Jessica Beckendorf, Bill Ryan, and Christian Schmieder

Community Research to Support Economic Development Efforts

Presentation at the Wisconsin Downtown Action Council Conference, La Crosse, WI October 27, 2016

Purpose of a Market Analysis

1. To explore business development ideas with reliable data that describes the market.

2. To research issues specific to your particular community.

3. To provide a foundation for economic development strategies.

How do we fill storefronts and reuse downtown

space?

Is there potential fordowntown housing?

How are consumers changing?

How can we assess

potential for businesses

development?

What image, branding and

marketing opportunities

are there?

How can we retain and

expand existing

businesses?

What are unique and

realistic downtown businesses

ideas?

How can the physical

environment be improved?

What dining options would

do well downtown?

Outline of the ProcessI. Understanding the Market

II. Analysis of Opportunities by Sector

III. Putting Your Research to Work

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

I. Understanding the Market

Trade Area Analysis

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 customer addresses and zip codes

A trade area is the geographic area from which a community generates the majority of its customers. A community may have both a convenience and a destination trade area.

Establishing Trade Area(s) Using GIS

Establishing Trade Area(s) Using GIS

Establishing Trade Area(s) Using GIS

Establishing Trade Area(s) Using GIS

Larger communities will have a primary (convenience) and secondary (destination) trade area.

I. Understanding the Market

Demographic & Lifestyle Analysis

Demographic Data:• Population and households• Housing ownership and value• Income• Age, gender and ethnicity• Educational attainment• Employment

Lifestyle Data:• Households in a trade area

are segmented into unique clusters that describe their lifestyle, characteristics

• Examine spending propensity for a variety of goods and services

Demographic and Lifestyle data can provide insight into local consumer buying behaviors and preferences. Comparison are made to state and national averages.

Analysis of Demographics Using Tables and Maps

Analysis of Lifestyle Data

Households in a trade area can be segmented into unique clusters that describe their demographic, lifestyle, media and purchasing characteristics. These systems help you know the potential customer in your area including what they buy and how to reach them.

Free zip code data:• Community Tapestry by ESRI Business Information Solutions). http://www.esri.com/data/esri_data/tapestry

• Claritas PRIZM by Nielsen. http://www.claritas.com/MyBestSegments/Default.jsp

I. Understanding the Market

Local and Regional Economic Analysis

• Industry Concentrations and Employers• Labor Force and Employment Levels• Entrepreneurial Activity• Business Climate Analysis• Real Estate Activity• Transportation Patterns• Tourism and Community Attractions• Quality of Life Measures

Economic data can help describe downtown’s position in the local and regional economy and identify factors that are of competitive advantage.

Research Design

Mail Surveys

Personal Interviews

Focus Groups

Online Surveys

Intercept Surveys

Phone Surveys

OPEN CLOSED

Research Design

Question DesignOPEN CLOSED

I. Understanding the Market

Business Owners Survey

Purpose of Questions:• Provides information on

business needs to support retention and expansion efforts.

• Allows business community to share ideas for new economic activity in the community.

Possible Methods to Use:• Written Survey• Telephone Survey• Web-Based Survey• Business Visitations• Focus Groups

A business owner survey invites business owners to share their perspectives regarding the current and future economic health of the business district.

Provides Information on:• Who they are and how to

reach them.• Where, when and why they

shop for various goods and services.

• How downtown can be improved in terms of retail as well as other uses.

Possible Methods to Use:• Written Survey• Telephone Survey• Web-Based Survey• Social Media• Intercept Surveys• Focus Groups

A survey can help you understand the attitudes and shopping behaviors and preferences of current and potential consumers specific to your trade area.

I. Understanding the Market

Consumer Survey

Surveys – Download Examples and Templates

Toolbox includes:• Question-bank to help you

determine what questions are most relevant to your analysis

• Downloadable survey templates that can be customized for your community.

• Examples of surveys that have been customized and implemented in various cites.

Structure of Sessions:• 7-10 people with common characteristics (perhaps same

market segment)• Minimum of three groups• Conducted by a trained facilitator• Non-threatening environment• Used to understand human behavior• Not used to collect facts

A carefully planned discussion to collect qualitative data about feelings and perceptions regarding the downtown area.

I. Understanding the Market

Focus Groups

Identifying Comparable Places:

• Similar in Demographics• Similar in Location• Similar in Urban and Rural

Characteristics • Similar Function

Identifying Successful Districts:

• Knowledge from existing study group members

• Recognized downtown successes

• Research websites of downtown or Main Street organizations

Examining Similar Cities and their Business Districts is useful in identifying potential business opportunities and economic development strategies.

I. Understanding the Market

Peer City Comparisons

Tools for estimating demand and supply for selected business categories. Considers both quantitative and qualitative factors.

Realistic Business

Opportunities

DemandSupplyReasonable

ness Check

II. Analysis of Opportunities by Sector

Examining Business Opportunities

Retail Demand Based Solely on Resident Population

Comparison with Wisconsin cities/villages with 2,500-5,000 Pop. (Average of 60 Downtowns)

NAICS Description Number Sales (000's) Full-service restaurants 4.57 2,515 Beauty salons 3.52 573 Drinking places (alcoholic beverages) 3.08 784 Gasoline stations 1.72 6,295 Other amusement (bowling, golf, fitness) 1.63 779 Automotive mechanical & electrical repair 1.30 491 Gift, novelty, & souvenir stores 1.08 378 Used merchandise stores 1.08 466 Grocery stores 1.07 8,084 Automotive parts, accessories, & tire stores 1.05 1,032 Appliance, television, & other electronics stores 0.93 1,459 Florists 0.88 210 Barber shops 0.78 71 Sporting goods stores 0.73 348 Pharmacies & drug stores 0.72 1,720

Retail Demand Based on Spending of Various Market Segments

http://fyi.uwex.edu/innovativedowntownbusinesses//36

“Reasonableness Check”

• Case studies of downtown retail and service businesses that:build on downtown’s character

and Co-exists with big box stores.

• Searchable by type of business

Analysis of Other Property Uses

Restaurants Arts and Entertainment Housing Office Space Lodging

37

Includes techniques for estimating demand and supply for various downtown uses. To the extent possible, opportunities are examined in terms of quantitative and qualitative factors

Using Your Market Analysis

Niche Development Image, Branding,

Marketing Space Usage Business

Retention/Expansion Business Recruitment Entrepreneurship Benchmarking

38

Market analysis findings can provide a solid and objective foundation for launching economic development strategies for your district.

III. Putting Your Research to workNiche Development

A niche is a critical mass of businesses serving a common market segment(s) that is also jointly marketed and promoted.• Niche strategies allow a downtown to gain a dominance in

certain business categories• Niches work well in highly competitive business

environments (market differentiation)• Niches require cooperation between local businesses

(education about niches)• Niches can be based on consumer segments or product

segments

Reading OHPop. 11,000Suburb of Cincinnati

Niche: WeddingsFocuses on bridal shops and supporting businesses such as florists, photographers, jewelers, and stationary stores.

III. Putting Your Research to workImage, Branding, Marketing

Uses market information to learn about your downtown’s key consumer groups and how to reach and serve them better.

1. Define Your Key Markets Segments and Market Position

2. Improve the Image and Develop a Brand for Downtown

3. Implement Marketing Programs

III. Putting Your Research to workSpace Usage

Successful downtowns create the optimal mix of building and space uses. Downtown Business Arrangement• "A-Street" and "B-Streets"• Pedestrian interaction. • Consider auto access. • Consider walking distance and use of both sides of street • Street-level and upper-level units. • Clustering of certain businesses together so that both the

customers and business operators benefit.

Compatibility of Mixed Uses

 Entertainment:

Theaters

Entertainment:

Bars & Restaurants

Retail: Comparison

Retail:

Specialty

Retail: Convenience

Hotel

Offices

Residential

Residential  Offices -  

Hotel  

Retail: Convenience  

Retail: Specialty Stores  

Retail: Comparison  

Entertainment: Bars & Restaurants

 

Entertainment: Theaters   -

Level of Market Synergy in Mixed Use Development

Strong

Weak or Uncertain

- Neutral, Absence of Synergy

Potential Market Conflict

Source: Real Estate Market Analysis: A Case Study Approach

III. Putting Your Research to workBusiness Retention/Expansion

Roles of a business retention and expansion team1. Forming a business retention and expansion team2. Identifying warning flags3. Offering individual business assistance 4. Developing business retention and expansion strategies

III. Putting Your Research to workBusiness Recruitment

The key is to honestly demonstrate that the community is a profitable place to do business. • Step 1: Assemble a Team• Step 2: Create a Supportive Business Environment• Step 3: Assemble Recruitment and Marketing Materials• Step 4: Design an Ideal Tenant Mix• Step 5: Identify Prospective Tenants• Step 6: Contact Prospective Tenants• Step 7: Close Deals with Prospects

III. Putting Your Research to workEntrepreneurship

Use your market analysis to support entrepreneurship in your downtown or business district. 1. Use information from your market analysis to find clues

about prospective entrepreneurs. 2. Use information to examine the strengths and

weaknesses of your district’s infrastructure as it relates to entrepreneurship.

3. Your market analysis may provide ideas on how to build connections among entrepreneurs and the community.

III. Putting Your Research to workBenchmarking

Statistical data assembled in your market analysis can be used to measure progress

• Demographics• Employment Indicators• Investment Indicators• Housing• Office Space• Arts and Entertainment • Lodging• Retail and Services• Restaurants• Transportation and Safety

When done, materials to support your business development efforts

49

For More Information

University of Wisconsin-ExtensionCenter for Community Economic Development

610 Langdon Street, Room 329, Madison, WI 53703-1104 bill.ryan@uwex.edu