Archive for the ‘Retail’ Category

Retail legislation only an economist would love

Sunday, January 18th, 2009

j0424464Oregon HB 2388 is an economists dream. It requires a city or county to obtain and review a “comprehensive economic impact study” before approving or disapproving an application to construct a retail facility larger than 75,000 square feet. It also requires that the store pay a fee of $40,000 up-front to pay for the study.

Why would an economist like that?

It means people like me, who have done numerous retail economic impact studies would have a huge increase in work.  And, we would be guaranteed to get paid!  Figure the local government will skim 25 percent for “administration and overhead,” and that leaves about $30,000 for the study.  That’s a nice chunk of change, but not enough for a rigorous study of all the things the legislation thinks should go into a “comprehensive” study.

What do they want in the study?

The study must include each of the following elements.

  • The share of sales the proposed store would attract from existing stores
  • The supply and demand for retail space
  • The number and location of existing retail establishments in which there is overlap
  • of goods and services offered
  • Employment, including projected net job creation or loss
  • Retail wages and benefits
  • Sales revenue retained or reinvested in the market area
  • The public tax revenues and other income generated as a result of construction and operation the store
  • The number of trips to be generated by the large-scale retail development;
  • The number of trip miles generated; and
  • An estimate of carbon dioxide emissions
  • The amount of public subsidies, including tax increment financing, required by the store
  • The costs of public services and public facilities required as a result of the construction and operation of the store

How big is 65,000 square feet?

The bill is aimed at Walmart and other big boxes with stores that are well over 100,000 square feet.

Smaller stores, however, also will be subject to the legislation:  Costco, Fred Meyer, and some Safeway’s would need the comprehensive study.

What about competition?

The legislation mandates that the economic impact study examine the impact on other stores in which there is an “overlap” of goods or services offered.  Add to this the mandatory public comment period and existing stores will have a virtual veto over potential competitors.

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Black Friday spending – boost or bust?

Saturday, November 25th, 2006

Yesterday is what has gradually become known among some as Black Friday. To most people, however, it will always be known as the Day After Thanksgiving. For those who aren’t watching parades or football it is one of the biggest shopping days of the year. So big in fact, that retailers that have been in the red all year hope that the day will help them finish the year in the black.

We’ll have to wait some time before we get the official results on Black Friday. My informal survey suggests that Black Friday may be a disappointment for retailers. My informal survey involves trying to visit as many stores before noon. First, I found close-to-the-door parking at every store. Second, I faced check out times of less than 10 minutes at every store.

Some reasons why Black Friday may not be so big this year:

  1. Consumer spending is slowing: even though consumer confidence remains high it is beginning to slip, fewer mortgage refis mean less cash for consumer goods; also uncertainty about federal and state taxes also can make the retail champagne taste flat;
  2. No good deals, no big products: In past years a thumb through the Black Friday ads would always offer up a must-have product or too-good-to-pass offer, but not this year; The PlayStation 3 and the Wii are the hot products this year, but mumblings suggest that retail margins on the PS 3 are pretty small and consumer hype has dashed hopes that any Wiis would have been available on Black Friday.
  3. Competition, competition, competition: Day-After-Thanksgiving sales are now recognized as the starting pistol for the Christmas shopping season; every national retailer participates and they are chasing after the same set of “door buster” customers.

Remember, the survey is informal and consumers can offer surprises. Here are some of the bigger retailers to pay attention to: Wal-Mart, Home Depot, Kroger, Target, Costco, Sears, Best Buy, Gap, and Federated Dept. Stores.

Sometime I’ll discuss why “door buster” sales are like college early-acceptance programs …

UPDATE: Wal-Mart sounded a cautious note by announcing a decrease in same-store sales in November. (Reuters). On the other hand, an executive of Federated suggested that this may be the best Black Friday in years (Reuters).  According to ShopperTrak RCT Corp., which tracks total sales at more than 45,000 mall-based retail outlets, total sales rose 6 percent to $8.96 billion on Friday (AP).

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Expert testimony on Tribal retail motor fuel markets

Thursday, June 30th, 2005

Eric Fruits provided deposition testimony regarding the relationship between the activities of Indian tribes and Tribal retail motor fuel stations (“gas stations”). Dr. Fruits conducted a survey of gas station customers to evalute the extent to which Tribal membership or Tribal activities attracted customers to the gas stations. Dr. Fruits performed an analysis of the costs of highway improvements and how improvements could be funded from Tribal motor fuel revenues. Squaxin Island Tribe, et al. v. Stephens.

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