SOUTH: Steady Progress
ECONOMIC OVERVIEW
This laid-back region continues its slow-but-steady economic recovery. The jobless rate continues to dip while consumer confidence buds. “The South region has the lowest unemployment rate in the U.S. at 7.1 percent and faster wages and salary growth,” says Jack Kleinhenz, PhD, chief economist with the National Retail Federation. “Wages and salaries have been growing at least two percent per month throughout all of 2012 and into the first quarter of 2013, supporting a stronger spending pattern than in other parts of the country.”
JOBLESS RATE
The South currently boasts the lowest unemployment rate of all the Census regions in the country. This region reported a 7.1 jobless rate in April 2013, according to the U.S. Department of Labor’s Bureau of Labor Statistics (BLS).
This number was down, albeit not significantly, from April 2012, when the jobless rate was 7.8 percent. Still, the South has seen a healthy decline in this rate from its 10-year high of 9.6 percent in January of 2010.
CONFIDENCE FACTOR
A sense of recovery has consumers in certain sectors of the South region feeling quite confident about the economy. The West South Central region reported an impressive Consumer Confidence Index (CCI) of 102 in May 2013, according to The Conference Board. This number is up nicely from the CCI of 90.4 reported in May 2012.
This region also had an Expectations Index of 84.7 in May 2013. This is comparable to the Expectations Index for the overall U.S., which jumped from 74.3 in April to 82.4 in May, according to The Conference Board. In addition, the CCI for the U.S. reported in at 76.2 (1985=100) in May, up from 69.0 in April.
In the South’s South Atlantic region, the CCI came in at 80.2 in May, while the Expectations Index reported in at 86.4. In the East South Central region of the South, the CCI was a bit lower at 74.1 and the Expectations Index was also a bit lower at 81.1.
COST OF GOODS
The South saw a less than one percent increase in the Consumer Price Index (CPI/the prices paid by urban consumers for a representative basket of goods and services) from April 2012 to April 2013, a fact that shows that inflation is limited in this recovering region.
This slight increase was still greater than the overall U.S. CPI, which decreased by 0.4 percent for the same period, as reported by the BLS.
RETAIL REAL ESTATE
Much like its jobless rate recovery, the South is slowly making headway in retail real estate.
“It’s kind of a Goldilocks story in the South Atlantic,” says Ryan Severino, a senior economist with Reis, Inc. “It doesn’t have the wealth like the West and Northeast, but it does have strong Florida metros like West Palm Beach and Miami plus places like the Carolinas, which are bouncing back.”
| OPTICAL |
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LENS MARKET FREE-FORM. ECPs here experienced a slight jump in free-form sales, reporting 35 percent of total lens sales, an improvement over 2012’s 33 percent. PALS. It’s business as usual in the South regarding sales of progressive lenses versus multifocals. ECPs here are selling PALs to 71 percent of their presbyopic patients this year, the same amount as in 2012. Multifocal sales also stayed the course at 25 percent. MATERIALS AND EXTRAS. The South ranks last in sales of poly, with 45 percent of respondents noting it as their most-used premium material, down from 51 percent last year. However, the region saw increases in usage of Trivex and 1.67 materials, to 18 and 26 percent. The South is the only region that is staying steady on its 1.6 sales. It also saw a leap in photochromic sales, leading the nation this year with 25 percent of respondents noting photochromics as their most-sold extra. But it lost considerable ground with AR. The South had the lowest percentage of respondents (73 percent) who voted AR their most-sold extra, down from leading the country last year with 85 percent. Polarized also saw a bigger dip here than elsewhere so far this year, with just one percent of ECPs (down from seven last year) noting it as their most-sold extra. |
| FRAME FOCUS |
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MATERIAL. Inching up but still behind other regions, respondents from the South note that 53 percent of their frame sales so far this year are plastic, an increase from last year’s 50 percent. The South leads in the combo category of metal and plastic eyewear, with 20 percent of respondents’ patients opting for the mix. PURCHASE PATTERNS. The biggest shift from year to year in frame responses was in the Southern patients’ likelihood to select new eyewear when refilling their Rx, going from the top spot of 89 percent last year to the lowest spot in the U.S. with 81 percent. SECOND PAIRS. Like the rest of the nation, sunwear is the most popular second-pair option. Casual frames grabbed 11 percent, while computer eyewear hit 14 percent of second pairs. PRICING. Nearly half of respondents haven’t changed their pricing from 2012, while 15 percent went higher, 14 percent went lower, and 22 percent are trying high and low price additions. |
| EDGING STATS |
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The South comes in a close second (to the Northeast) in terms of in-house finishing labs, with 52 percent of the respondents reporting doing their own edging in house. That’s a 1 percent gain so far in 2013, but with edging fewer jobs than last year. 18%…more than last year 9%…less than last year 25%…same as last year |
| SPECIALTY EYEWEAR |
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Year to year, kids’ and sports eyewear have seen a sizable, double-digit growth here. |
| Did You Know |
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Clarksville, TN…Best place to retire (Greatplacestoretire.com) Miami…Worst city to find a job (Indeed.com) Raleigh, NC…Fastest-growing U.S. city (Forbes, Inc.) Washington, DC…Best place to land a job (U.S. News) |
VACANCY RATES
With a vacancy rate of 10.9 percent in the first quarter of 2013, this number was just slightly higher than the overall U.S. vacancy rate of 10.6 percent for the same time period, according to Reis, Inc.
This region’s first quarter vacancy rate in 2013 was also only slightly lower than its vacancy rate of 11.1 percent in the first quarter of 2012—evidence of a slow-but-steady decline and recovery in the commercial real estate market.
RENTS
Asking rents in the South Atlantic hit a two-year high of $18.15 per square foot in first quarter 2013, up slightly from $18 in first quarter 2011. This movement is in the right direction and comparable to the overall U.S. asking rent of $19.13 in first quarter 2013.
METRO MARKETS
A mix of unique metros, the South lays claim to some notable success stories on the economic front. Other cities, such as Atlanta (14.2 percent), Birmingham (15.4 percent), Chattanooga (14.1 percent), and Orlando (13.6 percent) struggled a bit more with higher vacancy rates.
CITIES TO WATCH
The vacancy rate continued to drop in the booming, creative center of Austin, TX, where rates came in at 6.9 percent in the first quarter of 2013, according to Reis, Inc. Asking rents also tipped up slightly to $20.30 for the same time period.
Lexington, KY, also continued to show promise with a vacancy rate of 8.7 percent (though this jumped up from 7.6 percent in the first quarter of 2012).
Nashville’s vacancy rate also moved up slightly, but still remained relatively healthy at 8.5 percent.
In suburban Virginia, the appealing vacancy rate of 6.8 percent remained unchanged from the first quarter of 2012.
FASHION TRENDS
The South still has its own very distinctive take on style.
“In the South, they really like everything in color,” says Roseanne Morrison, fashion director at The Doneger Group, a trend and color forecasting service. “They cringe when we talk about black.”
Thus, the Fall 2013 season’s highly feminine, colorful, and classic ready-to-wear trend is spot on for the South’s customer base.
“This trend was originally influenced by Kate Middleton and ‘Mad Men,’ and we broke away from all those trendy, edgy, contemporary looks into this ladylike, pristine, modest dressing,” says Morrison.
Southerners will have their own, unique take on the season’s other key trends—military and athleticinspired looks.
“We’ll see more classic military looks in the South, such as a navy blue jacket with brass buttons,” notes Morrison.
“We’ll also see more coordinated athletic looks, where consumers will buy matching pieces that will have multiple end uses.”
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