By John Rau, February 11, 2021
Business operations are the source of considerable taxable retail expenditures and tax revenues to local government agencies. An economic analysis of the Napa/Sonoma wine country trade area for the second and third quarters of 2020 shows that taxable retail sales in the area declined dramatically in several categories as a result of stay-at-home orders and resulting business closures.
Retail sales in Napa County declined 31 percent in the second quarter of 2020 and 15.1 percent in the third quarter relative to 2019. Among cities in the county, Yountville showed the greatest decline, 77.4 percent in the second quarter and 39.1 percent in the third quarter relative to 2019.
Retail sales in Sonoma County declined 16.3 percent in the second quarter of 2020 and 1.5 percent in the third quarter relative to 2019. Among cities in the county, Sonoma showed the greatest decline: 37.2 percent in the second quarter and 21.9 percent in the third quarter relative to 2019.
A 36-year old Anaheim-based economic consulting and taxable retail sales analysis firm recently conducted an analysis of the Napa-Sonoma Wine Country trade area regarding the impacts of pandemic-related closures on taxable retail sales during the first six months following the Governor’s Executive Order and Public Health Order (March 2020) that directed all Californians to stay home except to go to an essential job or to shop for essential needs. That action led to numerous safety measures (such as masks and social distancing) and operational restrictions on business operations that are sources of taxable retail expenditures and tax revenues to local government agencies. Examples of such businesses include retail operations of all types such as restaurants, breweries, wineries, bars, mall and shopping center stores, hotel and lodging facilities, recreational facilities, movie and family entertainment centers, live audience/fan sports facilities, amusement parks, etc.
The Wine Country study utilized the latest data and information provided by the State of California Department of Tax and Fee Administration for calendar years 2019 and 2020, quarters 2 and 3, covering the time periods April through June and July through September, respectively. In the case of calendar year 2020, this represents the first six months following the Governor’s stay-at-home orders and subsequent business operations restrictions. The study’s objective was to look at the same time period in the prior year to identify relative changes and potential impacts.
Recognize that there are many factors that may cause a change in retail sales from one year to the next, but — in light of the actions and procedures taken in the state regarding Covid-19 — it would be reasonable to assume that the pandemic was a major contributor to any sales declines.
Napa County
Comparing calendar year 2019 second quarter taxable retail sales with the 2020 second quarter (April through June), the first full three months of operations after the Governor’s Orders, Napa County taxable retail sales declined from $966.46 million in 2019 to $667.16 million in the same three-month period in 2020, a 31 percent decline. As would be expected, major retail categories were impacted: Food Services and Drinking Places (-63.1 percent), Clothing and Clothing Accessories Stores (-52.2 percent), Gasoline Stations (-48.7 percent), Motors Vehicles and Parts Dealers (-43.9 percent), Home Furnishings and Appliance Stores (-28.6 percent), and Food and Beverage Stores (-26.7 percent).
In terms of cities in the county, Yountville showed the largest decline, 77.4 percent, from 2019 second quarter to 2020 second quarter, and American Canyon showed the lowest decline, 28.1 percent. Collectively, all five cities in the County showed a 39.2 percent decline from $600.48 million taxable retail sales in second quarter 2019 to $364.94 million in second quarter 2020.
In comparing calendar year 2019 third quarter taxable retail sales with the 2020 third quarter (July through September, the second three months of operations after the Governor’s orders), Napa County taxable retail sales declined 15.1 percent from $966.29 million in 2019 to $820.54 million in the same three-month period in 2020. Relative to this second three-month period, the declines in major retail stores categories were: Food Services and Drinking Places (-37.2 percent), Gasoline Stations (-31.1 percent), Clothing and Clothing Accessories Stores (-20.4 percent), and Food and Beverage Stores (-18.9 percent).
In terms of cities in the county, Yountville again showed the largest decline, 39.1 percent from 2019 third quarter to 2020 third quarter, and American Canyon again showed the lowest decline: 5.2 percent over the three-month period in comparing 2019 with 2020. Collectively, all five cities in the county showed a 20.4 percent decline from $574.91 million taxable retail sales in third quarter 2019 to $457.90 million in third quarter 2020.
Sonoma County
Over the three-months April through June, the County taxable retail sales declined from $2,562.24 million in 2019 to $2,144.59 million in 2020, a 16.3 percent decline. Similar to Napa County, impacts in the major retail stores categories were: Clothing and Clothing Accessories Stores (-56.5 percent), Gasoline Stations (-46.8 percent), Food Services and Drinking Places (-46.5 percent), Home Furnishings and Appliance Stores (-29.6 percent), Motor Vehicles and Parts Dealers (-20.9 percent) and General Merchandise Stores (-18.0 percent). Food and Beverage Stores showed a 2.2 percent decline.
As to cities in the county, Sonoma showed the largest decline, 37.2 percent, from $74.09 million in 2019 to $46.52 million in 2020. The Town of Windsor showed the smallest decline at 5.3 percent from $103.69 million in 2019 to $98.20 million in 2020. Collectively, all nine cities in the County showed a decline from $1,791.70 million taxable retail sales in second quarter 2019 to $1,327.02 million in second quarter 2020, a 25.9 percent decline.
For the second three-month period, July through September, after the initial stay at home and business operations restrictions had been in place for three months, Sonoma County taxable retail sales declined from $2,613.93 million in 2019 to $2,574.58 million in the same three-month period in 2020, a 1.5 percent decline. Major retail stores categories impacted were: Food Services and Drinking Places (-28.1 percent), Gasoline Stations (-26.8 percent), Clothing and Clothing Accessories Stores (-23.3 percent), and General Merchandise Stores (-11.5 percent). Food and Beverage Stores actually showed a one percent increase in taxable retail sales.
In terms of cities in the county, Sonoma again showed the largest decline at 21.9 percent, from $76.67 million in 2019 to $57.90 million in 2020. Sebastopol showed the smallest decline at 9.2 percent from $42.72 million in 2019 to $38.79 million in 2020. Collectively, all nine cities in the County showed an 11.9 percent decline from $1,829.66 million in 2019 to $1,612.12 million in the same three-month period in 2020.
Summary
In the six months following pandemic-related stay-at-home orders and resulting business closures, taxable retail sales in the Napa-Sonoma Wine Country showed dramatic decreases in several categories at county and city levels. The study and the results presented here attempt to quantify these impacts that are most likely a result of the State’s response to the Covid-19 pandemic.
Other Napa and Sonoma County detailed results are presented in the January 27, 2021 report by Ultra-Research, Inc., which can be obtained by emailing the author.
John Rau is President/CEO of Ultra-Research, Inc., in Anaheim, California, a company he founded in 1985. He holds a master’s degree in mathematics from the University of Washington and a bachelor of applied science in mathematics from UC Riverside. Rau is a member of the Orange County Section of APA California. You can reach him at (714) 281-0150 or ultraresch@cs.com.