Marin retail sales climb back above 2008 level

It's taken a long time, but it looks like the retail sector in Marin has finally recovered from the recession.  In April the 3-month rolling average 1% sales tax distributed in Marin County was $2.75M, the highest level for six years.

What's holding back Marin's retail recovery?

Growth, or the lack of it, in retail sales, and what it says about the economy, is in the news again, with strong growth in sales reported in some sectors and weak performance in others. During the recession, total US retail sales fell from $340bn in 2008 to $295bn in 2009, then recovered back to pre-recession levels in early 2011, growing further to $360bn in April 2012. However, total sales have fallen in the last three months as the economy slows and consumers cut back on spending.

In Marin County, the recovery has not fully materialized. Based on retail sales tax data from the State Board of Equalization (see chart at right), retail sales in 2012 are tracking above 2011, but are still below 2008.

In this respect, Marin is out of line with most of the Bay Area.





Looking at retail sales tax growth since March 2010, which was when retail sales started to recover, Marin, and to some extent Sonoma, are lagging behind the major Bay Area counties and California as a whole.

What is holding back the recovery in Marin? Below are some possible reasons:



1. On the demand side, consumer spending has not recovered. Marin took a big hit from the recession. Total personal income in Marin County fell by over 13% in 2009, a much steeper drop than elsewhere in the Bay Area. Data beyond 2010 is not yet available, but it's very possible that income growth in Marin has yet to fully recover, which would help explain continued retail weakness.

2. On the supply side, tight market conditions have restricted the ability of new and innovative retail formats to start up and grow in Marin. In a recovery, consumers often need to be tempted to open their pocketbooks and start spending again, and that temptation is best provided by new and fresh retail formats. Marin County has one of the lowest retail vacancy rates in California, and also higher than average rents, which means it's tough for retailers to find high quality and affordable space.

3. Internet shopping. The growth of electronic commerce continues to impact traditional retailers, almost killing off whole categories, such as books and music, and cutting into the margins of others. In the US, online retailing is growing at an average annual rate of over 15%. It is very possible that Marin's combination of high average incomes and limited retail supply make online shopping a significantly attractive option.

Marin retail sales bounce back

After dragging along in a recessionary style for much of the year, retail sales in Marin got a very welcome boost upwards at the start of the holiday season. Distributions of the 1% sales tax to Marin's cities increased sharply to just over $3.2million in December, the highest monthly total since February 2008.

Marin retail sales hit by economic worries

Fears that the economy is sliding back into recession have had a negative impact on retail sales in Marin County. According to data released by the State Board of Equalization, just $2.6 million in sales tax distributions were made to cities in Marin in September. That total represents a fall of 6.5% over September 2010, and is also 3.9% less than the September total in the depths of the 2009 recession.

As the chart below shows, the rolling 3-month average for 2011 is tracking an almost identical path to 2008. Does this mean 2012 will turn out to be another 2009? Let's hope not.

Slow recovery for retail sales in Marin

As the national economy teeters between recovery and falling back into recession, retail sales in Marin continue to show a slow and steady improvement. The 1% retail sales tax distributed to cities in Marin averaged $2.38 million over the three months to June, an increase of 7.6% over the same period in 2010, and 16.5% up on the same period in 2009. The question now is how long will it take retail sales to catch up with the level seen in 2008?

Marin retail sales best in four years

Retail sales are surging back as customers across the nation head to the malls and exercise all the pent-up spending energy they've been accumulating during the recession.

For Marin retailers, this has been the best retail sales period for many years. The 1% retail sales tax distributed to cities in Marin in December (the purple line on the chart below) was over $3 million, a 10.7% increase over 2009 AND it was above both the 2008 and 2007 totals for the same month.

So is this the start of a new era of prosperity - or a blip in an otherwise unimpressive year?

Marin retail sales edge up in November

Retail sales tax distributions in Marin showed strong growth in November, coming in18.6% above November 2009. 

So far in 2010, some $25.5 million of sales tax receipts has been distributed to Marin's Cities, up 4.2% from the same period in 2009. There is still a way to go before retail sales recover to their pre-recession levels: sales to date in 2010 are 13.2% below those of the same period in 2008.

Retail sales track 2009, but some cities doing better than others

Sales tax distributions for October indicate that the volume of retail sales in Marin County continues to track that achieved in 2009. Total distributions reported by the State Board of Equalization this month were $1.9m, a slight 1.8% drop from October 2009.

This month, we take a look back to see how much retail sales have fallen over the course of the recession, and how far they have to rise to reach pre-recession levels.

The chart below shows the change in sales tax distributions since June 2008, using a 12-month rolling average index to remove monthly variability. Overall, the County is pulling in just 85% of the sales tax it was generating in 2008. However, there are some notable differences between cities:

• 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.

Positive signs in retail sales

This week saw the release of stronger than expected September retail sales results. There was also a dip in the mall vacancy rate - the first improvement in occupancy for three years. The rash of good news brought forth cautious optimism from several commentators that the retail sector is on the cusp of a period of sustained growth.

In Marin, our own radar on retail performance also surprised us with a strong September result. The 1% retail sales tax distribution to Marin cities for September was the highest since 2007, beating by a fraction both September 2009 and September 2008. This year's figure (the purple line on the chart below) was widely predicted (by me) to fall below 2009 due to the cash for clunkers stimulus that bumped up 2009 retail sales.

It will be interesting to see next month if the momentum can be maintained as we head into the holiday season.

Retail sales still tracking above 2009

Despite the slowdown in the economic recovery and amid warnings of a double-dip recession, 2010 retail sales in Marin have so far kept ahead of 2009 levels for the comparable month. For the year to August, the 1% sales tax distributed to Marin cities was $18.2m, up 3.3% over the same period for 2009.

Next month's figures will be interesting because the September 2009 figures were inflated by cash for clunkers spending from August 2009, as shown by the green line on the chart above, which rose to 2008 levels for that one month before sliding back in October.

Car makers are already reporting their August sales comps look terrible. So it will be no surprise if the Sept. 2010 retail sales number comes in 10%-20% below 2009.

Retail sales back on track (in Marin)

The strength of the consumer recovery had another setback today, as the latest retail sales report showed a decline of 1.2% in May. Department stores, general merchandise, auto sales and gasoline were all below estimates, and analysts pondered over the possible causes, which included the seasonal effect of cooler weather or the lack of growth in employment. Interestingly, online retail sales grew by nearly 16%. Maybe in our focus on the recession we're missing the big picture, which is the structural change in our shopping habits caused by innovations such as iphone shopping apps and the like.

Locally, the news is better. Our monthly update shows that Marin retail sales are higher than they were this time last year. The 1% sales tax distributed to Marin's cities in May 2010 was $2.36m, or 12% above the May 2009 figure. This tax distribution relates to sales that occurred in stores in February - March this year.

April data shows new year sales plunge in Marin

Last month's reading of the retail sales tax data suggested that Marin retail sales had finally turned the corner. But April's data suggests the recovery might instead have been nothing more than a dead cat bounce.

The total value of the 1% sales tax allocated to Marin's cities in April sank to just over $1.6 million, or 16.9% lower than April 2009. April's allocations represent retail sales tax collected in the first weeks of the new year and the total is the lowest monthly allocation so far in the Great Recession.

Retail sales jump

The volume of retail sales in Marin has finally turned upwards after 18 months of recording year-on-year declines.

Distributions of the 1% sales tax allocated to Marin's cities in March 2010 totaled $2.59 million, or +21.5% up on March 2009's $2.13m, and takes the county back to the same amount that was distributed in March 2008.

It's the first positive year-on-year change since the +1.5% increase in August 2008.

A reminder that taxes distributed to Cities in March represent retail sales that occurred over the 2009 holiday period.

Retail sales yet to turn around in Marin

The San Francisco Business Times kinda missed the point yesterday when it reported that Bay Area cities got 1/3 more in sales tax revenue than they did in January. What they missed telling us was that sales tax distributions are always up in February because that's when they dish out the taxes that were collected during the previous year's peak holiday shopping season.

As the chart above shows, the real story for Marin is that February distributions (the purple line) were -5% down on the same period for 2009 (the green line), and -19% below the same month in 2008 (brown line). So we have not reached the bottom yet. Having said that, I'm hearing that market conditions are improving, so I don't think it will be long before we see the purple line cross the green to show the retail sector moving out of recession.

Retail Sales Update

The latest sales tax figures from the California Board of Equalization show that Marin retail sales for the third quarter of 2009 were down 14% from the same period last year. Worst hit was San Rafael, which saw a 21% decline. Novato fared better, with a decline of 8%, while Corte Madera scored the best results, with 0% change from Q3 2008. Over California as a whole, retail sales were down 17%.

The chart above shows the annualized rate of change in retail sales. For the 12-months to September 30 sales fell to approximately $2.7 billion, approximately 18% below the peak of $3.3 billion achieved in 2007, and would have been even lower had it not been for the $100m+ impact of "cash for clunkers" auto sales in August.

Reports from malls and stores around the county suggest plenty of shopping activity over the holiday period. We'll see if this leads to a turnaround for retail sales in the new year.

Retail sales back on downward track after Cash for Clunkers blip

As reported in the San Francisco Business Times, California's Cities and Counties are losing millions of dollars because of falling sales tax revenues. As of October, consumers were stubbornly refusing to open their purses and wallets and flash the plastic at stores statewide.

The chart below tracks the annual change in the 1% retail sales distributed to the largest cities in Marin, using data from the California Board of Equalization. The distributions take place 1-2 months after the sales are made; so it looks like the September bump was largely caused by the one-off impact of August spending on "Cash for Clunkers". Distributions were up in the main car dealer locations: +40% in Novato and +14% in Corte Madera.

For Marin County in total, sales tax distributions in September were at the same level as in September 2008. That's an improvement over the year to August, where sales tax revenue averaged $2.2 million per month in 2009, compared with $2.7 million for the same period in 2008.

Come October however, and the sales tax distributions were back on the downward track, averaging -14% below October 2008 for the county as a whole. This is somewhat better than the May-August period this year, when the year-on-year sales decline ranged between -20% to -30%. It could be that retail conditions are improving, or it could be that some of the Clunkers payments carried over into the October numbers. The November figures will be out soon, at which time we will find out more. National indicators suggest an upward trend.

Marin retail sector shrinks below 2002/03 levels

Retail sales in Marin are now lower than they were during the last economic slowdown. In 2002-03, following the tech crash, the annual value of taxable retail sales in the county fell to $2.85 billion. In the following five years, the economy recovered and sales increased to a peak of $3.3bn at the beginning of 2007. Today, just two years later, that gain has been reversed, and retail sales are heading fast towards levels not seen since the 1990s.

The chart above shows trailing 12-months taxable retail sales and the average annual % change for Marin County. The estimate is based on data released by the California State Board of Equalization, which tracks the 1% of taxable retail sales that are distributed to local cities and counties where the retail sales are originated. Trailing 12-months sales are now -14% down from the previous year, with most of this impact occuring in the last few months: June 2009 distributions were -29.8% lower than June 2008, -18.2% lower for July 2009 and -24.1% lower for August 2009.

Marin’s experience matches the US trend. Retail sales data released by the US Census Bureau today show that retail sales dropped sharply earlier this year, although the 5.3% y-o-y decline in sales for August may be an indicator that the worst is over.

Several of Marin’s cities will be hoping that sales don’t fall much farther because retail sales tax provides a large slice of their income. In August 2009, the 1% sales tax distributed to the City of San Rafael was down 28% or $350,000 from August 2008; Novato declined by 22.4% ($125,000), and Corte Madera was down 19.4% ($78,000).

News in brief

Some retail-related news stories kicking around this week:

Marin County retail sales in the fourth quarter of 2008 were 14.1% lower than the same quarter in 2007. Novato's sales were down 7.1%. (That's taxable retail sales) Source: the Quarterly Sales Tax Update prepared for the City of Novato.

The City of San Rafael is to complete the Environmental Impact Report for the proposed Target superstore, even though the project is on hold. Source: Marin IJ

The Tavern at Lark Creek will open next week (June 3rd), replacing the Lark Creek Inn. According to the blurb, the Tavern will offer "a seasonally driven menu that highlights elevated crowd favorites. Main courses will be under $15". Sounds great - unless you're the nearest competing restaurant in the under$15 category, which just happens to be the Yankee Clipper, also owned by the Lark Creek Group...

The Marin IJ sent a reporter to the community meeting for the North Redwood Boulevard Corridor and found a surprising degree of consensus: Yes to a new hotel (because it will create tax revenue); Yes to narrowing Redwood Boulevard; Yes to large format retailers; but No to the proposed Walgreens.

Northgate is leading the race to adopt social media. The mall now has a Facebook page to go with it's Twitter account. Unfortunately the mall is still under serious renovation, so to make up for the absence of stores, it is posting some delightful photos of piles of construction rubble.

Tracking the recession in Marin

The California Board of Equalization recently released data on taxable retail sales for the first quarter of 2008. Yes, it's a little old and yes it would be nice if they released it sooner. But I picture the Board of Eq. consisting of three elderly clerks who tot-up each retail store's sales in giant ledgers, with the results passing through several committees before they can be released.


Anyway, the details for Q1 2008 are of interest because back then it was becoming clear that we were in a recession. The credit markets were still paralyzed, the housing market was stuffed, unemployment was rising and a few retailers were looking shaky and talking about profit warnings. Also, gas prices were rocketing, causing people to cut back on travel and car purchases.


The chart below shows that in Q1 2008 taxable sales at retail outlets in Marin fell by 3.9%, or $29.3 million compared to Q1 2007. This is similar to the decline in California as a whole, which saw a 4.5% fall in total sales.

The next table details where the recession was starting to hurt. The stores that were suffereing were those that depend on a strong housing market. Home Furnishings and Building Materials each saw declines in excess of 11% over the previous year. Motor Vehicles was the other big loser, with a sales hit of 11.6%, which we know continued and led to the closure of a number of car dealers across the county. Winners are the gas companies, with a 14.6% gain on the back of rising prices.

Interesting to see that not all retailers were suffering back at the beginning of 2008. Apparel sales were holding up, and people were still going out for dinner - sales at Eating and Drinking places increased by 3% over the previous year.


When we look at sales by city in the table below, it's the towns with the car dealers, and hardware and furniture stores that took the biggest hit. Half of the sales decline hit San Rafael, with the rest mostly falling on Novato and Corte Madera. Meanwhile, the second tier retail towns - Larkspur, Mill Valley, San Anselmo - managed healthy increrases in sales, as people continued to go out to eat, and buy their everyday necessities and services.
Come back this time next quarter to see how these trends play out.

Marin Retail: nothing much happening here...

Credit to the North Bay Business Journal for making the effort to report on the state of Marin's retail market. The content was not that exciting, but did include some dry real estate statistics and commentary. Let's interpret:

"Vacancies rise modestly". The vacancy rate in Marin shopping centers increased from 4.0% in 2007 to 6.2% in 2008. So the amount of vacant store space increased by more than 50%. Modest increase? No. But we're still way below the national average of approx. 10%

Average asking rental rates in the county are approx. $28 per sq.ft NNN, and are highger in the south of the county ($36 per sq.ft) than the north ($25 per sq.ft).

"Both Whole Foods and Trader Joes set to add stores in 2009". But don't form a line at the door just yet. The last time I looked, the Novato Whole Foods was not expected to open until spring 2010. And in this economic climate I would be surprised to see any activity at the sites acquired by Whole Foods in Mill Valley and Trader Joes in Larkspur.