Taxable Sales per Capita in the Retail Trade Sector: Outperforming the Region but Shifting Locally

by Brian Kennedy and Dr. Patrick Jones

Since the Great Recession, many adjustments in consumer spending habits have occurred. Tracking the trends of how retail spending has changed over time can shed light on how the local economy is doing. One way is through retail sales per capita. This measure serves as a proxy for the pace of economic activity, given that consumption spending forms the largest portion of most US regional economies. The measure captures consumer spending on big-ticket items such as cars and furniture as well as everyday purchases such as gas, clothing, books. Significantly, in Washington State it also includes online shopping.

Measuring retail sales on a per capita (simply taking all retail sales and dividing it by the resident population) helps determine the communities’ overall retail leakage, or how many dollars are spent outside the county by its residents. If leakage is high, in this situation, the graph would depict lower per capita measures. However, this can also move in a positive direction, where local retailers (as well as internet sales) attract high resident spending. Or where visitors spend money earned elsewhere. In both of these cases, one would expect much higher values in the per capita measure as more spending is occurring county’s population. This scenario is more aligned with the data that in Indicator 2.2.8.

The trends found on the graph show the retail sales per capita for the combined counties of Chelan and Douglas, along with a few other counties which serve as comparisons. In 2019, the combined counties posted retail sales per capita of $11,243, which was roughly $1.3 billion in total retail sales. The per capita measure has steadily grown by a compound annual growth rate of about 3% since 2004. Growth has occurred every year except the two years tracking the Great Recession of 2008-2009.

As observed in the trend lines, spending in the combined counties sits well above the other comparable Eastern Washington metro area benchmarks, with the exception of Benton County. This likely indicates the ability of local retailers to retain local dollars. This also likely indicates that Chelan and Douglas Counties are able to bring in additional money through visitor spending, in a sense, poaching consumers’ dollars from outside the community. That is easy to observe to anybody who lives or has visited the region. Ranging from hiking in the Enchantments, having a lazy beach day on Lake Chelan, taking in the local wine scene, strolling through the themed streets of Leavenworth, shopping Pybus Market, Waterville Days in the historic Douglas County Seat and the Douglas County Museum - there are many places and events to entice visitors to come spend in the community.

While Chelan and Douglas Counties are posting better rates than the other communities on the graph, spending here is right on par with Benton County’s. This county, home to two thirds of the population of the Tri-Cities, acts as a retail hub for much of the surrounding portion of Southeast Washington and northern Oregon. There aren’t a lot of options for shopping centers, auto dealers, or big box stores in places Columbia, Umatilla, Adams, and even Walla Walla Counties. Thus, the Tri-Cities have been able to capitalize on relative retail scarcity in adjacent counties.

As we can see, the combined counties are doing quite well, but what does a spending breakdown look like within the two counties? Up until about 2014 Chelan County had been leading the two counties, since then Douglas has taken over that role. This is largely resulting in the type of businesses residing in the two counties, and using Department of Revenue taxable retail sales data by sector we can see these differences.

Chelan County’s high retail spending per capita is largely driven by tourism and the resulting construction. Since 2004, total retail spending has increased by 66%, with the fastest growing sectors within retail building materials and garden equipment (increasing by 76%), along with general merchandise stores which includes most big box stores and supercenters (increasing by 32%). The Great Recession was the biggest setback to the county’s economy in modern times. The event caused retail sales per capita to slide for five consecutive years after 2007, not recovering to pre-recession levels until 2016.

Douglas County on the other hand, has been a steady underdog. While it experienced a slight decline through the Great Recession, the County rebounded in terms of retail sales per capita much earlier, surpassing the 2007 peak as early as 2011. While Douglas County spending levels had still been lower than its counterpart across the river, beginning in 2014 that relationship had flipped.

The sectors driving retail sales in Douglas County are not reliant upon the tourism industry nearly as much. The data tell us that new and used auto dealers, general merchandise stores, and electronics and appliances have been leading the charge. In a county with roughly half the population as Chelan, Douglas’s general merchandise stores did about $10 million more in sales in 2019 and electronics and appliances did about $26.7M more in sales. Additionally, auto sales have grown by 240% since 2019.

To sum up, the combined counties have continued to outperform the surrounding Eastern Washington metros. However, the composition of growth has been shifting, not only among industries but between the two counties as well. It seems the outdoor recreation and beauty make Chelan County a strong draw for visitors, but residents of the greater Wenatchee area are increasingly spending their money in Douglas County.