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<br />Retail Leakage and Surplus Analysis <br />The Retail Leakage and Surplus Analysis examines the quantitative aspect of the community's retail <br />opportunities. It is a guide to understanding retail opportunities but it is not an analysis that indicates <br />unconditional opportunities. The analysis is sometimes called "a gap analysis" or "a supply and demand <br />analysis" and can aid in the following: <br /> <br />- Indicating how well the retail needs of local residents are being met <br />- Uncovering unmet demand and possible opportunities <br />- Understanding the strengths and weaknesses of the local retail sector <br />- Measuring the difference between estimated and potential retail sales <br /> <br />Understanding Retail Leakage <br /> <br />Retail leakage means that residents are spending more for products than local businesses capture. Retail sales <br />leakage suggests that there is unmet demand in the trade area and that the community can support <br />additional store space for that type of business. <br /> <br />However, retail leakage does not necessarily translate into opportunity. For example, there could be a strong <br />competitor in a neighboring community that dominates the market for that type of product or store. <br /> <br />Understanding Retail Surplus <br /> <br />A retail surplus means that the community's trade area is capturing the local market plus attracting non-local <br />shoppers. A retail surplus does not necessarily mean that the community cannot support additional business. <br />Many communities have developed strong clusters of stores that have broad geographic appeal. Examples of <br />these types of retailers include: sporting goods stores, home furnishing stores, restaurants, and other specialty <br />operations that become destination retailers and draw customers from outside the trade area. <br /> <br />Examining the quantitative aspects (Leakage/Surplus) is only part of the evaluation of community's retail <br />opportunities. Before any conclusions can be drawn about potential business expansion or recruitment <br />opportunities, qualitative considerations such as trade area psychographics and buying habits must be <br />analyzed in context of other market factors. <br /> <br />Interpreting Leakage Index <br /> <br />1.0 = equilibrium, meaning that demand and sales in the area being analyzed are in balance. <br />.80 = demand exceeds sales by 20%, meaning that consumers are leaving the area being analyzed. <br />1.2 = sales exceed demand by 20%, meaning that consumers are coming from outside the area being <br />analyzed. <br />All estimates, projections or forecasts in this model are subject to errors, including statistical error, error due to the subjective nature of some data, error due to changes in demographics, error based on <br />lagging competitor information or growth data, and error due to factors that are not included in the model. The user assumes all risk of reliance on this information. <br /> <br />GROW WITH US.1-888-2BUXTON |buxton@buxtonco.com |www.buxtonco.com <br />