For a second consecutive year, retail sales in Naperville in 2018 surpassed all other suburbs in the Chicago metropolitan area, according to an annual report based on Illinois Department of Revenue statistics.
"Naperville continues to be a retail mecca in the Chicago metropolitan area, recently surpassing Schaumburg for the top suburban Chicago market in terms of total retail sales,” said John C. Melaniphy, president of commercial real estate consulting firm Melaniphy & Associates, which did the survey.
Over the past 10 years, Naperville has taken the top spot in overall suburban sales five times. The village of Schaumburg garnered first in the other five years.
“Being number one is pretty incredible,” said Christine Jeffries, president of the Naperville Development Partnership. “We are known as a bedroom community, and we have this incredible offsetting sales tax revenue. It spells success. Our city policies are pretty spot-on. People are comfortable shopping here, dining here, living here, investing here.”
From 2017 to 2018, total retail sales rose 1.2% in Naperville, 2.9% in all suburbs combined and 3.5% in the entire metropolitan area, including Chicago, according to the report.
Last year was the first time the report showed Naperville with more restaurant and bar sales than Schaumburg, and that trend continued again in 2018.
"Naperville's retail and restaurant portfolio has grown commensurately with all of its residential growth, given the excellent quality of life in the community,” Melaniphy said.
Events at North Central College have also contributed, Jeffries said. “People don’t need to go into Chicago for cultural activities. You can do dinner and a show in downtown Naperville and not pay to park and be home in 10 minutes,” she said.
Naperville’s growth in eating establishments also extends beyond downtown, Jeffries said. “Look at new restaurants at CityGate Centre (at Route 59 and Ferry Road) and Freedom Drive that didn’t exist 10 years ago, and then you have the south market. I don’t see us tapped out on restaurants. The city has invested in (marketing through) Dine Naperville. All of that is funded by taxes collected by restaurants, and the city chooses to reinvest to keep it going. Naperville has been progressive in supporting business and industry.”
For the entire 10-year time period summarized by the report, Naperville has been No. 1 in sales by a large margin for sales at car dealerships, grocery stores and home improvement stores.
“We are dominant in auto sales; they are huge revenue sources,” Jeffries said. “That makes up 30 percent of our retail sales tax into our city. Another one where Naperville leads the pack is home improvement. That’s where you see the trend of what’s important in a community — home and hearth. (Residents) don’t have to leave the community to shop for these items.”
The robust commercial sector is due to the city’s “very good” comprehensive plan, she said.
“I see Naperville continuing to be strong but we have to be cautious,” said Jeffries, whose organization teams up with government and private enterprise to promote economic development in the city. “Sales tax is unknown. We saw in 2008 a dip. Part of our plan is diversity in office and retail. We don’t put all our eggs in one basket.”
Though the city has benefited from a building boom in recent years, there is still room for more growth, Jeffries said.
“We’re not at build-out yet,” she said. “The southwest sector is the last frontier of build-out. Naperville at build-out will be 20 to 25% commercial and 75 to 80% residential. Even after build-out, pockets of redevelopment will continue to change the landscape.”
Despite fears that online stores could reduce city revenues as local shops close, the retail market is not on the verge of collapse, she said.
“People will continue to spend,” Jeffries said. “I think people are seeing a marketplace shift. I am part of the group that thinks the retail apocalypse is hyberbole and not reality. There is a change of shoppers’ buying habits. There is growth of the online market. A lot of brick-and-mortar stores are continuing to broaden their online base. There’s also order online and then pick up at the store. Those are trending right now.”
New legislation requiring online retailers to pay state and local sales tax will also help, Jeffries said.
Naperville collects 7.75% sales tax for everything sold other than packaged food, medicines and licensed items, she said. Most of that tax (5.25%) goes to the state, while 0.75% is delegated to the Regional Transportation Authority, she said.
“When you look at any community, you have to have a solid mix. You have to have retail for property and sales tax. The city collects more in sales tax than they do in property taxes,” Jeffries said. “Some towns have industrial, which doesn’t generate as much property tax. Our emphasis on office and retail is a benefit to the school district” because office property taxes are almost double industrial property taxes, Jeffries said.
One part of the mix that is not in Naperville’s city limits is a mall, and that has pushed Naperville consistently lower in the report’s rankings in sales at department stores, clothing shops, furniture retailers and pharmacies. The top spot in 2018 for stores that sell furniture or electronics was Vernon Hills, for drugs or specialty items like jewelry or flowers was Mount Prospect, for general merchandise at big box retailers such as Walmart was Joliet, and for clothing or accessories was Aurora.
“We have a lot of big box stores but can’t compete with their malls,” Jeffries said. “If you look at Route 59, where the general merchandise stores are, they are split between Aurora and Naperville; if you shop they might be on one side of the street or the other. And that’s OK. If we were top in every category, we would have half the town under a commercial roof.”
As for lower drug store sales, “maybe we’re just very healthy people,” Jeffries added with a laugh. “Certain categories you don’t want to be the top of.”