organized crime, gift card fraud
The MRA supports continued funding of the state’s Organized Retail Crime Initiative. “So far, the ORC Force team has charged more than 80 defendants in 42 cases, contributing to over $20 million in losses for Michigan’s retailers,” Veda said.
“We’re certainly in favor of continuing to fund this program because it’s making a big impact for retailers across the state. It’s recovered more than $10 million in retail products and nearly $2 million in cash.”
The group also backs House Bill 1234, which would include gift card fraud under the Organized Retail Crime Initiative.
“This is a scam or a type of fraud that is on the rise,” Veda explained, describing how scammers tamper with unused gift cards and, when they are loaded at the store, drain their balances remotely.
Opposition to retail delivery tax
Lastly, MRA opposes any proposed retail delivery tax to fund Michigan’s road infrastructure.
“Having some kind of tax for every online order … really harms residents,” she said. “You’re taxing citizens … and what difference does it make if it’s my car that’s driving to the grocery store to go pick up my groceries or a delivery driver?”