Lake Oswego Retail Market Analysis


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Lake Oswego Retail Market Analysis

  1. 1. Lake Oswego Retail Market Analysis & Business Development Plan Executive Summary October 2009
  2. 2. The goals of the Lake Oswego Retail Market Analysis and Business Development Plan are to identify business opportunities and develop marketing strategies to support and attract more small businesses and bring customers in the doors of local retailers. The City of Lake Oswego contracted with Marketek, Inc. to complete the project in summer and fall 2009. The initiative included business outreach, a commercial assessment, a retail market analysis, business mix recommendations and a business development strategy. This executive summary outlines the major findings from the research and analysis. It highlights the recommended business mix and outlines next steps for business success in Lake Oswego’s retail centers overall and downtown specifically. A Lake Grove-specific market study was conducted separately. Business Outreach Marketek conducted 60 in-store visits to retailers and restaurants throughout Lake Oswego and held two business owner focus groups during July and August. In-Store Visits • The existing retail base is small, with women’s apparel the dominant merchandise type. Restaurants vary widely in cuisine and price, although Mountain Park and Palisades have more limited choices. • Downtown Lake Oswego retail and restaurants are oriented to middle and upper income markets. • Strengths include customer service, merchandise and food quality and cleanliness. Some businesses could benefit from exterior upgrades (i.e., signs and window displays). Focus Groups • Business owners regard Lake Oswego, especially the downtown, as a unique community, perhaps the most beautiful in the state. However, they feel that businesses are not fully supported or appreciated by the City. • Business owners noted that Lake Oswego needs a larger retail base and stronger business mix with more kid-friendly choices. • In terms of marketing, participants agreed a consistent marketing plan was needed to make Lake Oswego a destination for Portlanders. Lake Oswego is often perceived as elitist, in part because of high price points and lack of lake access. Commercial Assessment Marketek assessed downtown Lake Oswego on a variety of retail market factors to portray downtown from the perspective of both shoppers and businesses. Strengths and weaknesses are summarized here. Strengths • High household incomes in the city and market area. Strong visitor and employee markets. Ample retail market opportunity in the market area over the next ten years. • High occupancy rate (>95%) and several business and civic anchors in downtown. Executive Summary Lake Oswego Retail Market Analysis & Business Development Plan 1
  3. 3. • Attractive shopping environment with appealing streetscape, well-designed buildings and a variety of unique, locally-owned businesses. • Multiple high quality events, including Arts Festival, Lake Run and Farmer’s Market. Weaknesses • Lack of real estate preparedness – no inventory of available properties and no retail incubation space. • City’s development process is not perceived as business-friendly. Financial assistance to downtown businesses is limited to a façade improvement grant program. • Multiple business-related organizations exist but do not appear unified to serve local businesses. No ongoing business recognition program specific to downtown. • No webpage focused on downtown. • Business attraction efforts are not well-organized and no target businesses/merchandise types have been identified. Retail Market Analysis The retail market analysis estimates the amount of potential new retail space that can be supported in downtown Lake Oswego over the next ten years. Key target markets and demand estimates are summarized below. Target Markets • Local residents living within the downtown Lake Oswego Retail Market Area (shown to the right) will provide downtown with the greatest opportunity for a dependable source of year-round sales. The market area contains 49,000 households as of 2009 and is projected to grow to 50,236 by 2014. • Income and education levels are high in the market area. The median household income is $77,500 and more than half of residents age 25 or older hold college degrees. • Local employees are another key target market. Within two miles of downtown Lake Oswego are an estimated 10,400 employees as of 2009. Retail Demand Analysis • Based on a comparison of existing retail supply and demand, an estimated $537 million in potential retail sales is currently being met outside of the market area. This sales leakage translates to 2.25 million square feet of store space. • There is potential future demand for an additional 535,000 square feet of retail space in the market area through 2019, based on projected household growth. • Downtown Lake Oswego can potentially capture 10% of existing and future market area demand, or 279,328 square feet of new retail space over the next ten years. • Downtown is likely to capture a higher percentage of shopper’s goods (apparel, specialty retail, dining) and a lower share of convenience goods (grocery, personal care items), as customers will shop for the latter items as close to home as possible. Executive Summary Lake Oswego Retail Market Analysis & Business Development Plan 2
  4. 4. Business Mix Marketek prepared an inventory of existing businesses in four shopping areas throughout Lake Oswego and of pending new developments in downtown. Marketek identified target business/merchandise opportunities and potential retail prospects for downtown. Existing Business Base • Areas surveyed include downtown Lake Oswego, Lake Grove, Mountain Park and Palisades/McVey. Downtown and Lake Grove are the largest, both with over 700,000 square feet of ground floor retail space. • Ground floor vacancy rates are 3.6% in Mountain Park and 4.8% in downtown. In Lake Grove, the vacancy rate is higher at 8.1%. • Anticipated new developments expected to be initiated in downtown Lake Oswego over the next 3-5 years will accommodate 135,000 square feet of new retail space and 115,000 square feet of new mixed-use space, some of which would be retail. Selected Target Business & Merchandise Opportunities • Music • Health food restaurants • Garden supplies • Green grocer • Unique children’s clothes, books, toys • Breakfast restaurant • Furniture and home décor • Wine and cheese shop • Sporting goods and outdoor gear • Family restaurants • Art co-operative and galleries • Brewpub • Arts and craft supplies, yarn, fabric • Live music • Boutique bookstore • Health care • Apparel, accessories and shoes • Eye care • Quality consignment apparel • Day spa • Gifts • Photography studio • Computer store Business Development Strategy Downtown Retail Themes To promote a successful business mix, the following retail development guidelines should be considered. The marketing action plan further develops these principles: • Expand the size and scope of consumer markets (residents, employees, visitors) • Recognize and promote the unique character of Lake Oswego’s shopping areas • Take care of existing business and civic anchors • Define the retail core and key nodes • Manage the merchandise mix • Know what you have to offer (marketplace data, available real estate, sales data) • Aggressively market Lake Oswego as a prime choice for businesses Executive Summary Lake Oswego Retail Market Analysis & Business Development Plan 3
  5. 5. Business District Market Position For a business development program to be successful, a clear market position statement must be articulated: • Lake Grove is a small town shopping district serving a significant daytime marketplace with a wide range of convenience shopping choices and commercial services. • Downtown Lake Oswego is a unique lakefront business district with one-of-a-kind specialty shopping, entertainment and restaurants serving local and metro residents. Business Clustering Guidelines Clustering involves strategically locating businesses within a shopping district to take advantage of relationships with nearby businesses, which may be compatible, complementary or competitive businesses or significant traffic generators. Marketek identified a framework for organizing downtown business development efforts in the short term, which includes two neighborhood convenience retail/service clusters, three specialty/boutique retail clusters and a dining and entertainment district. Business/Marketing Strategy Product Readiness • Form a Property Improvement Team responsible for inventorying and assessing vacant and other key properties, contacting property owners, identifying priority sites and marketing these properties to appropriate business targets. Business Retention and Expansion • Share results of the market analysis with existing businesses. • Organize a Business Assistance Team to help businesses diversify products/services. • Improve City’s business-friendliness and designate a business ombudsman staff position. • Initiate a business recognition program and expand business-to-business marketing. Business Attraction • Succinctly package Lake Oswego’s vision for Lake Oswego and downtown. • Prepare a sales package with available properties, maps, business assistance, etc. • Create an economic development webpage and make above info downloadable. • Focus on filling in key storefront vacancies. Identify priority business opportunities and develop a recruitment campaign to fill these market niches. • Create a referral network and actively manage the business development process. • Track and regularly update results (i.e., new businesses, jobs, etc.) Customer Attraction • Develop a brand identity for use in all marketing materials. • Work with key collaborators to design a marketing plan and identify roles/responsibilities. Map out specific promotions for downtown and Lake Grove. • Develop a consumer-oriented Lake Oswego website listing businesses and events. • Develop a public relations campaign to promote Lake Oswego activities and events. • Produce a winter season community event focused on the arts. Executive Summary Lake Oswego Retail Market Analysis & Business Development Plan 4