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A study of retail sales pull factors in South Dakota: 2007 data.

Article Excerpt
I. Introduction

The competitiveness of the retail sector is of great importance to the economic health of cities and towns throughout South Dakota. The economic well-being of residents depends on the ease, variety, and convenience at which they can purchase the necessities of life. A viable retail sector also provides jobs and tax base to support community services. In many communities, particularly small cities, the largest employer is the retail sector. In South Dakota, the retail trade sector provides over 50 thousand jobs and accounts for about 12 percent of total wage and salary employment. (1)

One way of measuring the competitiveness of the retail sector of a community is by utilizing what are known as "retail sales pull factors." A retail sales pull factor measures the relative strength of a community's retail sector. The pull factor is typically measured by dividing its per capita retail sales by the state's per capita retail sales. A factor greater than one indicates the community is capturing sales beyond its own population base while a factor less than one indicates that the community is losing sales to other areas.

This article updates the retail sales pull factors for cities and towns in South Dakota. (2) This year we use calendar year 2007 data to calculate the latest retail sales pull factors for more than 200 cities and towns and detailed pull factor information for the, largest 11 cities.

This paper is organized as follows: Section II will examine the pull factors for 201 cities in South Dakota and Section III will examine the pull factors by industry detail for the eleven largest cities in South Dakota. Section IV will provide a summary and conclusions of this study.

II. Retail Sales Pull Factors for 201 Cities

A retail sales pull factor measures a city's retail shopping draw to consumers by comparing a city's retail sales to the retail sales of a predetermined average or greater area, usually the state average. The pull factor is calculated as follows:

Pull factor = (City retail sales per capita) / (Average retail sales per capita)

A pull factor of 1.0 indicates a city is experiencing as much retail trade as would be expected compared to the average, or that sales leaked to other cities are balanced by increased sales from city residents and nonresidents. A pull factor greater than 1.0 indicates the city is drawing in sales from other cities at a greater rate than sales are leaked, and a pull factor less than 1.0 indicates a city is leaking sales to other cities at a greater rate than it is drawing in sales.

The data used to compute the retail sales pull factors is based on population data for incorporated places in South Dakota for 2007 published by the US Census Bureau (3) and taxable sales data for the retail trade sector published by the South Dakota Department of Revenue and Regulation for 2007. (4) Table 1 on page 4 presents data for 201 cities and towns in South Dakota with a population of more than 100 persons for which both population and sales data were available. (5)

A list of the 10 cities with the highest pull factors is presented in Table 2. Most of the high pull factor cities are tourist-oriented. This includes such communities as Oacoma, Deadwood, and Hill City. Keystone has the highest pull factor at 8.08. A list of cities with the lowest pull factors are...

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