AMERICAN DEMOGRAPHICS 2015

SOUTH: STEADY AS She Goes

“In the South, certain states...are growing, but not as quickly as they were. They are lagging compared to the rest of the economy.”

— RYAN SEVERINO, senior economist with Reis, Inc., a leading provider of commercial real estate information

ECONOMIC OVERVIEW

Like other U.S. regions, the South is seeing slowed but continued improvements on the jobless front, plus a slight decrease in inflation. In addition, with some highly optimistic sectors, the South lays claim to some of the strongest consumer confidence in the country.

“The South Atlantic, and especially Florida, had a greater rebound and this was partly due to the housing rebound,” says Lynn Franco, director of economic indicators at The Conference Board, an independent business membership and research association. “The West South Central has also picked up moderately in terms of confidence and Texas is a major component—they’ve weathered the decline in energy prices quite well.”

JOBLESS RATE

The jobless rate in the South was 5.3% in June 2015—just slightly lower than the rate of 5.5% for the overall nation, according to the U.S. Department of Labor’s Bureau of Labor Statistics (BLS). This region has the second-lowest unemployment rate of any region in the U.S., behind the Midwest’s 5.0% jobless rate. In addition, The South’s jobs outlook continues to get better with a slow decline in the unemployment rate from 7.0% in June 2013 and 6.0% in June 2014.

CONSUMER CONFIDENCE

Despite a healthy jobless rate, levels of confidence about the economy vary in the South. In this region’s South Atlantic area, which includes states such as Florida, the Carolinas, and Maryland, a lower confidence was recorded at 91.5 in May 2015, according to The Conference Board. This number was somewhat lower than the 95.4 CCI (1985=100) reported for the overall U.S. in the same period.

In the region’s East South Central sector—including Kentucky, Tennessee, Mississippi, and Alabama—the CCI was reported at 103 in May 2015. Its West South Central region—which includes the states of Texas, Oklahoma, Arkansas, and Louisiana—however, reported the highest consumer confidence rate in the entire country at 119.7 in May 2015. This number is still down from the CCI of 128.5 in May 2014.

COST OF GOODS

The South experienced a slight 0.4% decline in the Consumer Price Index (CPI/the prices paid by urban consumers for a representative basket of goods and services) from June 2014 to June 2015. Dixie’s decrease on this front signals a small but always welcome downturn in inflation. The overall U.S. CPI moved up slightly by 0.3% for the same time period, according to the BLS.

KEEPING IT Casual

After a year in the sun as the leader in second-pair sunglass sales, the South tumbled down from 74% in 2014 to 71% this year. Casual eyewear is a bright spot, as the region leads the U.S. in these sales with a reported 10% of second pairs. Computer eyewear continues to grow, representing 18% of second pairs.

RETAIL REAL ESTATE

The retail real estate market in the South is seeing slowed progress on the road to recovery.

“In the South, certain states like Texas are growing, but not as quickly as they were,” says Ryan Severino, a senior economist with Reis, Inc., a leading provider of commercial real estate information and forecasting. “They are lagging compared to rest of economy and their turnaround is now not at the rate people would like to see, like what we had at an earlier stage of recovery, Still, we’ve definitely seen a big turnaround in Florida in a short period of time.”

VACANCY RATES

In the South Atlantic, the vacancy rate for retail real estate was reported at 9.9% in the second quarter of 2015, according to Reis, Inc. This is a barely noticeable downward movement over the first quarter of 2014, when the vacancy rate here was 10.4%.

RENTS

Asking rents in this region also stepped up ever so slightly. Retail real estate asking rents were $18.85 per square foot in the second quarter of 2015, up a small amount from the $18.38 reported in the first quarter of 2014. In comparison, the asking rent reported for the overall U.S. was only slightly higher at $19.89 in the second quarter of 2015, according to Reis, Inc.

METRO MARKETS

This sun-soaked, genteel region, which corners the market on charming urban areas, revealed some standout metro success stories, including Texas, Florida, and Tennessee.

CITIES TO WATCH

Cities that boasted lower vacancy rates in the second quarter of 2015 in this region include suburban Virginia (5.5%), Miami (6.2%, down from 7.1% in Q1 2014), Nashville (8.1%), Lexington, KY (8.3%), and Fort Lauderdale (9.3%, down from 10.1% in Q2 2014), according to Reis, Inc.

Many of these urban centers also showed improvements in unemployment rates in May 2015, which strengthened their local economies. Examples of success stories include Lexington, KY (3.8%, down from 6.1% in May 2013), Nashville (4.6%, down from 6.3% in May 2013), Fort Lauderdale (5.2%), and Miami (5.6%).

FASHION TRENDS

Style follows a more ladylike and gentlemanly path in the South, with devotees exhibiting an unabashed love for color.

This fall, one of the key fashion trends pinpointed by The Doneger Group that will undoubtedly be adopted by the South is Winter’s Tale. This highly feminine style direction blends poetic influences with mystery. Pretty silhouettes are presented in mottled colors, dip-dyes, ombré, and blurred prints.

PRICES: Mixing it Up

The Southern respondents indicated the most willingness to change their inventory strategies this year; only 37% reported keeping frame prices the same. They lead the nation in expanding to include both higher and lower price points (26%). While adding higher-priced styles hopped up by 1% to 27%, 10% of respondents expanded to include lower price points (up from 3%).

SOUTH in focus

LENS MARKET

FREE-FORM: Charlie Daniels sang “The South’s Gonna Do It Again,” and when it comes to sales success of free-form/digitally produced lenses, he’s right. For the second year in a row, this region leads the nation in sales of these premium lenses—this year reporting free-form as 62% of its total lens sales. Not only do ECPs here lead the nation again, they’ve bested their 2014 numbers by a whopping 21%.

MATERIALS AND EXTRAS: In keeping with the national trend, polycarbonate is the most-used lens material here (cited as such by 55% of ECPs). However, that number is down from last year, most likely due to the increase in use of Trivex and high-index. Citation of plastic as the “go-to” material remained steady at 16%. Also remaining true to the national trend, AR tops the “extras” list here, with 80% of ECPs citing it as their most popular add-on. The South did better with sales of photochromics and polarized lenses as well. After losing 15% in sales from 2013 to 2014, photochromics has yet to regain its footing, though sales did gain 1 percentage point over last year’s dreary 10%. Polarized also saw a slight jump, up 3%.

PRESBYOPES: The South shares the same percentage of PAL sales as the Northeast, at 49% of all lens sales. But the South has slightly more single vision lens wearers, representing 47% of lens sales.

GOING DIGITAL: With 32% of respondents reporting digital eye strain/blue light filtering lenses as their fastest growing specialty category, the South nonetheless ranks last in this type of sale. That may be, however, because ECPs ranked it equal with kids eyewear and sports eyewear as fast-growing categories.

FRAME MATERIALS: A LOOK AT THE LATEST IN FRAME SALES AND TRENDS IN THE SOUTH

REFILLS: STILL NEW

Southern eyeglass wearers stayed flat when it comes to opting for new eyewear with their new Rx’s. Once again, our respondents report 88% of patients purchase new while 12% opt for refill of current eyewear, second only to the Northeast’s refill rate.

ON THE EDGE: SOUTH REGION