California Retail Still Far from Recovery

Xin Zhao Analysis, Retail, Topics

California Retail Still Far from Recovery

Zip-code level analysis reveals most places in California still between ten and twenty percent off pre-recession levels

Southern California Percent Change in Retail Sales by Zip Code, 2007 to 2010

Recent reports such as the LAEDC mid-year economic forecast have indicated some improvement in retail sales, with national retail sales already exceeding pre-recession levels. With job-growth unevenly distributed across the Golden State, how has retail been doing across California since the recession? Recent data-analysis by the Institute for Spatial Economic Analysis shows that the California retail sector (including restaurants and food services) almost everywhere still has a long way to go to recover from the great recession. The researchers combined data from the California Board of Equalization, the California Retail Survey 2011 Edition and Census Data to estimate patterns of retail sales across zip-codes.

When comparing 2010 and 2007 retail numbers, in more than 50% of all zip-codes, retail sales are still down between 10 and 20%. Only less than 3% of all zip-codes saw positive growth in retail sales as compared to pre-recession levels. Even taking recent estimates of retail sales growth into account, retail sales are still uniformly down. Only small pockets – the usual suspects – seem to have fared better: some zip-codes in San Francisco, Santa Cruz, Oakland, Long Beach and Downtown San Diego showed smaller losses (shown in yellow) or some positive growth (shown in green).

The researchers matched and compared California Board of Equalization data over comparable quarters in 2010 and 2007 to see whether industry-specific effects play a major role, and they did: while apparel sales overall were up, car sales – aside from parts sales were still substantially down – by more than 30% in the state overall.

Hit the hardest: RVs and Florists, with more than 50% drop in sales. Moreover, the researchers confirmed patterns of adaptation that one might expect: consumers switched spending from full-service to fast-food restaurants and gave up on purchases many may have deemed unnecessary, such as cameras, gifts and books. Even food stores recorded some decrease. Notable exceptions are Beer, Wine and Liquor stores, which recorded an 8% increase. However, store-owners may not feel those increases due to increased competition: types of stores that saw increase in sales or only smaller drops in sales frequently also saw increases in the number of licenses issued, which means sales per store license issued went down.

This directly affects the geographic distribution of retail sales: for one, regions that have a mix of different retail outlets are expected to see a moderate drop, while zip-codes with lots of car dealers may face a larger drop in retail sales overall and areas specialized in apparel may see a much more moderate drop or even an increase. It is this clustering of certain types of retail stores, such as car retailers and fashion stores that likely explains the observed patterns in the geographic distribution of retail sales. With auto-sales showing recent improvements, researchers hope to see fewer and fewer red areas on their maps.

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Percent Change Retail Sales 2007-2010 Legend

Additional Maps

California Percent Change in Retail Sales by Zip Code, 2007 to 2010

Inland Empire Percent Change in Retail Sales by Zip Code, 2007 to 2010

Inland Empire Percent Change in Retail Sales by Zip Code, 2007 to 2010

Los Angeles County Percent Change in Retail Sales by Zip Code, 2007 to 2010

Los Angeles County Percent Change in Retail Sales by Zip Code, 2007 to 2010

Northern California Percent Change in Retail Sales by Zip Code, 2007 to 2010

Northern California Percent Change in Retail Sales by Zip Code, 2007 to 2010

Orange County Percent Change in Retail Sales by Zip Code, 2007 to 2010

Orange County Percent Change in Retail Sales by Zip Code, 2007 to 2010

San Diego County Percent Change in Retail Sales by Zip Code, 2007 to 2010

San Diego County Percent Change in Retail Sales by Zip Code, 2007 to 2010