Retail Market Analysis Program


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Retail Market Analysis Program

  1. 1. Retail Market Analysis Program: An Overview
  2. 2. Why Retail Market Analysis? <ul><li>Retail Market Analysis (RMA) is a way to: </li></ul><ul><li>Evaluate the health of local retail sales </li></ul><ul><li>Provide insight on a variety of economic development issues </li></ul><ul><ul><li>ex. downtown revitalization, business attraction and expansion </li></ul></ul><ul><li>Explore new and unique opportunities </li></ul><ul><ul><li>demonstrate their market potential </li></ul></ul>Retail Market Analysis OSU Extension
  3. 3. What is Retail Market Analysis? <ul><li>Identify local market trends in retail spending </li></ul><ul><ul><li>Current Trends </li></ul></ul><ul><ul><ul><li>Demographic </li></ul></ul></ul><ul><ul><ul><li>Economic </li></ul></ul></ul><ul><ul><li>Market comparison </li></ul></ul><ul><ul><li>Retail sales surplus/leakage analysis </li></ul></ul>Retail Market Analysis OSU Extension
  4. 4. Market Comparison <ul><li>What is the local market area? </li></ul><ul><ul><li>A market area is the geographic area that contains most of the customers of a local or regional shopping district. </li></ul></ul><ul><ul><ul><li>Size of market area determined by retail sales of trade center. </li></ul></ul></ul><ul><li>What are the competing market areas? </li></ul>Retail Market Analysis OSU Extension
  5. 5. example market areas – Urbana Ohio
  6. 6. Retail Sales Surplus/Leakage <ul><li>How do the potential retail sales of an area compare to its actual retail sales? </li></ul><ul><li>Potential sales = an estimate of sales that could be achieved in retail area based on population and per capita income level. </li></ul><ul><ul><ul><li>The larger the population, the higher the potential sales </li></ul></ul></ul><ul><ul><ul><li>The higher the income level, the higher the potential sales </li></ul></ul></ul><ul><li>Surplus: Actual sales are greater than potential sales. </li></ul><ul><li>Leakage: Potential sales are greater than actual sales. </li></ul>Retail Market Analysis OSU Extension
  7. 7. example surplus/leakage map
  8. 8. Motor Vehicles Liquor Variety Stores Bars/Restaurants Hardware Drug Store Grocery Store Gas Station Hobby Floral Books Camera Optical Goods Candy Sporting Goods Rec. Vehicles Paint Electronics Bakery Jewelry Lumber Nursery Furniture Shoes/ Apparel Appliance Dept Stores = SOME good are sold at this retail center level = ALL goods are sold at this retail center level Minimum Convenience Full Convenience Partial Shopping Full Shopping Retail Market Analysis OSU Extension
  9. 9. Comparison <ul><li>Market Area Comparison </li></ul><ul><ul><li>retail sales </li></ul></ul><ul><ul><li>surplus/leakage </li></ul></ul><ul><ul><li>retail diversity </li></ul></ul>Retail Market Analysis OSU Extension
  10. 10. Analysis <ul><li>Determine Possible Reasons for Surpluses </li></ul><ul><li>Examples </li></ul><ul><ul><li>Market niche </li></ul></ul><ul><ul><ul><li>Unique or unusual retail product* </li></ul></ul></ul><ul><ul><ul><li>Size of retail store relative to competition </li></ul></ul></ul><ul><ul><li>Complementary businesses* </li></ul></ul><ul><ul><ul><li>Multi-destination shopping trips </li></ul></ul></ul><ul><ul><li>Other attractions* </li></ul></ul><ul><ul><ul><li>For example, recreational destination </li></ul></ul></ul>Retail Market Analysis OSU Extension
  11. 11. Analysis <ul><li>Determine Possible Reasons for Leakages </li></ul><ul><li>Examples </li></ul><ul><ul><li>Local residents have a lower than average purchasing power </li></ul></ul><ul><ul><li>People are shopping outside their local trade area because: </li></ul></ul><ul><ul><ul><li>Insufficient local demand to support a store </li></ul></ul></ul><ul><ul><ul><li>Easy access to areas that offer more selection and/or lower prices </li></ul></ul></ul><ul><ul><ul><li>Increased work commutes </li></ul></ul></ul><ul><ul><ul><li>On-line shopping via the Internet </li></ul></ul></ul>Retail Market Analysis OSU Extension
  12. 12. Retail Development Strategies <ul><li>Plug leakages in sales of non-specialized goods </li></ul><ul><li>Build on existing surpluses </li></ul><ul><li>Identify underserved segments of the population </li></ul><ul><li>Identify niche markets </li></ul><ul><li>Capitalize on other “attractive” aspects of the local community </li></ul>Retail Market Analysis OSU Extension
  13. 13. Steps for Basic RMA <ul><li>Task force identifies the local and competing market areas </li></ul><ul><li>RMA team calculates the initial surplus/leakages per sector </li></ul><ul><li>Task force reviews initial calculations </li></ul><ul><li>RMA team compiles the final report, including, demographic trends, surplus/leakages </li></ul><ul><li>RMA team and task force develop strategies </li></ul><ul><li>RMA team and task force present the study and strategies to the community </li></ul>Time Line = 3-4 months Retail Market Analysis OSU Extension
  14. 14. RMA Players <ul><li>RMA Team </li></ul><ul><li>Lead Community Contact (Coordinator) </li></ul><ul><li>Community Task Force </li></ul>Retail Market Analysis OSU Extension
  15. 15. RMA Team <ul><li>Present at task force meetings </li></ul><ul><li>Communicate progress with coordinator </li></ul><ul><li>Conduct the retail market analysis, including: </li></ul><ul><ul><li>delineation of trade areas and region </li></ul></ul><ul><ul><li>demographic trends analysis of the local market area </li></ul></ul><ul><ul><li>retail sales for each sector in each trade area </li></ul></ul><ul><ul><li>surplus and leakage for each sector in each trade area </li></ul></ul><ul><li>Provide coordinator and task force with a report of the analysis results </li></ul><ul><li>Collaborate with the task force to develop strategies for improving local retail markets </li></ul><ul><li>Present these results at a final public meeting </li></ul>Retail Market Analysis OSU Extension
  16. 16. Lead community contact (coordinator) <ul><li>Organize a community task force (5-12 members) </li></ul><ul><li>Coordinate task force meetings (2-3 total) </li></ul><ul><li>Solicit and organize feedback from task force while the report is being assembled </li></ul><ul><li>Leads task force to collaborate with RMA team to develop strategies for improving local retail markets </li></ul><ul><li>Communicate results to the community </li></ul>Retail Market Analysis OSU Extension
  17. 17. Task Force <ul><li>Assists the RMA team in determining the market trade areas </li></ul><ul><li>Attends 2-3 task force meetings </li></ul><ul><li>Provides feedback to coordinator during the analysis </li></ul><ul><li>Collaborates with RMA team to develop strategies for improving local retail markets </li></ul><ul><li>Helps coordinator communicate results to community </li></ul>Retail Market Analysis OSU Extension
  18. 18. Products <ul><li>Basic Report </li></ul><ul><ul><li>Maps of market centers, market areas and market region </li></ul></ul><ul><ul><li>Demographic trends analysis of the local market area </li></ul></ul><ul><ul><li>Retail sales for each sector in each trade area </li></ul></ul><ul><ul><li>Surplus and leakage for each sector in each trade area </li></ul></ul><ul><li>Economic and demographic trends supplement </li></ul><ul><ul><li>Expanded analysis of local economic and demographic trends </li></ul></ul><ul><li>Additional products </li></ul><ul><ul><li>Products can be customized depending on the goals of the community. </li></ul></ul>Retail Market Analysis OSU Extension
  19. 19. Products, continued add 2 weeks for each additional product Prices vary - ex. $800 for neighborhood analysis; $500 for cross-Ohio community comparison other tailored products (examples) add 1 month $800 for the first supplement; $600 for an additional nearby community economic and demographic trends supplement 3 – 4 months $2,000 for the first report; $1800 for an additional nearby community; $1500 for a county RMA basic retail market analysis report Timeframe Cost Product
  20. 20. Data <ul><li>2 nd quarter 2000 business data -- InfoUSA </li></ul><ul><li>Demographic data -- US Census Bureau </li></ul><ul><li>Spatial data (ex. political boundaries, road network) -- US Census Bureau and Ohio Dept. of Transportation </li></ul><ul><li>Geographic Information System (GIS) is used to perform spatial analysis and display information </li></ul><ul><ul><li>Build trade areas and region </li></ul></ul><ul><ul><li>Calculate retail sales, surpluses, and leakages by trade area </li></ul></ul><ul><ul><li>Maps of surplus/leakages </li></ul></ul>Retail Market Analysis OSU Extension
  21. 21. For more information <ul><li>Jill Clark, Program Manager, Exurban Change Project, AEDE </li></ul><ul><ul><ul><li>614-247-6479 </li></ul></ul></ul><ul><ul><ul><li>[email_address] </li></ul></ul></ul><ul><li>Elena Irwin, Assistant Professor and State Specialist, Department of Agricultural, Environmental, and Development Economics, Ohio State University. </li></ul><ul><ul><ul><li>614-292-6449 </li></ul></ul></ul><ul><ul><ul><li>[email_address] </li></ul></ul></ul>Retail Market Analysis OSU Extension