This week’s announcement by the Department of Revenue that taxable retail sales rose by more than 8 percent in Clark County in 2014 was good news for an area where the retail trade has struggled in the shadow of sales tax-free Oregon.
The county’s taxable retail sales growth of 8.5 percent for 2014 exceeded the state’s one-year increase of 6.6 percent, with total sales in the county of $5.3 billion, just a notch below the inflation-adjusted peak of $5.6 billion in 2006.
While that growth rate reflects a strong component of housing construction, it also suggests that retailers of consumer products are enjoying increased sales as well.
Mary Sisson, co-owner of the Kazoodles toy store in east Vancouver, says her store is seeing solid growth into the current year.
“The first four month this year are up 15 percent over the first four months of last year,” said Sisson, who heads the Buy Vancouver USA organization of local retailers. In addition to the effects of an improved economy, Sisson attributes the growth in part to a loyalty program that entices customers to return by offering a discount after six purchases.
Still, the state’s numbers show that larger brick-and-mortar retailers struggled in 2014. Department store taxable sales dropped 2.2 percent in 2014 to just under $3 billion, the Department of Revenue reported.
Certainly, retailers of all sizes have reason to pay close attention to competing online retailers. In 2014, total online sales of $2.1 billion statewide remain just a fraction of the total $56.3 billion in retail trade, excluding construction and services. But online growth is racing forward.
Statewide, e-commerce and mail-order sales rose by nearly 20 percent. That’s more than four times the growth rate of the retail trade category that does not include nonretail sectors such as construction and services. And the behemoth online retailer Amazon.com never lets up. On Thursday, it announced that it would offer its Prime members free same-day delivery for limited purchases over $35 in 14 markets, including Seattle but not Portland-Vancouver.
Steve Lerch, executive director of Washington’s Economic Revenue & Forecast Council, said new home construction is a big part of the increase in taxable retail sales. While home construction and prices are approaching pre-recession levels in parts of the Puget Sound region and Clark County, “a lot of the other areas are not seeing as much activity,” he said.
The taxable sales revenue likely looks much different in Clark County than in other parts of the state due to the loss of sales to Oregon retailers. While businesses generally report out-of-state purchases and pay Washington taxes, Lerch said he suspects that many state residents aren’t even aware that they are supposed to pay taxes for those out-of-state purchases. And without paying an income tax on Oregon purchases, buying in a store in Oregon can become a better deal for large purchases than buying the product online.
Even with all those unique circumstances, Clark County generated strong retail sales in 2014 that speak to the county’s strong economic recovery. In the retail trade category that doesn’t count construction and services, Clark County reported an 8.1 percent increase for a total of $2.4 billion in sales. By comparison, retail trade statewide rose by only 4.8 percent statewide, to $56.3 billion.
Using another measure, Vancouver, with the fifth-highest retail trade count in the state, reported an 11.5 percent increase in the retail trade category. Vancouver’s growth rate in retail trade was about double that of Seattle, which had the second-highest growth in retail trade.
But such big-picture examinations can overlook the countless small factors that can affect a retailer’s bottom line. Sisson, of Kazoodles, said her business has slowed in May, which she attributes in part to the recent relocation of the popular cafe Seize the Bagel, long a neighbor to Kazoodles, to a new location a short distance away. Despite cross-promotiion between the cafe and the toy store, Sisson said she’s seeing fewer customers dropping by after a visit to the bagel outlet.
The distance between the two businesses is just “150 steps,” Sisson said. “People don’t want to work off those bagels,” she said.