retail market analysis program

Retail Market Analysis Program:An Overview

Why Retail Market Analysis?

Retail Market Analysis (RMA) is a way to:Evaluate the health of local retail salesProvide insight on a variety of economic development issues – ex. downtown revitalization, business attraction and

expansionExplore new and unique opportunities– demonstrate their market potential

Retail Market AnalysisOSU Extension

What is Retail Market Analysis?

Identify local market trends in retail spending– Current Trends

• Demographic

• Economic

– Market comparison

– Retail sales surplus/leakage analysis


Market Comparison

What is the local market area?– A market area is the geographic area that contains

most of the customers of a local or regional shopping district.

• Size of market area determined by retail sales of trade center.

What are the competing market areas?


example market areas – Urbana Ohio

Retail Sales Surplus/Leakage

How do the potential retail sales of an area compare to its actual retail sales?

Potential salesPotential sales = an estimate of sales that could be achieved in retail area based on population and per capita income level.

• The larger the population, the higher the potential sales• The higher the income level, the higher the potential sales

Surplus:Surplus: Actual sales are greater than potential sales.

Leakage:Leakage: Potential sales are greater than actual sales.Retail Market Analysis

OSU Extension

example surplus/leakage map

Motor VehiclesLiquorVariety StoresBars/Restaurants

HardwareDrug StoreGrocery StoreGas Station

HobbyFloralBooksCameraOptical Goods

CandySporting GoodsRec. VehiclesPaintElectronics

BakeryJewelryLumberNursery

FurnitureShoes/ ApparelApplianceDept Stores

= SOME good are sold at this retail center level

= ALL goods are sold at this retail center level

MinimumConvenience

FullConvenience

PartialShopping

FullShopping Retail Market Analysis

OSU Extension

Rank Market Area ($) Sales in 20001 Western Columbus 6,662,231,195$ 2 Dayton 3,131,371,586$ 3 Springfield 2,808,621,592$ 4 Bellefountaine 866,279,398$ 5 Troy 633,791,876$ 6 Urbana 433,775,423$ 7 Tipp City 260,023,949$ 8 St. Paris 45,004,987$ 9 West Liberty 40,510,982$

10 Mechanicsburg 34,754,490$

Rank Market Area ($) Surplus 20001 West Columbus 1,690,645,788$ 2 Bellefountaine 206,340,395$ 3 West Liberty (60,319,430)$ 4 Mechanicsburg (82,789,324)$ 5 St. Paris (88,621,224)$ 6 Urbana (154,600,449)$ 7 Tipp City (182,587,640)$ 8 Troy (212,497,049)$ 9 Springfield (305,010,053)$

10 Dayton (810,556,192)$

Rank Market Area1 Western Columbus 212 Springfield 143 Bellefountaine 114 Troy 105 Dayton 86 Urbana 67 Mechanicsburg 58 St. Paris 59 West Liberty 4

10 Tipp City 3

# of Surplus Sectors* 2000

Comparison

Market Area Comparison– retail sales– surplus/leakage– retail diversity


Analysis

Determine Possible Reasons for Surpluses

Examples– Market niche

• Unique or unusual retail product*• Size of retail store relative to competition

– Complementary businesses*• Multi-destination shopping trips

– Other attractions*• For example, recreational destination


Analysis

Determine Possible Reasons for Leakages

Examples– Local residents have a lower than average purchasing

power– People are shopping outside their local trade area

because:• Insufficient local demand to support a store• Easy access to areas that offer more selection and/or lower prices• Increased work commutes• On-line shopping via the Internet


Retail Development Strategies

Plug leakages in sales of non-specialized goodsBuild on existing surpluses Identify underserved segments of the populationIdentify niche markets Capitalize on other “attractive” aspects of the local community


Steps for Basic RMA

1. Task force identifies the local and competing market areas

2. RMA team calculates the initial surplus/leakages per sector

3. Task force reviews initial calculations4. RMA team compiles the final report, including,

demographic trends, surplus/leakages5. RMA team and task force develop strategies6. RMA team and task force present the study and

strategies to the community

Time Line = 3-4 months


RMA Players

RMA Team

Lead Community Contact (Coordinator)

Community Task Force


RMA Team

Present at task force meetingsCommunicate progress with coordinatorConduct the retail market analysis, including:– delineation of trade areas and region– demographic trends analysis of the local market area– retail sales for each sector in each trade area– surplus and leakage for each sector in each trade area

Provide coordinator and task force with a report of the analysis resultsCollaborate with the task force to develop strategies for improving local retail marketsPresent these results at a final public meeting Retail Market Analysis

OSU Extension

Lead community contact (coordinator)

Organize a community task force (5-12 members)Coordinate task force meetings (2-3 total)Solicit and organize feedback from task force while the report is being assembledLeads task force to collaborate with RMA team to develop strategies for improving local retail marketsCommunicate results to the community


Task Force

Assists the RMA team in determining the market trade areasAttends 2-3 task force meetings Provides feedback to coordinator during the analysisCollaborates with RMA team to develop strategies for improving local retail marketsHelps coordinator communicate results to community


ProductsBasic Report– Maps of market centers, market areas and market region– Demographic trends analysis of the local market area– Retail sales for each sector in each trade area– Surplus and leakage for each sector in each trade area

Economic and demographic trends supplement– Expanded analysis of local economic and demographic trends

Additional products– Products can be customized depending on the goals of the

community. Retail Market Analysis

OSU Extension

Products, continued

Product Cost Timeframe

basic retail market analysis report

$2,000 for the first report; $1800 for an additional nearby community; $1500 for a county RMA

3 – 4 months

economic and demographic

trends supplement

$800 for the first supplement; $600 for an additional nearby community

add 1 month

other tailored products

(examples)

Prices vary - ex. $800 for neighborhood analysis; $500 for cross-Ohio community comparison

add 2 weeks for each additional product

Data

2nd quarter 2000 business data -- InfoUSA Demographic data -- US Census BureauSpatial data (ex. political boundaries, road network) -- US Census Bureau and Ohio Dept. of Transportation Geographic Information System (GIS) is used to perform spatial analysis and display information– Build trade areas and region– Calculate retail sales, surpluses, and leakages by trade area– Maps of surplus/leakages


For more information

Jill Clark, Program Manager, Exurban Change Project, AEDE

• 614-247-6479• [email protected]

Elena Irwin, Assistant Professor and State Specialist, Department of Agricultural, Environmental, and Development Economics, Ohio State University.

• 614-292-6449• [email protected]


retail market analysis program

Business