Retail sales numbers for Whatcom County may be starting to reflect a shift to online shopping, particularly for our Canadian neighbors.
According to data from the state Department of Revenue, 75 percent of Whatcom County retail trade sales - goods sold primarily in stores or online - was in Bellingham in 2017. That indicates Bellingham is still the dominant retail area in this region, but its market share is decreasing. Five years earlier Bellingham accounted for 77 percent of Whatcom’s retail trade; 10 years ago Bellingham’s market share was 80 percent.
While market share in Bellingham is going down, it has steadily risen in Blaine and unincorporated Whatcom County while it’s remained relatively flat in Ferndale and Lynden. Blaine’s market share rose from 1.6 percent to 3.4 percent in 10 years, while in the past five years unincorporated areas like Birch Bay went from 8.5 percent in 2012 to 10 percent last year.
While it is not conclusive, other data points to online shopping and its influence on cross-border shopping as a factor. As online shopping began taking off, Canadians learned they could save money on international costs and other fees by getting a post office box or mailing address in the U.S.
Blaine has taken advantage of the need for mail handling, package and small freight businesses. For a town of about 5,000 people, Blaine has around 20 of these types of businesses, said Michael Jones, interim city manager.
Whatcom County residents are also changing where retail sales tax is collected. If a Ferndale resident shops at Bellis Fair, the retail sales tax stays in Bellingham. If they go online and the goods are delivered at home, Ferndale gets the sales tax, according to the Department of Revenue.
Bellingham is concerned about the market share trend, said Brian Henshaw, the city’s finance director. Along with online sales, new retail in nearby communities like Ferndale, Lynden, as well as proposed retail north of Bellingham along Interstate 5, could add to the competition, he said.
Henshaw noted that legislative changes like the Marketplace Fairness Act are forcing online retailers to collect retail sales tax. That is helping cities gain more revenue. At this point the city budget is planning for continued growth, but at a slower rate.
The impact of online sales is also showing up in retail jobs: Whatcom County has added 5,200 non-farm jobs between July 2016 and last month, but the retail sector has shrunk by 100 during the same period according to data from the state’s Employment Security Department. During that same period, transportation/trade added 900 jobs locally.
Overall retail sales have been climbing, but as a percentage, Blaine and other areas have been climbing faster. That could mean that some shoppers outside of Bellingham are redirecting a trip to the mall or other brick-and-mortar stores to an online source, said James McCafferty, director at Western Washington University’s Center for Economic and Business Research.
While the market share has declined, Bellingham still dominates in retail and sales are growing. In the first quarter of this year, Bellingham generated $333.7 million of Whatcom County’s $450 million in retail trade. That’s a 11.5 percent increase compared to the same period in 2017. Whatcom County’s retail trade rose 12.7 percent for the same period.
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