Eliminating the Gap: How to Stop Retail Leakage
Transcript of Eliminating the Gap: How to Stop Retail Leakage
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Eliminating the Gap: How to Stop Retail Leakage
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Ask most any government official:
“What type of retail development would you
like to see in your community?”
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The answer heard most: “Something that
will stop our citizens from leaving our
community to shop.”
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The community leader needs to discuss their plans, or lack of plans, for the retail development of their community and why it’s leaking retail dollars.
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Leakage/Surplus (Gap) Analysis
Retail leakage or surplus figures are essentially calculations of
demand less supply.
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Retail demand is a function of the number of households in the trade area and how much they spend on retail purchases annually.
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Retail Supply: • Amount of goods and services currently
offered in the trade area.• A function of the amount of stores in the
area, their types and sizes, and projected sales volume.
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Leakage occurs when retail demand is greater than retail supply
Households in the community or trade area are spending their retail dollars outside the community or trade area.
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Retail Surplus occurs when retail supply is greater than retail demand
Customers from elsewhere are coming into the market to support local retailers.
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The Leakage/Surplus Analysis provides the dollars of retail sales in your trade area plus the types of stores they were spent in and products purchased.
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But these figures don’t tell you “Why” and “Where.”
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Along with annual dollar details, use detailed analysis to answer the question, “Why have we lost retail sales?”
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Start analysis by reviewing leakage by store type and by product.
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Look for patterns on why your citizens are leaving the community to buy certain products or shop in certain stores.
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Are they leaving due to . . .
Price?
Service?
Product Selection?
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Help define weaknesses and determine what to improve by understanding your citizens’ needs, expectations, and what is important to them.
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What’s Next?
Analyze the lifestyles and buying habits of customers in your trade area.
Identify and match candidate retailers and restaurants that can
succeed.
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Analysis allows you to assist increase local businesses sales through better selection of merchandise, service and value, therefore improving or eliminating retail leakage.