Retail Analysis: Identifying Opportunities Through Spending Analysis
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Retail Analysis: Identifying Opportunities Through Spending Analysis

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Retail Analysis: Identifying Opportunities Through Spending Analysis Retail Analysis: Identifying Opportunities Through Spending Analysis Presentation Transcript

  • Welcome Retail Analysis:Identifying Investment Opportunities Through Spending Analysis
  • AgendaDashboardQ&AFollow-UpSpeakers
  • Christopher DollStrategic Business ConsultantNuguru ConsultingSpecializes in facilitation, strategic planning,feasibility studies, business planning, andcorporate finance.
  • Retail Analysis August 2012Venturus
  • Agenda► Introductions► Purpose of Retail Studies - Benefits► Retail Analysis Methodology► Retail Analysis for Investment► Retail Analysis and Customer Profiling► Community Impacts – Retail Spending► Questions
  • Venturus Ltd.► Founded as Nuguru in 2007► Name change in 2012► Staff-Christopher Doll, Eunice Washkowsky, and Thai Hoang► What we do - Facilitation, Strategic Planning, Investment Attraction, Corporate Finance, Feasibility Studies, Economic Studies, Marketing and Branding, Major Projects Planning, and Public Speaking
  • Clients► Clients – Cameco, PCS, University of Saskatchewan and Winnipeg, Municipalities including Saskatoon, North Battleford, Warman, and Dalmeny, Economic Development Agencies, Westcap Management/Golden Opportunities, Private Companies, First Nations, National Hotel Developers, and Value Added Processors
  • Retail Study Purpose► Three target markets:  Entrepreneurs looking to identify new opportunities  Existing business considering expansion  Potential outside investors/companies through targeted investment attraction
  • Retail Analysis Methodology► Retail Analysis uses statistics, surveys, comparative spending analysis, gravitational models, and population models (local, regional and tourism behaviour) to provide information on how consumers behave in a particular area.
  • Retail Analysis Methodology► Statistics and Surveys► Acquisition of good statistical information is difficult as data availability for smaller populations is challenging due to privacy issues and rapid evolution of the retail market► Surveys are time consuming, expensive, and often incomplete. Usually based on retail sales dollars or square footage.
  • Retail Analysis Methodology► Statistics are most accurate at regional or city levels► Retail behaves on a regional basis in most markets anyway► Data for spending can be acquired on a household or per capita basis, but what information does that provide?
  • Retail Analysis Methodology► The existing data examines spending overall in a retail category, but we don’t at this point understand where the spending occurs or if it provides retail opportunities.► In order to better understand spending we use gravitational models like Reilly’s Law of Retail Gravitation
  • Reilly’s Law
  • Reilly’s Law► Ok so what does it mean?► Basically a larger population has more retail “pull” than a smaller one so it determines the point at which a consumer will go to destination A or B based on the size of the market or population base► Can also be used (inverse equation) to determine where retail leakage in spending and percentage is most likely to occur
  • Reilly’s ExampleRegional Impact - North Battleford Population Spending by Retail CentreRetail Centre Retail $MM Effort Formula % of sales Total MMNorth Battleford 408.8 1 408.8 83.36 $408.80Lloydminster 928.2 9 11.45926 2.34 $9.55Saskatoon 4471 10 44.71 9.12 $37.27Edmonton 20452 35 16.69551 3.40 $13.92Calgary 21,776 70 4.444082 0.91 $3.70Regina 3,665 40 2.290471 0.47 $1.91Prince Albert 801 20 2.00125 0.41 $1.67 Total 490.4006 476.8226
  • Comparative Analysis► Data in each retail sector can be acquired for a given population and compared to other areas. Reduced to a per capita basis spending levels can be compared.► Spending can then be normalized based on income► Opportunities can be determined by under spending in a specific retail category and the market size
  • Comparative Analysis► So once the data has been filtered by Reilly’s Law, and comparative analysis and normalized spending specific opportunities in a market can be identified► The key is to ensure the market size is large enough to support the opportunity
  • ExampleRegion/Area Yorkton Income North BattlefordGeography Level CA Adjusted Per Cap Adj CAPer Capita 17608 0.99029167 17669 Total $Total Sales $m 486.9 491.6733268 $27,923.29 408.8 $23,136.57 ($84,576,648)(%) Total Sales $m 0.12 0.121176421 0.1New Car, Used, Recreational Motor Vehicle & Parts Dealers $m 168.9 170.5558121 $9,686.27 88.2 $4,991.79 ($82,946,674)(%) New Car, Used, Recreational Motor Vehicle & Parts Dealers $m 0.17 0.171666596 0.09Gasoline Stations $m 44.7 45.1382167 $2,563.51 61.9 $3,503.31 $16,605,409(%) Gasoline Stations $m 0.1 0.100980351 0.13Furniture Stores $m 6.7 6.765683487 $384.24 4.2 $237.70 ($2,589,122)(%) Furniture Stores $m 0.06 0.06058821 0.04Home Furnishings Stores $m 5.5 5.55391928 $315.42 2.7 $152.81 ($2,873,160)(%) Home Furnishings Stores $m 0.09 0.090882315 0.04Computer & Software Stores $m 0.5 0.504901753 $28.67 0.2 $11.32 ($306,651)(%) Computer & Software Stores $m 0.03 0.030294105 0.01Home Electronics & Appliance Stores $m 9.7 9.795094003 $556.29 7 $396.17 ($2,829,027)(%) Home Electronics & Appliance Stores $m 0.07 0.070686245 0.05Home Centres, Hardware, Specialized Building Materials & Garden Stores $m 26.3 26.55783219 $1,508.28 30.8 $1,743.17 $4,150,163(%) Home Centres, Hardware, Specialized Building Materials & Garden Stores $m 0.1 0.100980351 0.11Supermarkets $m 35.4 35.74704409 $2,030.16 50.7 $2,869.43 $14,829,116(%) Supermarkets $m 0.05 0.050490175 0.08Convenience & Specialty Food Stores $m 2.3 2.322548063 $131.90 2.5 $141.49 $169,406(%) Convenience & Specialty Food Stores $m 0.02 0.02019607 0.03Beer, Wine & Liquor Stores $m 7.4 7.472545941 $424.38 8.4 $475.41 $901,567(%) Beer, Wine & Liquor Stores $m 0.05 0.050490175 0.05Pharmacies & Personal Care Stores $m 23.5 23.73038238 $1,347.70 21.7 $1,228.14 ($2,112,592)(%) Pharmacies & Personal Care Stores $m 0.08 0.08078428 0.07Clothing Stores $m 14 14.13724908 $802.89 6.2 $350.90 ($7,986,225)(%) Clothing Stores $m 0.08 0.08078428 0.03Shoe, Clothing Accessories & Jewellery Stores $m 5.4 5.45293893 $309.69 3.8 $215.07 ($1,671,830)(%) Shoe, Clothing Accessories & Jewellery Stores $m 0.1 0.100980351 0.07Department & Other General Merchandise Stores $m 124 125.2156347 $7,111.29 110.9 $6,276.53 ($14,749,424)(%) Department & Other General Merchandise Stores $m 0.25 0.252450876 0.23Sporting Goods, Hobby, Music & Book Stores $m 5.4 5.45293893 $309.69 3.7 $209.41 ($1,771,830)(%) Sporting Goods, Hobby, Music & Book Stores $m 0.05 0.050490175 0.03Miscellaneous Store Retail $m 7.3 7.37156559 $418.65 5.8 $328.26 ($1,597,103)(%) Miscellaneous Store Retail $m 0.07 0.070686245 0.05 ($84,777,978)
  • Population Models► In some markets population models become more important and spending cannot be explained by Reilly’s alone► Markets with substantial regional and tourism populations may not behave typically► Las Vegas has a significantly outsized retail sector given its population base► Outlet malls are single largest tourism driver
  • Retail Analysis for Investment► Large retailers are interested in Saskatchewan but the market is difficult for them to assess.► Markets typically based on population blocks – one store per 500,000 etc.► Retailers need compelling proof of market size to enter Saskatchewan markets
  • Drivers of Success► There are two keys to investment attraction:► Potential investors are looking for a tailored package that addresses an opportunity specific to their industry.► Effective investm ent attraction requires identification of targets and direct contact w ith decision m akers.
  • Why Strategic Business Attraction► Past approaches:  Incentive Competition  Website - Passive Marketing  Devine Intervention  Government Handout
  • Not Just Retail► Targeted investment attraction works based on competitive and comparative advantages that can be determined through comparative analysis and direct contact with potential investors
  • Retail Analysis and Customer Profiling► Retail Analysis determines where consumers are spending their money and what they are buying► It determines how a market may behave differently from the norm► Kindersley for example has far too many hotels on a per capita basis but the market and consumers are behaving differently
  • Retail Analysis and Customer Profiling► Provides more ammunition for opportunity identification► Where would you expect to find this car?
  • Community Impacts► Retail Spending Analysis is used to determine the flow of spending► Leakage to other markets and online can be determined► Can show how many dollars are leaving a community and what percentage of spending occurs inside and outside the region
  • The Process - Summary► Process>Data Collection>Comparative Analysis>Spending Normalization>Reilly’s Law>Aggregation of total spending to determine opportunities► Other information  Dollars spent or percentage spent in other communities  Behaviour of spending in your region or community and how it differs from others
  • Q&APlease send your questions via the Chat orQuestion widget on your dashboard.
  • Thank YouVerona ThibaultPresident, SEDA@saskecdevassoc@growourregionverona.thibault@seda.sk.ca306-384-5817Christopher DollConsultant, Nuguru Consulting Services306-270-9301crifter@hotmail.com