- Fairfax lives up to its reputation as being somewhat disconnected from the rest of the county, having maintained higher levels of sales tax revenues over the last two years, albeit with a decline over recent months at a time when other towns are recovering.
- Corte Madera was hit quite hard at the beginning of the recession, but has shown the strongest recovery this year, and is my bet for being the first city to break back through 100 on the index. Novato has followed a similar path and is not far behind.
- Sausalito, Larkspur and San Anselmo were more resilient at the start of the recession, possibly because of their reliance on eateries and local services, but were hit hard in 2009 as residents were hit with job losses and house price declines.
- San Rafael and Mill Valley are each still below 80% of their pre-recession retail sales. San Rafael accounts for approximately 1/3 of Marin retail sales but has been hit with 1/2 of the county's sales decline. Mill Valley's acute decline is likely connected to its population base, which includes larger numbers of workers in finance, business and other sectors hit with job losses.
- That leaves Tiburon in last place. Despite being the County's wealthiest town, its retail sector has imploded in the last few years, with sales now at just 66% of their 2008 level. A small retail sector, with a heavy reliance on tourist spending, is likely the reason behind the poor performance.
Tuesday, October 19, 2010
Monday, October 18, 2010
Friday, October 8, 2010
Monday, October 4, 2010
The proposed Target store at San Rafael was in the news last week as the San Rafael Chamber of Commerce postponed making a decision on whether or not to support the development.
This is a familiar big-box retail situation that has played out across the United States. Typically, the City often favors the development because it creates jobs and provides fiscal benefits from sales taxes. Other retailers and their representatives denounce the effect that the proposal will have on locally-owned independent businesses and the historic downtown and neighborhood stores. And the proponents claim that they will be providing a service that will compete mainly with other big box stores and will allow people to shop locally instead of having to drive to the big box stores and malls in other towns further away.
The Chamber plans to research other communities where Target stores have located. There are many examples where unlimited development of strip malls has killed downtown retail areas, but fewer where the impact of one store is clear cut. Target and Wal-Mart have plenty of experience in making their case in these situations.
A 135,000 sq.ft Target store like the one proposed in San Rafael would probably generate $40m-$50m in annual retail sales. The size of the retail spending market in central and southern Marin in the categories of goods that Target sells is approximately $1 Billion. Often, retail developers will cite growth in retail spending as demonstrating a need for new development. This isn’t the case in Marin, where population growth is less than one percent annually, and retail sales have been in decline as a result of the recession and the longer term growth of internet sales. The new Target’s $40m-$50m annual revenue would instead come from existing spending, which means on average the new store would capture 4%-5% of existing stores’ sales. This average figure represents a fairly minor sales decline that could be considered as being within the normal scope of competitive business. However, the distribution of impact will not be even, but will depend on (1) geography: the closer, the higher the impact, and (2) comparability: customers are more likely to switch from similar stores selling similar products; therefore niche, gourmet and specialty stores are less likely to notice an impact, but department stores and big box mass-market stores would take a larger hit.
Among the retailers in downtown San Rafael, many of the fashion boutiques and niche stores selling gifts and accessories wouldn’t compete directly with Target. The stores selling more generic items, like toys, sports goods, household goods, books, electronics and cds are in more danger of taking a sales hit from Target. And all businesses, including the eateries and health & beauty services that don’t directly compete with Target, will suffer if the new store reduces shopper traffic along Fourth Street.