Los Angeles: Steady Growth in retail employment, GDP
The script for the Los Angeles economy in 2018 might best be described as an uplifting tale suitable for a Hollywood blockbuster.
The Los Angeles metropolitan area is the second largest in the United States with a population of 13.3 million, and the second-largest nominal gross domestic product of any metropolitan area in the country — which totaled $978.2 billion in 2017, according to the U.S. Commerce Department’s Bureau of Economic Analysis.
According to the Institute of Applied Economics at the Los Angeles County Economic Development Corp., the real GDP for Los Angeles County grew at 3.2% in 2017, up from 2.1% growth in 2016. The LAEDC projects real GDP growth is expected to be 2.4% for 2018 and 2.2% for 2019.
The economy is dominated by the entertainment industry, but also is home to the nation’s busiest seaport area with the Port of Los Angeles and Port of Long Beach combined. Other major industries include aerospace, technology, petroleum, tourism and fashion and apparel.
The strongest job growth in the next two years is predicted to be in health care and social assistance; administrative and support; construction; leisure and hospitality; retail trade; and government, according to the LAEDC. Although the group noted a slight slowdown in retail employment from 2016 to 2017, with a decline of 1,300 jobs, it predicted modest growth in the next two years, with 4,500 jobs added.
All three major drug store chains have a significant presence in the Los Angeles metro area, led by CVS Pharmacy, according to a 2015 research report from Barclays Capital. In 2016 CVS Health began opening its Hispanic-focused CVS Pharmacy y Más banner in the market with nine locations. Rite Aid entered the market through its 1996 acquisition of Thrifty Payless, but many of its stores in the Western United States are expected to be acquired via the pending merger with Albertsons.
Among the biggest changes in consumables retailing during the last two years has been the entry of Batavia, Ill.-based discounter Aldi to the market. The German-owned chain opened its first Southern California stores in 2016 in the Inland Empire and Coachella Valley areas, but has ramped up aggressively in the past two years with stores throughout the region. It closed out 2017 with about 55 locations, with another 20 to 25 planned for 2018. The stores are generating higher volumes than typical Aldi locations in the United States, according to local reports.
Overall Southern California is the largest grocery market in the country with annual sales of about $45 billion, according to a recent report in the Los Angeles Times. Major players include Kroger’s Ralphs banner and Albertsons and its Vons and Pavilions banners. With Albertsons’ planned acquisition of Camp Hill, Pa.-based Rite Aid, in-store pharmacies will eventually carry the Rite Aid name. Also in play are big-box operators Walmart, Target
Los Angeles has been a major testing area for Target, which in 2015 launched an initiative called LA25 in the region — a remodeling of 25 stores where the company tested various initiatives that are now being incorporated in new stores and remodels around the country.
Overall, the Los Angeles metropolitan area’s retail market is in flux as e-commerce gains traction and consumers increasingly seek something more from retailers.
“There’s definitely a shift toward smaller businesses that offer experiences,” Jodie Poirier, managing director of real estate firm CBRE’s South Bay office recently told the Long Beach Business Journal. “The big-box stores [and] the larger format type stores that are doing well are the ones that are able to incorporate the e-commerce aspect to fit the way that we buy and live.”