Analysis of Retail Trends and Taxable Sales For

-AE-03119

ANALYSIS OF RETAIL TRENDS AND TAXABLE SALES FOR

DURANT AND BRYAN COUNTY, OKLAHOMA

Suzette Barta, Extension Assistant, OSU, Stillwater

(405) 744-6186

Susan Trzebiatowski, Student Assistant, OSU, Stillwater

(405) 744-6186

S. Clay Jones, Agric./4-H & CED, OSU, Durant

(405) 257-5433

Jack Frye, Area Community Development Specialist, OSU, Ada

(580) 332-4100

Mike D. Woods, Extension Economist, OSU, Stillwater

(405) 744-9837

OKLAHOMA COOPERATIVE EXTENSION SERVICE

OKLAHOMA STATE UNIVERSITY

December 2003

Analysis Of Retail Trends And Taxable Sales For

Durant and Bryan County, Oklahoma

Suzette Barta Susan Trzebiatowski Mike Woods

Extension Assistant Student Assistant Extension Economist

Room 527, Ag. Hall Room 527, Ag. Hall Room 514, Ag. Hall

Oklahoma State University Oklahoma State University Oklahoma State University

Stillwater, OK 74078-6026 Stillwater, OK 74078-6026 Stillwater, OK 74078-6026

S. Clay Jones Jack Frye

Ext. Ed., Agric./4-H & CED Area Ext. Comm. Dev. Specialist

Box 749 Comm. Building P.O. Box 1378

Durant, OK 74702-0749 314 S. Broadway, Suite 101

Ada, OK 74821-1378

ABSTRACT

The goal of this paper is to provide an analysis of taxable sales for the community of Durant in Bryan County. Basic data is used to provide estimates of trade area capture and pull factors. Reported sales tax data is also used to analyze trends in the county and area.

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ANALYSIS OF RETAIL TRENDS AND TAXABLE SALES FOR

DURANT AND BRYAN COUNTY, OKLAHOMA

INTRODUCTION

Oklahoma communities have been concerned with all aspects of economic development for the past several years. Creating new jobs and additional income is of concern to rural communities and urban areas alike. Often, retailing is viewed as a "service" sector dependent on the "basic" sectors such as oil, manufacturing, and agriculture. Export sectors produce goods and services sold outside the local or regional economy. Service sectors tend to circulate existing local dollars rather than attracting "new" outside dollars. The retail sector is important, though, as retail activity reflects the general health of a local economy. Retail sales also produce sales tax dollars, which support municipal service provision. Many local communities are promoting a "shop at home" campaign to keep local retail dollars in the community. It will not be possible to stop all out-of-town spending or sales leakage’s for a local economy. Opportunities for improvement do frequently exist, however. The information in this study may help the community leaders in Durant, OK identify key areas for improvement. Specifically, the objectives of this study are:

1.  Utilize reported sales tax data to analyze trends in the city and county, and

2.  Provide estimates of trade area capture and market attraction.

3.  Provide estimates of market attraction, broken out by SIC code.

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METHODOLOGY AND DATA SOURCES

A trade area analysis model frequently used is “trade area capture.” Trade area capture is calculated by dividing the city’s retail sales by state per capita retail sales. The figure is adjusted by income differences between the state and relevant local area. The specific equation utilized is:

Where:

TACc=Trade Area Capture by city,

RSc=Retail Sales by city,

RSs=Retail Sales for the state,

Ps=State Population,

PCIc=Per Capita Income by county, and

PCIs=Per Capita Income for the state.

Trade area capture figures incorporate both income and expenditure factors, which may be influencing retail trade trends. An underlying assumption of the trade area capture estimate is that local tastes and preferences are similar to that of the state as a whole. If a trade area capture estimate is larger than city population then two explanations are possible: 1) the city is attracting customers outside its boundaries or 2) residents of the city are spending more than the state average.

Trade area capture figures can be utilized to estimate the amount of sales going to outside consumers. To do this a pull factor, which is a measure of an economy’s retail sales gap, is derived using trade area capture figures and city population:

Where:

PFc=City Pull Factor, and

Pc=City Population.

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A pull factor of 1.0 means the city is drawing all its customers from within its boundaries but none from the outside. A pull factor of 1.50 means the city is drawing non-local customers equal to 50 percent of the city population. A pull factor of less than one means the city is not capturing the shoppers within its boundaries or they are spending relatively less than the state average. This is considered leakage of retail sales or a retail sales gap. Additional discussion of trade area capture and pull factors can be found in the references cited in this report (Barta and Woods; Harris; Stone and McConnon; Hustedde, Shatter, and Pulver). The Oklahoma Cooperative Extension Service has been conducting pull factor/gap analysis and sales tax analysis since 1991 (Woods, 1991).

City pull factors and trade area capture figures are calculated for fiscal years 1980 through 2003. Data used were sales tax returns as reported by the Oklahoma Tax Commission. These figures do not include all retail sales (only taxable sales) in an area but provide a proxy. Population data were obtained from the Oklahoma State Data Center and were consistent with figures from the1980, 1990, and 2000 Census. Income figures were taken from Bureau of Economic Analysis estimates for counties. Similar income data for cities were not available so county income was used as a proxy.

TAXABLE SALES ANALYSIS

Sales tax returns as reported by the Oklahoma Tax Commission for Durant, OK are listed in Table 1 for the fiscal years 1980 to 2003. Sales tax returns are important to a city because they reflect the general health of a local economy and also represent significant revenue for the city budget. In FY 2003, Durant collected nearly $6.1 million in sales tax at a 3.0% tax rate. Figure 1 plots estimated taxable sales for the same time period in both actual dollars and inflation-adjusted dollars for Durant. Sales are estimated from the sales tax returns and the sales tax rate that is reported. The Consumer Price Index is used to adjust for inflation. When taxable sales have been adjusted for inflation, Figure 1 shows that “real” sales for Durant have grown (albeit slowly) over the course of the time frame shown.

Table 2 lists trade area capture figures for Durant from 1980 to 2003. The trade area capture for Durant was at a maximum of 27,009 occurring in 2003. This means that in 2003 Durant “captured” the retail sales of 27,009 persons. Trade area for Durant grew nicely from 1981 to about 1987, when it reached over 25,000. However, from 1988-2002, it has remained relatively constant, staying between 23,000 and 25,000. In 2003, the trade area grew to over 27,000. (See Figure 2)

Table 3 lists pull factors for the cities and towns in Bryan County for the years 1980 to 2003. The pull factor for Durant ranges from 1.582 to 1.953. Recently, these pull factors have tended to be about 1.95. The interpretation is that Durant is capturing a number of shoppers that is equal to its own population plus another 95%. In general, a pull factor greater than 1.0 indicates that a community is attracting non-local shoppers to its economy. This does not necessarily mean that all Durant residents do all their shopping at home, but it might mean that any outshopping by Durant residents is more than offset by the dollars spent by non-local shoppers in Durant.

Figure 3 shows pull factors for cities and towns in Bryan County with a reported sales tax. Durant clearly holds first place on this chart, with pull factors in the 1.7 to 1.9 range. The remaining towns have pull factors bunched up in a range of 0.33 to 0.66 (in 2003). Colbert and Caddo top this group with pull factors greater than 0.60 recently. Kenefic entered the chart in 1990 and had a pull factor of just 0.05 in 2003.

Figure 4 shows pull factors for 461 cities that have sales tax return information available. The pull factors are presented as a group average by city size. The highest pull factors fall in the size categories 5,001 to 10,000 and 10,001 to 25,000 and 25,001 to 50,000 in population. The smallest pull factors fall in the range for cities less than 1,000 in population. Figure 5 plots Durant’s pull factors compared to other cities with population 10,000 to 25,000. Durant has consistently posted pull factors that are greater than the average for other cities of similar size.

Table 1

Sales Tax Collections for Durant, OK in Bryan County

1980-2003

Rate / Collected
1980 / 3.00% / $1,860,563.72
1981 / 3.00% / $2,053,148.74
1982 / 3.00% / $2,277,574.40
1983 / 3.00% / $2,434,809.00
1984 / 3.00% / $2,669,454.19
1985 / 3.00% / $2,783,948.57
1986 / 3.00% / $2,798,268.00
1987 / 3.00% / $3,002,248.85
1988 / 3.00% / $2,996,504.26
1989 / 3.00% / $3,041,163.71
1990 / 3.00% / $3,290,625.62
1991 / 3.00% / $3,564,806.49
1992 / 3.00% / $3,699,426.06
1993 / 3.00% / $3,802,972.30
1994 / 3.00% / $3,950,399.74
1995 / 3.00% / $4,058,680.94
1996 / 3.00% / $4,257,782.19
1997 / 3.00% / $4,432,148.45
1998 / 3.00% / $4,535,508.27
1999 / 3.00% / $4,831,662.77
2000 / 3.00% / $5,074,698.38
2001 / 3.00% / $5,329,163.38
2002 / 3.00% / $5,397,132.51
2003 / 3.00% / $6,120,370.83

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Table 2

Trade Area Capture Durant OK, in Bryan County

1980-2003

Year / Trade Area Capture / Population
1980 / 20,722 / 11,972
1981 / 19,385 / 12,250
1982 / 20,773 / 12,650
1983 / 20,736 / 13,100
1984 / 21,477 / 13,300
1985 / 22,248 / 13,450
1986 / 23,152 / 13,800
1987 / 25,375 / 13,600
1988 / 23,936 / 13,350
1989 / 23,488 / 13,500
1990 / 24,358 / 13,110
1991 / 25,285 / 13,005
1992 / 25,277 / 12,990
1993 / 25,414 / 13,093
1994 / 24,572 / 12,988
1995 / 24,173 / 13,050
1996 / 23,727 / 12,966
1997 / 24,154 / 13,051
1998 / 24,218 / 13,044
1999 / 24,343 / 12,992
2000 / 24,186 / 13,549
2001 / 23,430 / 13,713
2002 / 23,924 / 13,827
2003 / 27,009 / 13,827

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Table 3

Pull Factors for Cities and Towns in Bryan County

1980-2003

Achille / Bennington / Bokchito / Caddo / Calera / Colbert / Durant / Kenefic / Mead
1980 / --- / 0.399 / 0.964 / 0.636 / 0.257 / 0.585 / 1.731 / --- / 0.035
1981 / --- / 0.303 / 0.803 / 0.535 / 0.243 / 0.507 / 1.582 / --- / 0.126
1982 / --- / 0.334 / 0.706 / 0.533 / 0.231 / 0.511 / 1.642 / --- / 0.122
1983 / --- / 0.309 / 0.527 / 0.527 / 0.252 / 0.541 / 1.583 / --- / 0.136
1984 / --- / 0.282 / 0.511 / 0.522 / 0.348 / 0.568 / 1.615 / --- / 0.171
1985 / --- / 0.377 / 0.731 / 0.563 / 0.299 / 0.514 / 1.654 / --- / 0.348
1986 / 0.291 / 0.506 / 0.764 / 0.512 / 0.391 / 0.624 / 1.678 / --- / 0.274
1987 / 0.398 / 0.587 / 0.788 / 0.516 / 0.354 / 0.615 / 1.866 / --- / 0.249
1988 / 0.411 / 0.662 / 0.637 / 0.497 / 0.362 / 0.546 / 1.793 / --- / 0.210
1989 / 0.443 / 0.686 / 0.624 / 0.520 / 0.333 / 0.584 / 1.740 / --- / 0.252
1990 / 0.401 / 0.813 / 0.669 / 0.461 / 0.324 / 0.651 / 1.858 / 0.064 / 0.353
1991 / 0.423 / 0.795 / 0.761 / 0.393 / 0.363 / 0.761 / 1.944 / 0.119 / 0.305
1992 / 0.415 / 0.739 / 0.772 / 0.374 / 0.383 / 0.726 / 1.946 / 0.055 / 0.368
1993 / 0.319 / 0.613 / 0.878 / 0.382 / 0.398 / 0.656 / 1.941 / 0.083 / 0.435
1994 / 0.323 / 0.634 / 0.744 / 0.395 / 0.394 / 0.661 / 1.892 / 0.096 / 0.446
1995 / 0.321 / 0.616 / 0.680 / 0.428 / 0.427 / 0.636 / 1.852 / 0.149 / 0.615
1996 / 0.325 / 0.646 / 0.749 / 0.439 / 0.431 / 0.613 / 1.830 / 0.157 / 0.611
1997 / 0.366 / 0.614 / 0.774 / 0.426 / 0.476 / 0.890 / 1.851 / 0.181 / 0.662
1998 / 0.329 / 0.593 / 0.813 / 0.423 / 0.484 / 0.702 / 1.857 / 0.138 / 0.774
1999 / 0.358 / 0.519 / 0.731 / 0.397 / 0.453 / 0.708 / 1.874 / 0.138 / 0.807
2000 / 0.348 / 0.509 / 0.788 / 0.422 / 0.449 / 0.822 / 1.785 / 0.079 / 0.724
2001 / 0.351 / 0.539 / 0.671 / 0.465 / 0.334 / 0.599 / 1.709 / 0.104 / 0.827
2002 / 0.324 / 0.529 / 0.610 / 0.475 / 0.352 / 0.620 / 1.730 / 0.075 / 0.697
2003 / 0.333 / 0.552 / 0.592 / 0.623 / 0.259 / 0.663 / 1.953 / 0.050 / 0.613

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