What happens when there are no stores in your city or town that have what you need? Depending on the severity of their need, most consumers are willing to travel outside of their home city to find an alternative. In light of the fact that a significant portion of city revenue comes from the taxes levied on retail sales, towns have a vested interest in preventing shoppers from leaving the city limits. With the right information provided by a retail gap analysis, chamber of commerce and economic development officials can take actionable steps to make their city the ultimate retail destination.
Gap Analysis Provides an Economic Development Benchmark
Retail data takes, at most, about two weeks to compile, making it an important tool to the economic development team. The first thing that chamber professionals need to be concerned with is their trade area capture or TAC. This metric is an estimate of the number of people who have shopped in an area over the course of one year. While it may be next to impossible to find out explicitly how many people shopped in your town, a close estimate can be approached by dividing the dollar amount of retail sales in the community by the average retail budget per capita of the state’s or county’s residents.
For a town of 5,000 people, if you estimate your trade area capture to be about 8,000, then not only did everyone in your town shop there, but 3,000 out-of-towners did as well. Those are 3,000 more people who paid sales tax on their retail purchases that can go to improving area schools, making repairs to city infrastructure, or paying public service salaries for teachers, firefighters, EMT’s and policemen. While it is difficult to compare your TAC with those of other communities, it serves as a good benchmark to analyze and adjust your current retail sector development efforts.
A Gap Analysis Describes the Surplus or Deficit of Each Retail Sector
Another important facet of the retail analysis is that it breaks down sales data into different retail industries, so that trade area capture and your town’s attraction factor can be assessed for specific retail