The document discusses analyzing retail opportunities through studying retail spending patterns. It outlines how retail analysis uses statistics, surveys, models of retail gravitation, and comparative spending analysis to identify opportunities. Specifically, it shows how Reilly's Law of retail gravitation can be used to determine what percentage of retail spending from a population occurs in different retail centers based on their size. It then provides an example comparing normalized per capita retail spending across categories between Yorkton and North Battleford to identify opportunities.

1. Welcome
Retail Analysis:
Identifying Investment Opportunities
Through Spending Analysis

2. Agenda
Dashboard
Q&A
Follow-Up
Speakers

3. Christopher Doll
Strategic Business Consultant
Nuguru Consulting
Specializes in facilitation, strategic planning,
feasibility studies, business planning, and
corporate finance.

4. Retail Analysis
August 2012
Venturus

5. Agenda
► Introductions
► Purpose of Retail Studies - Benefits
► Retail Analysis Methodology
► Retail Analysis for Investment
► Retail Analysis and Customer Profiling
► Community Impacts – Retail Spending
► Questions

6. 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

7. 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

8. Retail Study Purpose
► Three target markets:
 Entrepreneurs looking to identify new
opportunities
 Existing business considering expansion
 Potential outside investors/companies through
targeted investment attraction

9. 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.

10. 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.

11. 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?

12. 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

13. Reilly’s Law

14. 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

15. Reilly’s Example
Regional Impact - North Battleford Population Spending by Retail Centre
Retail Centre Retail $MM Effort Formula % of sales Total MM
North Battleford 408.8 1 408.8 83.36 $408.80
Lloydminster 928.2 9 11.45926 2.34 $9.55
Saskatoon 4471 10 44.71 9.12 $37.27
Edmonton 20452 35 16.69551 3.40 $13.92
Calgary 21,776 70 4.444082 0.91 $3.70
Regina 3,665 40 2.290471 0.47 $1.91
Prince Albert 801 20 2.00125 0.41 $1.67
Total 490.4006 476.8226

16. 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

17. 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

18. Example
Region/Area Yorkton Income North Battleford
Geography Level CA Adjusted Per Cap Adj CA
Per 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 0.1
New 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 0.09
Gasoline Stations $m 44.7 45.1382167 $2,563.51 61.9 $3,503.31 $16,605,409
(%) Gasoline Stations $m 0.1 0.100980351 0.13
Furniture Stores $m 6.7 6.765683487 $384.24 4.2 $237.70 ($2,589,122)
(%) Furniture Stores $m 0.06 0.06058821 0.04
Home Furnishings Stores $m 5.5 5.55391928 $315.42 2.7 $152.81 ($2,873,160)
(%) Home Furnishings Stores $m 0.09 0.090882315 0.04
Computer & Software Stores $m 0.5 0.504901753 $28.67 0.2 $11.32 ($306,651)
(%) Computer & Software Stores $m 0.03 0.030294105 0.01
Home 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 0.05
Home 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 0.11
Supermarkets $m 35.4 35.74704409 $2,030.16 50.7 $2,869.43 $14,829,116
(%) Supermarkets $m 0.05 0.050490175 0.08
Convenience & 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 0.03
Beer, 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 0.05
Pharmacies & 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 0.07
Clothing Stores $m 14 14.13724908 $802.89 6.2 $350.90 ($7,986,225)
(%) Clothing Stores $m 0.08 0.08078428 0.03
Shoe, 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 0.07
Department & 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 0.23
Sporting 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 0.03
Miscellaneous 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)

19. 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

20. 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

21. 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.

22. Why Strategic Business Attraction
► Past approaches:
 Incentive Competition
 Website - Passive Marketing
 Devine Intervention
 Government Handout

23. 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

24. 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

25. Retail Analysis and Customer
Profiling
► Provides more ammunition for opportunity
identification
► Where would you expect to find this car?

26. 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

27. 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

28. Q&A
Please send your questions via the Chat or
Question widget on your dashboard.

29. Thank You
Verona Thibault
President, SEDA
@saskecdevassoc
@growourregion
verona.thibault@seda.sk.ca
306-384-5817
Christopher Doll
Consultant, Nuguru Consulting Services
306-270-9301
crifter@hotmail.com