by David Stanowski
06 December 2007
The first article in this series, Galveston Retail Sales, demonstrated that our local retail sales have been lagging behind the national average for 20 years! In 1984, Retail Sales Per Capita, in Galveston, exceeded the national average, but by 1987, they had slipped below that bench mark, and have been falling further behind ever since!
National Retail Sales in 2006 exceeded sales in 2005, but that was not the case in Galveston. When adjusted for inflation, using the CPI, local Retail Sales peaked in 2000, BELOW their 1984 level, but on a national basis, they didn't peak until 2004.
This under performance of the retail sector is even more incredible because Galveston is a major tourist destination! Legend has it that somewhere between 4 and 6 million tourists visit The Island each year, which would bring in 70-100 times more people, than the local population base, as potential shoppers!
The next article, Retail Sales To Tourists, compared Galveston to other small tourist towns in Texas and Florida, and found that all of these cities had much higher Retail Sales Per Capita than our local retail sector. It was clear that all of these towns were doing a much better job of converting tourist visits into dollars!
The reaction to that article raised three additional questions. How much did the higher Median Household Incomes in Kemah and South Padre Island help them to generate more Retail Sales, how did Galveston compare to some nearby non-tourist towns, and is the problem simply that it is so easy for Galveston residents to go to Houston where more shopping choices are available?
The first table shows that seven nearby Texas cites have higher Retail Sales Per Capita than Galveston!! This is true of Port Arthur even though it has a lower Median HH Income than Galveston, and probably far fewer tourists! Beaumont has Retail Sales Per Capita 139% higher than Galveston with a Median HH Income only 6% higher!
Texas City, La Marque, Dickinson, and Kemah all offer closer proximity to shopping in Houston, but they are not suffering enough defections to push their Retail Sales Per Capita below those in Galveston! League City and Friendswood each have Median HH Incomes more than double that in Galveston, but they have lower Retail Sales Per Capita. Apparently, people who live in those two cities do shop somewhere else!
Source: U.S. Retail Sales: Census Bureau
Source: U.S. Population: Info Please
Source: Texas Retail Sales: Texas Comptroller
Source: Texas Population: City Data
When Beaumont, Port Arthur, Texas City, League City and Friendswood are added to the comparison with small tourist towns, in Florida, which had to use 1997 data; the same relationships hold true! Galveston has a Median HH Income comparable to Beaumont and Port Arthur and probably far more tourists, but trails both of these cities in Retail Sales Per Capita in 1997 and 2006!
Likewise, with a Median Household Income similar to all of these Florida cites, Galveston trails them by a large margin in Retail Sales Per Capita. Fort Myers has a Median HH Income 7% higher than Galveston, but has Retail Sales Per Capita that are 517% higher! Clearly, Galveston's low Median HH Income is NOT the problem.
The Galveston retail sector is under performing almost every conceivable bench mark on a nationwide and statewide basis, and when it is compared to other cities. The two most likely reasons for this are a lack of support for local businesses, by the City and County governments, and the lack of a coherent marketing plan. This is why it is imperative to develop a comprehensive blueprint of the problems that the local governments are creating for Galveston businesses, using some sort of survey, like the one discussed in Ease of Doing Business; and it is essential to create, and fully fund, a new marketing plan.
The national economy is reaching a critical juncture where is it is likely to slip into a serious recession, at any time. In fact, Merrill Lynch says that the recession "is already here", and Goldman Sachs also believes that at least 1/3 of the U.S. economy is already in a recession. If Galveston does not recognize, and acknowledge that its economy is in peril, it will enter a recessionary period without the strength to survive it intact!
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