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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
Retail Market AnalysisOSU Extension
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?
Retail Market AnalysisOSU Extension
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
Retail Market AnalysisOSU Extension
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
Retail Market AnalysisOSU Extension
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 Market AnalysisOSU Extension
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
Retail Market AnalysisOSU Extension
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
Retail Market AnalysisOSU Extension
RMA Players
RMA Team
Lead Community Contact (Coordinator)
Community Task Force
Retail Market AnalysisOSU Extension
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
Retail Market AnalysisOSU Extension
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
Retail Market AnalysisOSU Extension
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
Retail Market AnalysisOSU Extension
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 AnalysisOSU Extension