State retail sales seen to rise 4 percent in ’11

Retail sales in Nevada seem to have ended their recession-era slump, with a statewide trade group projecting solid growth in spending in 2011.

The Retail Association of Nevada released a Monday report forecasting a 4 percent jump in the state's retail sales in 2011, a growth pace that should match the nation's retail expansion.

But experts said the year's sales increase will come more from industrial growth in Nevada's rural corners than from higher consumer spending.

The trend is already evident in the most recent sales figures from December, when equipment purchases among utilities, mining companies and manufacturers in rural Elko and Humboldt counties made up most of the state's 11.2 percent sales jump, according to figures from the state Department of Taxation.

It's an increase Komatsu Equipment in North Las Vegas has experienced firsthand, said Colin Corbett, the company's area sales manager.

"In mining, we've definitely seen higher sales, because the prices of gold, copper and other materials have gone up so much," Corbett said. "Mining (equipment) sales will do better as long as those materials stay up in price."

From a budgetary standpoint, a retail sale is a retail sale, so the source of the transaction doesn't matter much to Nevada's fiscal situation, said Alyson Bettelman, a project manager for local consulting firm Applied Analysis and a researcher who helped put together the retail association's report.

But large industrial-equipment purchases tend to be one-time deals, so the boost they give to sales increases might be difficult to sustain.

"If these sales are not signifying a trend, but rather just a one-time purchase, that would be a concern," Bettelman said.

Plus, consumers will be key to any bigger recovery, Bettelman added.

"The more sales growth that is sourced to consumers' discretionary spending, the better that will be for the economy overall, because it means more new jobs will be spread over a larger area rather than in just one industry," she said. "Also, it would be a signal that we are recovering on a broader base, and you have more of a domino effect, rather than more spending isolated in one area and one industry."

Association President Mary Lau said in a statement that sectors including car dealers, clothing stores and Internet retailers have shown positive results recently, but that stores selling sporting goods, hobby materials, books, building materials and general merchandise haven't fared so well.

"With continued growth in mining and mining-related activities, it is likely Nevada will report gains in taxable sales consistent with national expectations for 2011," Lau said. "However, it remains to be seen how much of that growth will be attributed to substantial improvement in consumer discretionary spending in our larger metropolitan areas, as opposed to relatively isolated growth occurring in our more rural areas."

Rising gasoline prices and continued high unemployment could also hurt sales growth in 2011, the retail association's report said.

Consumer sales categories aren't performing evenly, Lau said, with some sectors faring better than others. Car dealers, clothing stores and Internet retailers are experiencing solid sales growth, while sellers of sporting goods, hobby items, books, music, building materials and general merchandise continue to slump.

Local retailers said they can testify to improving business in some areas.

At Ritzy Rags, a Las Vegas boutique that specializes in resales of designer clothes from brands including Chanel, Louis Vuitton and Gucci, December brought the best sales month in the store's 13 years, said owner Pam Linder.

"Things are picking up. I'm finding people who are coming in and saying, 'I just got a job, and I need office-type suits that are very businesslike,' " Linder said.

Nor are customers coming in strictly to sell clothes to the store. They're also buying, Linder said.

"I found that people came to sell last year. I thought I had a Bank of America sign on top of my store," she said. "At the end of 2009 and the beginning of 2010, everyone was trying to sell everything they had that was precious. Now, it's getting back to normal."

But sales aren't normal on every front: At Komatsu, construction spending in Clark County remains well below its prerecession rates, Corbett noted, and he said it would be tough to predict when sales and leases of building equipment would pick up.

Also, the projected 4 percent statewide sales increase would run below the average gains of better times, Bettelman noted. In 2004, for example, retail sales jumped 15 percent; sales rose another 12 percent in 2005.

But 4 percent might be a beneficial growth rate strictly because it's more sustainable than the double-digit gains of the boom era, Bettelman said.

"Maybe this is our new normal," she said. "If we're not seeing population increases, then (growing sales) 4 percent to 5 percent every year would be great, as long as it's keeping up with inflation."

Contact reporter Jennifer Robison at
jrobison@reviewjournal.com or 702-380-4512.