AE-10018
ANALYSIS OF RETAIL TRENDS AND TAXABLE SALES FOR
SHAWNEE, OKLAHOMA AND POTTAWATOMIE COUNTY
Joe Benton, Pottawatomie County Extension Director, OSU, Shawnee
(405) 273-7683
Jack Frye, Area Community Development Specialist, OSU, Ada
(580) 332-4100
Lara Brooks, Extension Assistant, OSU, Stillwater
(405) 744-4857
Dave Shideler, Extension Economist, OSU, Stillwater
(405) 744-6170
OKLAHOMA COOPERATIVE EXTENSION SERVICE
OKLAHOMA STATE UNIVERSITY
June 2010
Analysis of Retail Trends And Taxable Sales For
Shawnee, Oklahoma and Pottawatomie County
Joe Benton Jack Frye
Pottawatomie County Extension Director Area Ext. Comm. Dev. Specialist
1401 N. Kennedy PO Box 1378
Shawnee, OK 74801-6814 314 S. Broadway, Suite 101
Ada, OK 74821-1378
Lara Brooks Dave Shideler
Extension Assistant Extension Economist
526 Ag Hall 323 Ag Hall
Oklahoma State University Oklahoma State University
Stillwater, OK 74078-6026 Stillwater, OK 74078-6026
ABSTRACT
The goal of this paper is to provide an analysis of taxable sales for the community of Shawnee and Pottawatomie 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
SHAWNEE, OKLAHOMA AND POTTAWATOMIE COUNTY
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 that 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 for a local economy. Opportunities for improvement do frequently exist, however. Key areas can be identified for improvement. Analysis of retail trends can identify emerging trade centers. Local leaders in Shawnee requested the following taxable sales analysis. The specific objectives of the study are:
1. Utilize reported sales tax data to analyze trends in the county and area.
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 a 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 2009. Data used were sales tax returns as reported by the Oklahoma Tax Commission. These figures include only taxable sales in an area, but they provide a proxy for all retail sales. Population data were obtained from the Oklahoma Department of Commerce and are consistent with figures from the 1980, 1990, and 2000 Census. Income figures were taken from the Bureau of Economic Analysis (BEA) estimates for counties. Similar income data for cities were not available, so county income was used as a proxy.
IMPORTANT: Readers should note that BEA continually updates its estimates—sometimes for all years back to 1969, which was the case with a recently released data set. These updates affect the values for trade area capture and pull factors. Because of this, trade area capture and pull factor values in this report may differ slightly from values previously published in older versions of this report.
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TAXABLE SALES ANALYSIS
Sales tax returns as reported by the Oklahoma Tax Commission for Shawnee are listed in Table 1 for the fiscal years 1980 to 2009. 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 2009, Shawnee collected nearly $16 million in sales tax at a tax rate of 3.00%. This translates into over $531 million in retail sales. This is an increase from 2008 when Shawnee collected over $15 million in sales tax collections at a rate of 3.00%, meaning just over $513 million in retail sales. Sales are estimated from the sales tax returns and the sales tax rate that is reported. Figure 1 plots estimated taxable sales in both actual dollars and inflation-adjusted dollars. The Consumer Price Index is used to adjust for inflation. When taxable sales have been adjusted for inflation, Figure 1 shows that “real” sales have overall increased modestly since 1980.
Table 2 lists trade area capture figures for Shawnee from 1980 to 2009. Shawnee’s trade area capture has ranged from 35,952 in 1981 to 53,263 in 1998. Shawnee’s trade area capture for 2009 is 50,157. This means that in 2009 Shawnee “captured” the retail sales of 50,157 persons. This is an increase from 2008 when Shawnee captured the sales of 49,452 shoppers. Figure 2 presents a graphic of these same trade area capture figures. Table 2 also displays population figures for Shawnee from 1980 to 2009. Shawnee’s population has steadily increased since 1980. Shawnee’s current population is 30,562.
Table 3 lists pull factors for Shawnee for the years 1980 to 2009. The pull factor for Shawnee ranges from 1.332 in 1981 to 1.915 in 1997. Shawnee’s pull factor is currently about 1.641. The interpretation is that Shawnee is capturing a number of shoppers that is equal to 1.641 times its own population.
Table 3 also shows pull factors for cities and towns in Pottawatomie County with a reported sales tax. Figure 3 plots these pull factors. When reviewing the pull factors in Pottawatomie County, Shawnee emerges as the retail trade center for the county. Earlsboro follows with a current pull factor of 0.867. This is a decrease from 2008, and it appears that Earlsboro’s pull factor has been decreasing since 2005. Tecumseh is next with a current pull factor of 0.368. This an increase from 2008 when Tecumseh posted a pull factor of 0.358. Asher and McLoud follow with very close pull factors. Asher’s current pull factor is 0.328. This is an increase from 2008. McLoud’s 2009 pull factor is 0.326. McLoud also experienced an increase in their pull factor from 2008. Maud and Wanette both post pull factors below 0.30. In addition, both communities experienced a decrease in their pull factor from 2008. Pink has collected a sales tax for the fewest number of years with FY 2008 as their first year. Therefore, Pink did experience an increase in their pull factor from 2008. Their current pull factor is 0.074.
Figure 4 shows pull factors for 460+ 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 10,001 to 25,000 and 25,001 to 50,000 in population with the category of 5,000-10,000 close behind. The smallest pull factors fall in the range for cities less than 1,000 in population. Figure 5 plots Shawnee’s pull factor compared to other cities with population of 25,000-50,000. When compared to cities of similar size, Shawnee consistently posts pull factors above the average.
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Year / Collections / Tax Rate / Taxable Sales1980 / $2,976,835.00 / 2.00% / $148,841,750.00
1981 / $3,272,182.00 / 2.00% / $163,609,100.00
1982 / $3,611,132.00 / 2.00% / $180,556,600.00
*1983(2) / $646,114.00 / 2.00% / $32,305,700.00
*1983(10) / $4,634,619.00 / 3.00% / $5,280,733.00
1984 / $5,906,573.00 / 3.00% / $196,885,766.67
1985 / $6,120,796.00 / 3.00% / $204,026,533.33
1986 / $5,945,623.00 / 3.00% / $198,187,433.33
1987 / $5,790,485.00 / 3.00% / $193,016,166.67
1988 / $5,963,670.00 / 3.00% / $198,789,000.00
1989 / $6,176,886.00 / 3.00% / $205,896,200.00
1990 / $6,809,065.00 / 3.00% / $226,968,833.33
1991 / $7,103,545.00 / 3.00% / $236,784,833.33
1992 / $7,547,212.00 / 3.00% / $251,573,733.33
1993 / $7,992,862.00 / 3.00% / $266,428,733.33
1994 / $8,257,842.00 / 3.00% / $275,261,400.00
1995 / $8,832,524.00 / 3.00% / $294,417,466.67
1996 / $9,343,119.00 / 3.00% / $311,437,300.00
1997 / $10,000,310.00 / 3.00% / $333,343,666.67
1998 / $10,451,364.00 / 3.00% / $348,378,800.00
1999 / $10,885,535.00 / 3.00% / $362,851,166.67
2000 / $11,371,534.00 / 3.00% / $379,051,133.33
2001 / $12,061,740.00 / 3.00% / $402,058,000.00
2002 / $12,143,172.00 / 3.00% / $404,772,400.00
2003 / $12,307,601.00 / 3.00% / $410,253,366.67
2004 / $12,534,443.00 / 3.00% / $417,814,766.67
2005 / $13,243,845.00 / 3.00% / $441,461,500.00
2006 / $13,940,367.00 / 3.00% / $464,678,900.00
2007 / $14,620,777.00 / 3.00% / $487,359,233.33
2008 / $15,407,919.00 / 3.00% / $513,597,300.00
2009 / $15,946,576.00 / 3.00% / $531,552,533.33
(*) Data are for months of the year indicated in parentheses.
Table 1
Tax Returns, Shawnee, Oklahoma, FY 1980-2009
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Table 2
Trade Area Capture Shawnee, OK, in Pottawatomie County
1980-2009
Year / Trade Area Capture / Population1980 / 36,937 / 26,506
1981 / 35,952 / 27,000
1982 / 39,758 / 27,400
1983 / 40,950 / 27,750
1984 / 40,463 / 27,900
1985 / 42,644 / 27,750
1986 / 43,102 / 27,600
1987 / 42,204 / 26,850
1988 / 41,149 / 25,950
1989 / 41,204 / 25,750
1990 / 44,535 / 27,172
1991 / 45,040 / 26,988
1992 / 46,299 / 27,065
1993 / 48,035 / 27,369
1994 / 46,529 / 27,121
1995 / 47,436 / 27,351
1996 / 49,890 / 27,578
1997 / 51,995 / 27,156
1998 / 53,263 / 27,824
1999 / 53,257 / 27,979
2000 / 51,010 / 29,151
2001 / 51,378 / 29,365
2002 / 50,768 / 29,411
2003 / 52,399 / 29,595
2004 / 51,197 / 29,442
2005 / 52,521 / 29,489
2006 / 51,228 / 29,867
2007 / 52,976 / 30,256
2008 / 49,452 / 30,562
2009† / 50,157 / 30,562
† Values for 2009 should be considered preliminary since they rely on 2008 BEA data.
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Table 3
Pull Factors for Cities and Towns in Pottawatomie County, FY 1980-2009
Year / Asher / Earlsboro / Maud / McLoud / Pink / Shawnee / Tecumseh / Wanette1980 / 0.303 / -- / 0.410 / 0.255 / -- / 1.394 / 0.907 / 0.251
1981 / 0.248 / -- / 0.420 / 0.232 / -- / 1.332 / 0.881 / 0.266
1982 / 0.303 / -- / 0.495 / 0.267 / -- / 1.451 / 0.985 / 0.288
1983 / 0.319 / -- / 0.511 / 0.250 / -- / 1.476 / 0.995 / 0.284
1984 / 0.257 / -- / 0.507 / 0.265 / -- / 1.450 / 0.918 / 0.290
1985 / 0.308 / -- / 0.634 / 0.262 / -- / 1.537 / 0.941 / 0.275
1986 / 0.339 / -- / 0.600 / 0.236 / -- / 1.562 / 0.990 / 0.258
1987 / 0.277 / -- / 0.515 / 0.202 / -- / 1.572 / 0.827 / 0.205
1988 / 0.318 / -- / 0.471 / 0.186 / -- / 1.586 / 0.775 / 0.229
1989 / 0.310 / -- / 0.444 / 0.175 / -- / 1.600 / 0.694 / 0.224
1990 / 0.563 / 0.362 / 0.426 / 0.321 / -- / 1.639 / 0.719 / 0.318
1991 / 0.611 / 0.952 / 0.425 / 0.349 / -- / 1.669 / 0.680 / 0.211
1992 / 0.583 / 0.675 / 0.412 / 0.364 / -- / 1.711 / 0.641 / 0.228
1993 / 0.588 / 0.634 / 0.406 / 0.378 / -- / 1.755 / 0.662 / 0.249
1994 / 0.652 / 0.660 / 0.385 / 0.355 / -- / 1.716 / 0.632 / 0.303
1995 / 0.637 / 0.604 / 0.361 / 0.352 / -- / 1.734 / 0.593 / 0.192
1996 / 0.707 / 0.998 / 0.353 / 0.383 / -- / 1.809 / 0.643 / 0.246
1997 / 0.644 / 1.577 / 0.359 / 0.371 / -- / 1.915 / 0.668 / 0.266
1998 / 0.611 / 0.877 / 0.357 / 0.570 / -- / 1.914 / 0.646 / 0.284
1999 / 0.576 / 0.724 / 0.340 / 0.601 / -- / 1.903 / 0.610 / 0.253
2000 / 0.578 / 0.656 / 0.375 / 0.405 / -- / 1.750 / 0.561 / 0.234
2001 / 0.698 / 0.788 / 0.438 / 0.429 / -- / 1.750 / 0.542 / 0.285
2002 / 0.642 / 0.792 / 0.388 / 0.390 / -- / 1.726 / 0.494 / 0.296
2003 / 0.501 / 0.708 / 0.419 / 0.359 / -- / 1.771 / 0.494 / 0.241
2004 / 0.475 / 0.815 / 0.394 / 0.325 / -- / 1.739 / 0.458 / 0.204
2005 / 0.451 / 0.962 / 0.376 / 0.344 / -- / 1.781 / 0.409 / 0.189
2006 / 0.374 / 1.220 / 0.321 / 0.348 / -- / 1.715 / 0.396 / 0.205
2007 / 0.357 / 1.120 / 0.346 / 0.343 / -- / 1.751 / 0.406 / 0.199
2008 / 0.293 / 0.915 / 0.305 / 0.314 / 0.025 / 1.618 / 0.358 / 0.173
2009 / 0.328 / 0.867 / 0.297 / 0.326 / 0.074 / 1.641 / 0.368 / 0.161
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