Statistics by John Husing Ph.D
Murrieta's Retail Economy
Murrieta’s retail economy is in the process of growing-up. Throughout the city, new projects are evident almost everywhere. Centers with names like Murrieta Town Center, Murrieta Town Center East, Murrieta AutoMall, Village Walk Plaza, Murrieta Pointe, HomeCenter Murrieta are already being occupied. Grading is underway on the 655,000 square foot Triangle development at the I-215 and I-15 intersection, and on the multi-use 200 acre mixed-used Golden Triangle just north along the I-15. As these centers are leased, they will increase Murrieta’s retail sales performance and the associated sales tax revenues flowing into its discretionary budget. This is important since, despite the recent aggressive growth, the city’s retail economy is still under-performing the surrounding region.
In 2005, Murrieta’s retail sales surged to another all-time high at $1.03 billion. Retail sales have increased in every year since its 1992 incorporation. In 2004 alone, the gain was $141.4 million (16.0%). Murrieta’s retail sales growth has exceeded that of Riverside County in all but two years (1997, 2000). In 2001-2003, the city’s sales (27.9%, 17.8%, 31.4%) grew more than twice the county’s rates. In 2004, its growth of 26.3% was faster than the county’s 16.3% and California’s 4.5%. In 2005 the rate slowed to 16.0% versus the county’s 11.4%. Murrieta’s rapid retail sales growth has given it the 15th highest volume of the 48 Inland Empire cities. Ontario ($5.2 billion), Riverside ($4.9 billion) and Corona ($3.3 billion) led the region with higher sales. Nearby Temecula ranked 5th ($2.6 billion).
Given the importance of the retail sales tax to California municipalities, taxable retail sales per capita is a measure of a community’s ability to provide services to its population. Murrieta has fared modestly on this standard. Its per capita sales roughly tripled from $3,892 in 1992 to $11,503 in 2005, up $7,611 (196%). Riverside County’s sales doubled from $7,131to $14,632, up $7,500 (105%) in this period. In 2005, the city’s per capita sales of $11,503 ranked 15th among the inland region’s 48 cities. More recently, the city sales per capita have increased by 47.3% since 2000. Despite this aggressive performance, Murrieta’s per capita sales remain below the county’s average. This means that the city has less than average sales tax revenues per person to spend on discretionary items within its budget.
Sector level retail sales data is published for Murrieta from 1994-2005. In this period, the city’s retail trade grew $871 million or over 5-fold. As price increases accounted for only 32.5% of the gain, the underlying physical volume of trade grew substantially. The largest share of the growth was the 18.6% from a $162 million increase in sales by general merchandise firms. Other retailers that fill-in around anchor tenants in malls grew $148 million (16.9% of gain), and building materials expanded by $141 million (16.2% of gain). The city’s population growth and residential expansion explains the strength of these sectors. The other major group driving the increase in Murrieta’s volume was retail sales by non-retail outlets (up $106 million). This includes taxable sales by professional & service firms, construction contractors, and manufacturing & distribution firms selling directly to the public.
From 1994-2005, the increasing diversity of Murrieta’s retail economy has affected its distribution of sales. In 2005, building material outlets were the largest retail sector at 19.1%, down from 35.1% in 1994. This sector is powered by outlets like Home Depot and Lowe’s. Other retail stores had the second larger share in 2005 at 17.4%, down from 19.9% in 1994. General merchandise stores ranked third in 2005 at 16.4%. They were up from an insignificant 3.6% in 1994 due to the opening of stores like Walmart, Sam’s Club and Walgreen’s. Interestingly, the city’s automotive outlets ranked only fifth at 9.1%, increasing from 0.4% in 1994 with the opening of Volkswagen, Suzuki and Mitsubishi in Murrieta AutoMall plus parts dealers like AutoZone and Kragen Auto Parts. The sector typically ranks first with 20% of sales.
In seven of ten sectors, 2005 average sales by Murrieta’s retail outlets did better than the average for all stores in Riverside County. The strongest per store performance was by building material suppliers ($3.6 million higher) and general merchandise stores ($1.9 million higher). The largest disadvantages were in automotive (-$1.6 million) and eating & drinking (-$121,648). Overall, Murrieta outlets generally outperformed those in the Inland Empire. The city’s average retail store had sales of $1.08 million. That was above the countywide averages for outlets in Riverside County ($1.01 million) and in San Bernardino County ($935,787). However, the city’s average sales in all outlets including non-store outlets of $618,002 was below the average for all venues in either county ($656,261 & $622,242). The difference was due to the city’s relatively small manufacturing and warehousing sectors.
Murrieta’s 2005 per capita taxable sales average of $11,503 was well below the averages for Riverside ($21,494), after it had been adjusted upward for the fact that the county had a much lower median income level than the city. An upward adjustment of 41.3% was made to Riverside County per capita sales, as this was the amount by which its median income and purchasing power were below those of the average Murrieta family. Given that adjustment, a sales tax “gap” analysis shows that dollars are leaving the city for other communities in all but one sector. In the building material category, the city’s sales per capita were $118 higher than the income-adjusted figure for Riverside County indicating it is gaining dollars from surrounding areas. Murrieta has a net outflow of retail dollars to other cities in every other category. For in-store sales, the automotive (-$2,689) and eating and drinking (-$948) categories show the biggest “sales gaps”. These are sectors where new firms can succeed via sales to the city’s residents.