Retail sales slip in Napa

Evidence of national woes at local stores

By KEVIN COURTNEY
Register Staff Writer

The national business slowdown is finally hitting wine country, with 11 of the city of Napa’s 15 major shopping zones reporting declining sales in the first half of 2008.

Sales dropped 9 percent between January and June compared to 2007 levels, according to the city’s business trend report.

“It’s very obvious that the economy is slowing,” Carole Wilson, the city’s finance director, said Friday. “We are not immune to what’s happening in the state and the nation.”

The best that can be said about the current economic situation is that many communities are suffering much worse, Wilson said.

Sales in the first half of 2008 were up only at Bel Aire Plaza, which saw the debut of Whole Foods supermarket; the Longs-Genova center on Trancas Street; the Grapeyard Center on Jefferson Street and Redwood Plaza, which completed a major makeover.

Sales were down everywhere else, with some of the biggest drops at South Napa Marketplace, Napa Premium Outlets and River Park.

Downtown sales dropped 9.1 percent, just about the citywide average. A much greater drop is expected in coming months with the pending closure of Mervyns, said Cassandra Walker, the city’s economic development manager.

Confidential sales numbers for individual businesses suggest a general softening of the local economy, Walker said. “Most businesses are down slightly,” she said.

Centers with the biggest declines are typically victims of the dramatic slowdown in construction or the opening last September of the Wal-Mart Supercenter in American Canyon, which siphoned off customers, Robin Klingbeil, a city analyst, said.

The drop in housing starts is having a big impact on any business that sells building materials or furnishings, Klingbeil said.

Businesses and centers that meet the everyday needs of Napans seem to be doing reasonably well, Walker said. “It shows me that people are cutting back, but they’re still going out, they’re fixing their cars.”

Citywide sales figures had risen every year since 2001, with 2007 a record year. Sales last year were up 5.3 percent.

“Those were the biggest numbers ever,” Walker said about 2007. “People started tightening up after the fourth quarter ‘07.”

“It’s one of those cycles,” said Kate King, CEO of the Napa Chamber of Commerce. “People are pulling in their horns. I’ve heard of a few layoffs. They create a ripple (effect).”

If families are spending less, King said, it’s even more important that they shop locally and boost the local economy.

The shopping zone with the biggest drop in sales was the Oxbow, down 28 percent. This is attributable to the closure of the Vallerga’s market at First Street and Silverado Trail, Klingbeil said.

The opening of Whole Foods probably softened sales at most other local supermarkets, she said.

Sales along Soscol Avenue, the city’s Auto Row, were down sharply in the first quarter, but rebounded to 2007 levels in the second quarter, city figures show.

State figures show that vehicle sales were off just 3 percent for the first six months, but many of today’s sales are smaller, lower-priced, more fuel-efficient vehicles.

The 12 percent sales decline at Napa Premium Outlets reflects some recent store closures as the center prepares to bring in new merchants, Klingbeil said.

River Park Center, which is now for sale for $31 million and is a candidate for redevelopment, reported a 10.4 percent decline. Six-month sales totaled $11.3 million, the lowest in 10 years.

The city’s trend report incorporates all sales — taxable and non-taxable — reported to the city for business license purposes.

The state’s sales tax report is a better indicator of retail sales, Wilson said, but has not yet been released. She will be reporting Sept. 23 to the City Council on how all of the city’s major revenue streams are doing, she said.

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