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Keywords

retail sales; pull factor; motor vehicle sales

Abstract

Retailing is an important sector of any economy at all geographic levels. Majority of the times, metropolitan areas serve as retail centers for larger geographic areas as the volume of retail activity generated is certainly an important metric to those places. In this paper, using Nebraska as a case study, we analyze the retailing patterns across the state at different geographical scales. For the analysis, we use Pull Factor (PF) as the primary unit of measurement of retail strength. PF measures the relative market share of retailing by a specific geographic area over a specific time period. Results show that population and major highway tended to be the largest factors that affects retailing and the corollary pull factor for county analysis. Less than one-fifth of Nebraska’s counties recorded a 2015 retail pull factor of greater than one, indicating they were trade-capture counties. Interstate 80 ran through half of these counties, providing them opportunity to capture retail trade from travelers, as well as providing greater ease of transportation for customers from nearby counties. The Great Recession had heterogeneous effect on different size communities. Smaller communities often serve a local agricultural economy; the relative robustness of agriculture seems to have spared them from the full brunt of the national recession. In contrast, the largest population class experienced almost no decrease in their pull factor – one possible reason being that higher-cost retail goods and services tend to be concentrated in those centers.

An analysis of top retail performers was done to see how these towns/cities levied additional local taxes permitted in Nebraska in addition to state sales tax. We found that all but one top retail performing town employing the additional tax which meant some tax shift from community residents to non- residents who purchase taxable goods and services from that community. On average rural county residents need to spend relatively more on motor vehicle purchases than their metropolitan counterparts, which can leave less disposable income for other retail activity given no drastic differences in median household income levels across the state. We found that higher (lower) the purchase index for motor vehicles, the lower (higher) the county retail pull factor tends to be for other taxable sales activity because of the aforementioned reason. Finally, retail volume over the past quarter century continues to evolve towards the urban and larger population centers of the state driven by both the supply and demand sides of the retail sector. We find substantial evidence that the larger cities of the state command a dominant retail role.

Creative Commons License

Creative Commons Attribution 4.0 License
This work is licensed under a Creative Commons Attribution 4.0 License.

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