The state collected more in sales tax from stores, restaurants and online retailers in the first half of this year than in the same period last year, and that bodes well for Alabama’s retail sector, according to the Alabama Retail Association.
Revenue from state sales taxes and the simplified sellers use tax program for online retailers was up nearly 6 percent during the first six months of 2020 compared to the same period last year, according to the Alabama Department of Revenue.
Collections were down in March and April compared to 2019 but increased significantly in May and June. While sales tax collections for June were up 11.32 percent over June of last year — the first such double-digit growth since a 10.99 percent increase in April 2019 — part of the increase is due to some small businesses being allowed to delay remitting sales tax from February, March and April until as late as June 1.
That fudges the numbers somewhat, but the overall takeaway is that Alabamians have continued to spend despite the global health pandemic, albeit in different ways, said ARA spokesperson Nancy King Dennis.
When places like grocery stores and home improvement stores were the only businesses that were open, their sales went up. Consumers continued to buy even though their options were limited, many with help from federal unemployment insurance that created an influx to the local economy, Dennis said.
While some businesses, including large chain stores, have closed due to the pandemic, shops and restaurants that were able to pivot and adapt did better, she said. Businesses that sell on as many channels as possible — in-store and online, including using social media — have been particularly successful.
“Smaller retailers are actually probably doing better than the larger big chain stores because they’re closer to their customers, they know their customer base,” Dennis said. “For the time that stores were closed, they were selling over Facetime, they were doing a lot of social media sales.”
The retail industry employs a quarter of Alabama’s private-sector workers, more than any other industry, according to the ARA. It provides the state with almost $2.5 billion in sales tax each year, which was about 20 percent of state revenue last year.
“When looking at the numbers back in March and April, my thought was we wouldn’t see an increase over the previous year for any months until probably 2021,” she said.
Rick Brown, president of the ARA, urged Alabamians to shop local in order to keep open small businesses that contribute to their communities.
“Alabama’s retailers and restaurants are leading our state’s recovery,” Brown said in a statement. “They continue to put people back to work, pivot to make their businesses safe for their customers and employees and innovate to serve customers however those customers prefer.”