Pull Factor Estimates for Retail Sales in West Virginia Counties

Pull factors provide a measure of retail trade capture. Pull factors for total and twelve subcategories of retail sales for all West Virginia Counties are analyzed based on 1997 Census of Retail Trade data. A method for estimating missing data points and the use of Rand-McNally trade regions both facilitate estimation of the pull factors. Results indicate that hypothesizes concerning pull factors for central places in West Virginia generally hold. However, other elements influence pull factor estimates. The most important of these is the impact of state sales tax policy, which reduces pull factors for border cities through lessened retail activity in food and drinking establishment and gas stations. Study results imply that state government may wish to rethink its sale tax policy. Introduction Many factors influence the ability of local businesses to survive and thrive. The importance of each factor varies between different types of businesses. For retail businesses, a key factor is the ability of the local community to provide a sufficient market for their products. The ability of local demand to support their operation is determined by local population, local income, and the taste and preferences of local consumers. Also important is the degree of competition from other local retailers and retailers in neighboring communities. The viability of the local retail sector is also important to communities. A viable retail sector makes a community a more attractive place to live. Residents benefit from a broader array of goods and a more competitive retail environment. A viable retail sector also enhances the ability to retain dollars generated in the local economy and attractive customers from elsewhere. Further, all else equal, outside businesses are more likely to make investments in a local economy with growing and diverse shopping opportunities. Small cities and rural communities in particular have recognized the importance of local retail trade activity. Organizations such as Main Street have led local efforts to enhance the competitiveness of and educate local citizens about the import of the sector in general (Barta and Woods, 2001). Retail development is also often correlated with small business and entrepreneurial development. Development in these areas is currently seen as key elements of local economic growth (Daniels, Keller, and Lapping, 1988) as opposed to traditional smokestack chasing (Deller and Harris, 1993). Pull factors have been widely used as a way to evaluate local market capture for retail and service activity. Such tools are helpful in identifying business opportunities, the impact of sales tax on retail activity, and the health of the local economy. By comparing local retail to regional retail sales, pull factors indicate how successful the local retail sector is in retaining local dollars and in attracting consumer spending from other communities.