by Kristen Cloud/staff writer
While the Nevada economy appears to have improved slightly over the course of 2012, the Silver State has a long way to go in catching up with the pace of recovery being experienced by the rest of the U.S. and even most other western states. According to Dr. Stephen P.A. Brown, director of the Center for Business and Economic Research at the University of Nevada in Las Vegas, the state’s economy is now mired in a sluggish recovery, in which only 21.1 percent of the jobs lost during its recession have been restored.
Though Nevada’s November 2012 unemployment rate of 10.8 percent is the lowest it’s been since the first quarter of 2009, and down greatly from a year prior in November 2011 when it was at 13.2 percent, it remains considerably higher than the national average of 7.8 percent.
In his report entitled “What’s Shaping Nevada’s Economic Recovery” published Jan. 2, Brown says three different forces are shaping Nevada’s economy: a long-term trend of U.S. population and economic activity shifting toward the western U.S.; the effect of the most recent U.S. recession and subsequent slow recovery on the westward shift of economic activity; and the boom, bust and weak recovery of Nevada’s own housing market.
“The interaction of these three major forces will largely determine the course of Nevada’s economic activity over the next three to five years,” Brown says.
West re-emerging as fast-growing area, but Nevada lags behind in region
Between 1950 and 2007, the western states generally saw the strongest population growth in the U.S. Nevada experienced the strongest population growth of any state in the West during that time period. Employment and housing saw similar trends, according to Brown. When the recession set in, however, these thriving states—Nevada, in particular—fell hard. Now, six years later, the region is finally beginning to see some modest improvement. In fact, Utah, Arizona, Montana and Idaho were among the top 10 states for growth in 2012. Nevada, in the meantime, continues to struggle with a slower employment growth, according to Brown.
Brown attributes much of the weakness of the Nevada economy to the “interruption of the great westward movement caused by the U.S. recession and to the overbuilding that occurred during the 2000-07 real estate boom.
“The Nevada leisure and hospitality sector has been hampered by weak economic conditions in (some of) its neighboring western states. Nevada’s construction sector has been hampered by slow population growth and a sizable surplus of housing and commercial space.”
Diversification is key to economic future
Nevada has long been greatly dependent on construction and tourism for its economic vitality, but those industries currently are less than reliable.
And it’s an area of concern for 2013, according to Northern Nevada Business Weekly, since increased costs for airfares and gasoline could curtail tourism travel.
Nevada Gov. Brian Sandoval agrees, saying in December that, “in order to grow our state’s economy, we must continue to diversify, recruit new businesses to Nevada and help retrain workers still looking for employment.”
There is good news for construction and tourism, according to Brown, as both sectors are likely to shift to higher rates of growth in the coming years. Additionally, “as the economies of the western states improve, Nevada’s leisure and hospitality sector will show stronger growth,” he says. “When U.S. economic activity eventually shifts into a higher gear, the long-term shift of U.S. economic activity to the West will accelerate, and the Nevada housing market will gradually recover.
“As these two developments materialize, they will set the stage for Nevada to resume a leadership role in the nation’s economic growth.”
Hispanic market takes hold in Vegas
Retail grocery growth—relative to Nevada’s economy—has remained rather stagnant across the state over the past few years.
While chains like Kroger-owned Smith’s, which currently operates 40 food and drug stores in Nevada, and Boise, Idaho-based WinCo Foods, which entered the southern Nevada marketplace in early 2012 with stores in Las Vegas and Henderson, continue to do well in the state, there is one format that is flourishing, most notably in the Vegas area: the Hispanic market.
It’s a trend being seen across the U.S. and one that will continue, according to Keith Anderson, VP and senior analyst for RetailNet Group, an insight and advisory firm with specialized expertise in forward-thinking guidance pertaining to retail growth.
“…In aggregate, (the ethnic segment) represents another pretty meaningful pocket of growth in the grocery business,” Anderson tells The Shelby Report.
Vegas, especially, has seen rapid growth and “sweeping changes in grocery stores catering to Hispanic tastes,” according to the Las Vegas Review-Journal.
“Though specialty food markets catering to Asian, Filipino and Middle Eastern shoppers are common in Las Vegas, Hispanic markets tend to dominate the ethnic food trade in both size and number,” the Review-Journal says.
Among the players: Marketon, La Bonita, Mariana’s, El Super and Cardenas Markets.
Thirty-store operator Cardenas, based in Ontario, Calif., has three stores in Nevada—all in Vegas.
Marco Robles, public affairs director for the company, tells The Shelby Report that Cardenas entered the Vegas market about four years ago.
“What attracted us to the Vegas location, the first location, was the demographic changes,” he says. He mentions that a gap existed in servicing not only the Latino customer but also the wide audience that the format draws.
“While the demographics are very appealing to the retail chains that are pursuing the Latino market, it is much broader than that,” Robles says.
One must also be able to compete.
“The competitive edge (for us)—it’s in the design of the store,” he says.
Cardenas stores average between 35,000 and 45,000 s.f. and, as Robles explains, “it is a plaza design inside of an existing shell of a store.”
Cardenas has become somewhat known for moving into existing store locations, rather than building new stores.
“We actually get economic development agencies from cities calling upon us to consider this type of design, the uniqueness of our store…to open in an existing shopping center or a center that has perhaps seen decline in their anchor tenants,” Robles says. “That’s what Cardenas has been able to provide in these locations—these opportunities to create a synergy in centers that have lost their anchor tenants.”
One Vegas location, off U.S. 95 and Decatur Boulevard, for example, opened in a former Mervyn’s department store.
“Mervyn’s closed many of their stores,” Robles says, “and their design doesn’t always necessarily appeal to a typical retail supermarket. So that took a little bit of additional architectural design, but yet (it’s) a very successful store. And that space was created to develop adjacent tenants.”
Cardenas stores place a strong focus on fresh and prepared foods.
“Unique components inside the store surround the grocery section,” Robles says. “You have a Juice Bar, pastries and bakery, meats, tortilleria, restaurant…”
Fresh tortillas made in-house daily are a Cardenas staple.
“Each store does this, so you’re not just talking about what is typically known as corn and flour,” Robles says. “…You’re talking about a whole variety of different types of tortilla products that come out of that section on a daily basis.
“And it’s that freshness,” he adds, “that people look for as they walk through the store.”