AE-03105
ANALYSIS OF RETAIL TRENDS AND TAXABLE SALES FOR
PAWNEE, OKLAHOMA AND PAWNEE COUNTY
Suzette Barta, Extension Assistant, OSU, Stillwater
(405) 744-6186
Susan Trzebiatowski, Student Assistant, OSU, Stillwater
(405) 744-6186
Dwayne Skidgel, Ag/4-H & CED, OSU, Pawnee
(918) 762-2735
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
October 2003
Analysis Of Retail Trends And Taxable Sales For
Pawnee, Oklahoma And Pawnee County
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
Dwayne Skidgel Jack Frye
Ext. Ed., Ag/4-H & CED Area Ext. Comm. Dev. Specialist
500 Harrison St PO Box 1378
Room 103 Courthouse 314 S Broadway, Suite 101
Pawnee, OK 74058-2568 Ada, OK 74821-1378
ABSTRACT
The goal of this paper is to provide an analysis of taxable sales for Pawnee and Pawnee 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
PAWNEE, OKLAHOMA AND PAWNEE 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 Pawnee 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 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.
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TAXABLE SALES ANALYSIS
Sales tax returns as reported by the Oklahoma Tax Commission for Pawnee 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, Pawnee collected over $491,000 in sales tax at a tax rate of 3.0%. Figure 1 plots estimated taxable sales for the same time period in both actual dollars and inflation-adjusted dollars. 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 declined through most of the 1990s, but have started to rise since about 1999.
Table 2 lists trade area capture figures for Pawnee from 1980 to 2003. The trade area capture for Pawnee was at a maximum of 3,082 occurring in 1986. This means that in 1986 Pawnee “captured” the retail sales of 3,082 persons. Figure 2 presents a graphic of these same trade area capture figures. (Note that the trend shape is similar to the trend for inflation-adjusted sales.)
Table 3 lists pull factors for Pawnee for the years 1980 to 2003. The pull factor for Pawnee ranges from 0.896 to 1.761. Pawnee’s pull factor is currently about 0.97. The interpretation is that Pawnee is capturing a number of shoppers that is equal to about 97% of its own population. Pawnee is experiencing retail leakage or outshopping by about 3% of its population. This doesn’t necessarily mean that out-of-town visitors never shop in Pawnee, but it does imply that any of this kind of retail attraction is more than offset by the outshopping by Pawnee residents.
Table 3 also shows pull factors for cities and towns in Pawnee County with a reported sales tax. Figure 3 plots these pull factors. Pawnee, while it is the county seat for Pawnee County, is not necessarily the center of trade for the county. Pawnee’s pull factor of near 1.0 is second in line behind Cleveland, whose pull factor for 2003 was about 1.4. A quick check of the Wal-Mart store locator on www.walmart.com reveals that Cleveland has a Wal-Mart and Pawnee does not. This is probably enough to account for the differences in pull factors between the two towns. At one time, the town of Hallett had a pull factor greater than 1.3; however, it has experienced a continual drop and now has a pull factor around 0.65. Terlton’s pull factor, while down for 2003, had been on an upswing and had reached a high of 0.80 in 2002. Jennings’ pull factor has remained around 0.45-0.50 in recent years, while Ralston and Maramec tend to hover around the 0.20 mark.
Figure 4 shows pull factors for more than 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 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 Pawnee’s pull factor compared to other cities with population 1,000 to 5,000. Through the 1980s, Pawnee had pull factors that were significantly above average. Since 1990, that gap has closed somewhat; however, Pawnee is still above average for other cities or towns of similar size.
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Table 1Tax Returns, Pawnee, Oklahoma, 1980-2003
Year / Collections / Tax Rate
1980 / $202,976.15 / 2.00%
1981 / $224,969.53 / 2.00%
1982 / $259,717.77 / 2.00%
1983 / $261,155.65 / 2.00%
1984(4) / $100,565.87 / 2.00%
1984(8) / $270,134.67 / 3.00%
1985 / $452,395.50 / 3.00%
1986 / $450,217.54 / 3.00%
1987 / $406,876.78 / 3.00%
1988 / $370,023.36 / 3.00%
1989 / $350,282.93 / 3.00%
1990 / $369,225.14 / 3.00%
1991 / $382,457.49 / 3.00%
1992 / $386,750.07 / 3.00%
1993 / $386,880.89 / 3.00%
1994 / $390,745.83 / 3.00%
1995 / $398,087.39 / 3.00%
1996 / $394,481.80 / 3.00%
1997 / $394,343.13 / 3.00%
1998 / $403,818.91 / 3.00%
1999 / $410,111.57 / 3.00%
2000 / $449,624.25 / 3.00%
2001 / $456,624.71 / 3.00%
2002 / $461,812.07 / 3.00%
2003 / $491,193.90 / 3.00%
(4) Data are for 4 months of the year.
(8) Data are for 8 months of the year.
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Table 2
Trade Area Capture, Pawnee, Oklahoma,1980-2003
Year / Trade Area Capture / Population
1980 / 2,481 / 1,688
1981 / 2,373 / 1,750
1982 / 2,614 / 1,800
1983 / 2,686 / 1,800
1984 / 2,692 / 1,800
1985 / 2,956 / 1,800
1986 / 3,082 / 1,750
1987 / 2,864 / 1,700
1988 / 2,545 / 1,600
1989 / 2,330 / 1,650
1990 / 2,416 / 2,213
1991 / 2,447 / 2,180
1992 / 2,442 / 2,182
1993 / 2,352 / 2,174
1994 / 2,261 / 2,158
1995 / 2,236 / 2,140
1996 / 2,107 / 2,135
1997 / 2,013 / 2,126
1998 / 2,042 / 2,119
1999 / 2,010 / 2,106
2000 / 2,075 / 2,230
2001 / 2,001 / 2,233
2002 / 2,040 / 2,218
2003 / 2,160 / 2,218
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Table 3Pull Factors, Pawnee, OK and Other Towns in Pawnee County
1980-2003
Cleveland / Hallett / Jennings / Maramec / Pawnee / Ralston / Terlton
1980 / 1.598 / --- / --- / --- / 1.470 / 0.207 / ---
1981 / 1.477 / --- / --- / --- / 1.356 / 0.170 / ---
1982 / 1.470 / --- / 0.228 / --- / 1.452 / 0.230 / ---
1983 / 1.594 / --- / 0.403 / --- / 1.492 / 0.191 / ---
1984 / 1.622 / --- / 0.393 / --- / 1.496 / 0.207 / ---
1985 / 1.736 / --- / 0.492 / --- / 1.642 / 0.253 / ---
1986 / 1.800 / --- / 0.555 / --- / 1.761 / 0.283 / ---
1987 / 1.799 / 0.082 / 0.522 / --- / 1.685 / 0.288 / ---
1988 / 1.857 / 0.411 / 0.538 / --- / 1.591 / 0.350 / 0.035
1989 / 1.793 / 0.371 / 0.555 / --- / 1.412 / 0.310 / 0.221
1990 / 1.727 / 0.638 / 0.660 / --- / 1.092 / 0.357 / 0.417
1991 / 1.742 / 0.936 / 0.690 / --- / 1.122 / 0.284 / 0.423
1992 / 1.736 / 1.095 / 0.627 / 0.099 / 1.119 / 0.223 / 0.450
1993 / 1.694 / 1.310 / 0.661 / 0.319 / 1.082 / 0.260 / 0.437
1994 / 1.603 / 1.107 / 0.570 / 0.131 / 1.048 / 0.246 / 0.418
1995 / 1.642 / 0.870 / 0.543 / 0.154 / 1.045 / 0.242 / 0.446
1996 / 1.598 / 0.924 / 0.507 / 0.206 / 0.987 / 0.265 / 0.423
1997 / 1.575 / 0.760 / 0.478 / 0.168 / 0.947 / 0.284 / 0.451
1998 / 1.544 / 0.830 / 0.452 / 0.173 / 0.964 / 0.276 / 0.442
1999 / 1.565 / 0.883 / 0.434 / 0.177 / 0.955 / 0.244 / 0.632
2000 / 1.426 / 0.743 / 0.499 / 0.179 / 0.930 / 0.281 / 0.772
2001 / 1.405 / 0.730 / 0.507 / 0.168 / 0.896 / 0.204 / 0.793
2002 / 1.539 / 0.681 / 0.469 / 0.136 / 0.920 / 0.223 / 0.807
2003 / 1.439 / 0.653 / 0.452 / 0.167 / 0.974 / 0.231 / 0.649