Eliminating the Gap: How to Stop Retail Leakage

Ask most any government official:

“What type of retail development would you

like to see in your community?”

The answer heard most: “Something that

will stop our citizens from leaving our

community to shop.”

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.

Leakage/Surplus (Gap) Analysis

Retail leakage or surplus figures are essentially calculations of

demand less supply.

Retail demand is a function of the number of households in the trade area and how much they spend on retail purchases annually.

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.

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.

Retail Surplus occurs when retail supply is greater than retail demand

Customers from elsewhere are coming into the market to support local retailers.

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.

But these figures don’t tell you “Why” and “Where.”

Along with annual dollar details, use detailed analysis to answer the question, “Why have we lost retail sales?”

Start analysis by reviewing leakage by store type and by product.

Look for patterns on why your citizens are leaving the community to buy certain products or shop in certain stores.

Are they leaving due to . . .

Price?

Service?

Product Selection?

Help define weaknesses and determine what to improve by understanding your citizens’ needs, expectations, and what is important to them.

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.

Analysis allows you to assist increase local businesses sales through better selection of merchandise, service and value, therefore improving or eliminating retail leakage.

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