downtown and business district market analysis toolbox ryan russell brown

8/13/2019 Downtown and Business District Market Analysis Toolbox Ryan Russell Brown

1/57

Introduction to the Market Analysis Process

Bill RyanUniversity of Wisconsin-Extension

Jennifer Russell and Kathie Brown,University of Illinois-Extension

Funding - North Central Regional Center for Rural Development (NCRCRD) Seed Grant
http://ncrcrd.org/


2/57

Purpose of a Market Analysis

1. To support business developmentwith reliable data that accuratelydescribes the market.

2. To research issues specific to yourparticular community.

3. To provide a foundation fordeveloping economic developmentstrategies for a business district.


3/57

Illinois communities currently participatingin Downtown and Retail Market Analysis

Elmwood

Germantown Hills

Farmington

Silvis

Winchester


4/57

A. Extension educator

B. Main Street or BID director

C. City plannerD. Economic development professional

E. Retailer

F. Other

What is your role in downtown and business district analysis?

Poll


5/57

YES

NO

Has your community ever completed a downtown marketanalysis or other economic study?

Poll


6/57

http://fyi.uwex.edu/downtown-market-analysis/


7/57


8/57


9/57


10/57

Part I. Understanding the Market

Trade Area Analysis

http://ncrcrd.org/


11/57

Why Create a Trade Area?

1. Reasonable area for generating reports thatexamine local resident characteristics

2. Opportunity for businesses to learn where theymight be able to expand their own trade area

3. A basis for market potential calculations (supply

and demand estimates)


12/57

A. 10,000

B. 35,000C. 85,000

D. 500,000

The average Wal-Mart Trade Area in the U.S. includes howmany people?

Poll


13/57

Trade Area Considerations

Factors to Consider:

Population Proximity of competing

centers

Local mix of businesses

Local destination attractions Traffic patterns

Tools to Use:

Focus groups Mapping using geographic

features (distances,highways, drive-times, etc.)

Mapping using customeraddresses and zip codes

A trade area is the geographic area from which a communitygenerates the majority of its customers. A community may

have both a convenience and a destination trade area.


14/57

Rings


15/57

Drive Times


16/57

Equal Competition Areas


17/57

Using Customer Zip Code Data


18/57

Reillys Law of Gravitation


19/57

Using Customer Address Data


20/57

Using Multiple Methods


21/57

Market Segments and Trade Areas

Local customers Primary driver of local sales in most communities

Focus of your convenience and/or destination trade areas

Non-local In-commuters and workers

Tourists

Seasonal residents

Discussion: Which market segments are important to your

community?


22/57


Demographics and Lifestyles

http://ncrcrd.org/


23/57

23

Types of Data

Population/households

Age Income

Education

Occupation

Ethnicity Residence

Demographic Analysis

24


24/57

Data Sources

Public Sources:

US Census Bureau

State and University Data Centers

Private Sources (examples):

ESRI

Claritas

Others

24

25


25/57

Population/Households

What it tells us:

Market size

Future growth

Average number of people that live together (household).

Trends in the U.S.:

309M in 2010, double that of 1950

Average Household Size of 2.58

What does the data say about Winchester?

25

26


26/57

Age

What it tells us:

Predominance of certain age categories (each with differentpersonal expenditure preferences

Under 18

Over 65

Trends in the U.S.:

13.3% were 65 and older

In 2011 vs. 8.1 % in 1950 (US Census)


26

27


27/57

Income

What it tells us:

Distribution of income in the trade area as an indicator ofspending power

Trends in the U.S.:

Median Household Income of $50,500 (US Census, 2011)

32.5% earn more that 75,000

Impact of the Great Recession


27


28/57

28

Demographic segments may have a lot of similarities, but

$75K income,home owner,enjoys livemusic, drives aVolkswagen

$40K income,renter, buystwo books amonth, drivesa Pontiac

Photo UW-Madison University Communications, Jeff Miller

Lifestyle Analysis

29


29/57

29

One segmentation system offered is calledCommunity Tapestry (from ESRI BusinessInformation Solutions)

Households in each trade area can be segmentedinto unique clusters that describe their demographic,lifestyle, media and purchasing characteristics

Includes Market Potential Indicesthat examinespending propensity for a wide variety of goods andservices

Lifestyle Segmentation Systems


30/57

Heartland Communities

Sample buying habits and preferences

31


31/57

Spending Potential

Estimates for a trade area arebased on demographic data andavailable from:

Private data firm reports Extension's Gap Analysis

Calculator

31


32/57

Spending Potential Using Private Firm Reports

Potential sales in the trade area are also available throughpurchase from private data firms based on their internal

models. See the Food and Home (mostly grocery stores)

example below:

Food at Home: Total $ $49,306,088

Average Spent $4,024.00

Spending Potential Index 90

Data Note:The Spending Potential Index represents the amount spent in the area relative to a national average of 100.

Source: Consumer Spending data are derived from the 2005 and 2006 Consumer Expenditure Surveys, Bureau of Labor Statistics.ESRI


33/57

Spending Potential Using

the Gap Analysis Calculator

Grocery store calculation:

U.S. sales per capita by based

on the U.S. Economic Census

($1,631)

The ratio of local trade area per

capita income to U.S. per capita

income ($25,537/$26,739)

Trade area population (29,897)

Multiplication of above figuresis equal to the Potential Sales

in Trade Area ($46 million)


34/57


Conducting Surveys and Focus Groups

http://ncrcrd.org/


35/57

A. How to co-exist with big-box stores

B. How to sell over the Internet

C. How to capture more tourist business

D. How to encourage residents to buy local

E. How do we deal with the recessions impact on consumer spending?

F. How do we respond to changing demographics

Which of the following is the most important concern to localretailers in your community?

Poll


36/57

Business Owner Research

Elmwood, ILHome of Lorado Taft

Business owner research engages the business community inthe market analysis process. It invites business owners toshare their perspectives regarding the current and futureeconomic health of a business district.


37/57

37

What business challenges are you facing? Red flags? What business incentives or assistance would be helpful?

Characteristics of your business: category, years ofoperation, space occupied, employment, etc.

Market characteristics: busiest times, impact of communityevents, advertising effectiveness, target markets, etc.

Toughest competition and the products or services that

differentiate your business. Businesses that complement your business the most and

those you would most like to see come downtown.

Sample Questions - Business Owner Research


38/57

Consumer Research

A market analysis should include local research to fullyunderstand the uniqueness of your particular market and itsconsumers.


39/57

39

When do you typically shop for non-grocery items?

What restaurants or types of cuisine do you prefer?

Which events have you attended in the last 12 months?

How often do you come downtown and why?

How often and why do they shop at competing locations?

Which businesses would you patronize if opened downtown?

Demographics: gender, age, address, income, etc.

Attitudes about the downtown and the community.

Sample Questions Consumer Research


40/57

Secondary vs Primary Research

Secondary data is existing data which hasbeen collected, including U.S. census data,county based economic data, school districtdata, health department data, etc.

Primary data is information that you collect,including surveys, case studies, focusgroups, interviews, pilot tests, observationalstudies, etc. Data can be collected from

Consumers

Business operators and property owners


41/57

Types of Primary Data Collection

Method Pros Cons

Mail, phone, oronline survey

Can generalize to thepopulationClient controlData is in hand

Time consumingExpense of postage,printing, and data entryCollect only what isknown

Focus Group Depth of informationIntroduce new topicsQuickly implementedLess costly (?)

Cannot generalize topopulationNeed the right groupModerator skill

Mapping Client driven

Gathering and verifyinginformationClient engagement

Requires field work

Variable implementationand interpretation


42/57

Method Pros Cons

PersonalInterviews

Flexibility inimplementationDepth of information

Need trained interviewersVariability in implementationTime consumingCostly

Observation Do it yourself

Quick to design andimplementForces a focus

Time consuming

Limit to scope of informationLimit to geographyVariability in implementation

FacilitatedMeetings

EncouragesengagementImmediateinformationUses few staff

Need lead timeNeed skilled facilitatorsAll or nothing for the eventDevelops high expectations

43


43/57

Sample Surveys in the

Downtown & Business District Market Analysis toolbox

Business Owner Survey

Consumer Survey

University of IllinoisExtension online toolmay help in gettingstarted:http://www.communitydevelopment.uiuc.edu/commsurvey/


44/57

The Survey Process

1. Define goals.2. Develop and define method.

3. Ask: will this work within our constraints?

4. Develop survey instrument(s).

5. Identify population, select sample; develop contacts.6. Test the survey instrument (often questionnaire).

7. Implement survey process.

8. Collect data.

9. Analyze data.10. Prepare report.


45/57


46/57

Peer City Comparisons

Examining Similar Cities and their Business Districts is useful inidentifying potential business opportunities and economic

development strategies.

Identifying Comparable

Places: Similar in Demographics

Similar in Location

Similar in Urban and RuralCharacteristics

Similar Function

Identifying Successful

Districts: Knowledge from existing

study group members

Recognized downtownsuccesses

Research websites ofdowntown or Main Streetorganizations


47/57

University of Illinois ResourceCommunity SwapCommunity Swap processpairs like communities withsimilar populations,demographics and amenities.

Extension can assist inplanning.

Exchange followed by a

Town Hall Meetings todiscuss key findings.

Establish goals and

strategies based on newinformation.


48/57

Part II

Analysis of Opportunities by Sector

http://ncrcrd.org/


49/57

Includes tools for estimating demand and supply for selectedbusiness categories. Business opportunities are examined in

terms of quantitative and qualitative factors

RealisticRetail/Service

BusinessOpportunities

Demand Supply

ReasonablenessCheck

II. Analysis of Opportunities by Sector

Examining Retail Opportunities


50/57

Retail Analysis Tool: Gap Analysis Calculator


51/57

Poll

In Wisconsin, the top three categories of business that lineMain Streets include?

A. Grocery, drug stores and apparel shops

B. Restaurants, bars and hair salonsC. Hardware, furniture and home dcor stores

D. Gas stations, auto parts and auto repair


52/57

/

Retail Analysis Tool: Business Mix Analysis

NAICS Description Number Sales (000's)Full-service restaurants 7.9 5,378Beauty salons 6.7 1,451Drinking places (alcoholic beverages) 3.9 1,224Automotive mechanical & electrical repair 2.2 854Gift, novelty, & souvenir stores 2.0 729Other amusement (bowling, golf, fitness) 1.9 791Used merchandise stores 1.8 810Gasoline stations 1.7 5,527Appliance, television, & other electronics stores 1.7 3,322Grocery stores 1.6 13,973Barber shops 1.3 148Specialized building material dealers

1.3

2,240

Jewelry stores 1.1 830Florists 1.1 413Automotive parts, accessories, & tire stores 1.1 1,550Comparison with Wisconsin cities/villages with 5,000-10,000 Pop. (Average of 45 Downtowns)


53/57

Retail Analysis Tool: Innovative Downtown Businesses Clearinghouse

Case studies of downtown

retail and servicebusinesses that:

build on downtownscharacter and

offer products and

services not found in bigbox stores.

Searchable by

Type of businessSize of community


54/57

II. Analysis of Opportunities by Sector

Analysis of Other Property Uses

Includes techniques for estimating demand and supply forvarious downtown uses. To the extent possible, opportunities

are examined in terms of quantitative and qualitative factors

Restaurants

Arts and Entertainment Housing

Office Space

Lodging

Light Industrial


55/57

Part III

Putting Your Research to work

http://ncrcrd.org/


56/57

III. Putting Your Research to work

Using Your Market Analysis

Market analysis findings can provide a solid and objectivefoundation for launching economic development strategies for

your district.

Niche Development

Space Usage Image, Branding, Marketing

Business Retention/Expansion

Business Recruitment

Entrepreneurship Benchmarking


57/57

For More Information

Kathie Brown

University of Illinois-Extension

Email: [email protected]

Jennifer RussellUniversity of Illinois-Extension

Email: [email protected]

Bill Ryan

University of Wisconsin-ExtensionEmail: [email protected]

downtown and business district market analysis toolbox ryan russell brown

Documents