Intercounty Retail Leakage Patterns in North Carolina

Southeastern Geographer Vol. 22, No. 1, May 1982, pp. 52-67 INTERCOUNTY RETAIL LEAKAGE PATTERNS IN NORTH CAROLINA /. Dennis Lord Retail trade is an important component of a local economy because it generates sales tax and property tax revenues for local governments and provides jobs for the local population (1 ) These tax revenues are vital to the fiscal welfare of many local communities. Thus both the location of retail facilities and the location of consumer retail expenditures are important issues to a local community's economic health. A community's economy suffers when local retail facilities are insufficient to meet consumer demand or when consumers make retail purchases in other communities even though adequate local retail facilities exist. As a result there is not only a transfer of retail trade dollars from one community to another but also a shift in sales tax and property tax revenues. Most communities have both inflows and outflows of retail dollars, and the balance between these flows is critically important. The action whereby residents of one area (such as a town or county) make retail purchases in some other locale is known as "outshopping." When this happens, dollars literally leak out of the community to some other geographic area; "retail leakage" is the result. These economic losses include both the loss of retail sales by local retail merchants as well as the loss of sales tax and property tax revenues by the local government . There is a rather extensive literature on outshopping behavior and retail leakage. (2) At the individual consumer or behavioral scale of analysis, the studies focus primarily on three questions: (1) who is the outshopper versus the inshopper? (2) why do people engage in outshopping ? (3) what strategies can be used to curb or reduce outshopping ? The intensity or degree of outshopping by residents of a given community is related to both demographic and socioeconomic characteristics of residents as well as to the availability of shopping opportunities in the local area compared to surrounding communities. (3) The studies do not agree on the ability of several demographic and socioDr . Lord is Associate Professor of Geography at the University of North Carolina at Charlotte, in Charlotte, NC 28223. Vol. XXII, No. 1 53 economic variables to distinguish between outshoppers and inshoppers, but there is general consensus that outshoppers tend to be younger, more educated, and have higher incomes than inshoppers, and tlrat the greater selection of merchandise in other communities is the most important reason for outshopping. There is also some evidence that outshoppers perceive that prices are lower in other communities. (4) The larger the community the greater is the selection of merchandise . The geographic setting most amenable to outshopping and retail leakage is where a smaller community is located near larger towns or cities. Small communities so located are likely to suffer significant economic and fiscal losses. Therefore, the geography of town size and spacing is an important underlying factor in the spatial patterns of retail leakage. PURPOSE OF STUDY. This study presents a simple measurement or index to determine whether or not a community is experiencing significant retail leakage. The measurement indicates the extent to which a community's net inflow or outflow of retail dollars is due to the leakage phenomenon. The leakage index is applied at the county scale in North Carolina in order to discern the pattern of gains and losses in the leakage process. Estimates are made of the absolute magnitude of the net inflow or outflow of retail dollars for the extreme counties on the index in order to provide an indication of the economic magnitude of the leakage. In addition this study examines two specific questions: (1) are intercounty retail leakage flows of a greater magnitude today than in previous years? (2) do retail leakage flows between counties differ in magnitude for high order shopping goods compared to convenience goods? One might expect retail leakage flows to have increased over time because of the improved travel mobility of the consumer. This greater mobility is due to several factors, including the increase in automobile ownership, improved highways, the increase in personal incomes, and, until recently, cheap gasoline. (5) As a result of these changes...