Not long ago I heard someone comment that “70 percent of shopping occurs after 6 PM”. This is a statement that has been quoted for a couple decades now, and like most people, I accepted it for a long time. The more I became acquainted with retail, though, the more I had my doubts. Eventually I even began to look for a source to corroborate the claim. It seems there really is no source. In fact, the information we do have suggests something very different.
The best source of information is the American Time Use Survey compiled annually by the US Bureau of Labor Statistics. It shows that the number of people shopping actually peaks in the early afternoon and steadily declines through the remainder of the day. Fewer than one in five shoppers are out in the evening hours from six to ten.
The data tells us a few things more. Overall, we are shopping less. The number of people shopping* dropped from a daily average of 38.0 million in 2003 through 2007, to 34.3 million per day in the 2011 to 2015 time period. Comparing evening shopping between these two periods, the percentage of shoppers out during the hours of 6 PM to 10 PM declined from 19.5 percent to 18.7 percent. The percentage of people out during the daytime hours from noon to 6 PM remained relatively unchanged, while there was an increase in morning shoppers (8 AM to noon) from 19.7 percent to 20.4 percent of the total. The morning hours also saw in increase in the percentage of people patronizing service businesses.
Other data sources show that patterns vary for different kinds of retail businesses and shopping formats. Simply open up Google Maps to understand this. When you click on many businesses and scroll down the information window you will see “popular times”, a bar chart that reflects the typical customer traffic patterns for that business, by hour, for every day of the week. A grocery store will typically peak around four in the afternoon while a home improvement center will peak around eleven in the morning. Businesses like a coffee shop may have an uneven pattern of busier and slower times.
The upshot of this is that while our downtown businesses are certainly leaving some of the market potential on the table when they close early, it may not be as much as we have assumed. Whether it makes sense for those businesses to be open in the evening is really a more complex question that needs to factor in the kind of business, surrounding businesses that might help draw traffic, and the additional sales volume that might be captured. If the goal is to capture more sales, these businesses may best be served by encouraging them to develop their web presence, engage in online sales, and provide same day delivery services, rather than simply extend hours.
* Rather than “people” we should probably be using “shoppers by hour”, as the same person might be shopping more than one hour, but the simpler term will make this easier to read.
We are often approached by communities asking how they can attract more retail to their business districts. That may be the wrong question. The retail sector is experiencing a massive transformation as people are spending less, the internet is taking an increasing slice, shopping habits change, and chains continue to close stores at record levels. The best locations will continue to thrive, but all others need to be thinking about a more comprehensive approach to creating healthy business districts, in which attraction is only part of the picture.
Our white paper provides a comprehensive look at how retail is changing and what it might mean for your community, district, or center.
Storemaggedon – Retail Shifts and Communities
Kingman County is one of two counties making up the Wichita MSA in southern Kansas. This largely rural county has been losing population for decades, though that trend may be reversing as people move from the City of Wichita to rural home sites and smaller communities with a more affordable cost of living. The county’s economic development organization is seeking opportunities to retain businesses and attract new ones to the community both for the economic opportunities they provide, and to offer shopping and services to residents.
Place Dynamics was brought in to conduct the market and financial feasibility analysis for three potential uses:
- A conference facility capable of hosting events with a minimum of 100 attendees
- A new hotel, possibly in conjunction with the conference facility
- Retail and dining businesses
The retail trade area for the county and its principal city is really no larger than the county itself. While few single-category uses are immediately viable (aside from a truck stop and restaurants), there is an opportunity for businesses to combine product lines to capture unmet demand.
The City of Kingman can support a new hotel, fueled in part by a 20 percent increase in traffic on Highway 50 over the past decade. A 40-room midscale property was recommended. The financial analysis demonstrated the project’s likely profitability and ability to secure financing based on typical commercial lending criteria.
Few similar rural counties, or communities the size of Kingman have convention centers of the size and character the economic development organization has envisioned. We examined the small handful of comparable facilities and assessed likely competition for the proposed center. The recommended facility will have a combination of dedicated rooms, flexible space, and amenities to enable it to host diverse functions such as business meetings, conferences and some trade shows, and banquets or receptions. A proposed location in the historic downtown, outdoor reception space, allowing outside food, and lower rental fees will help the facility to compete for bookings.
In addition to the location and facility design, the study recommended a management structure, services to be provided, and marketing strategies.
None of the comparable spaces are financially self-sufficient, and the analysis predicted that this facility would similarly need continued financial support. That might not be the case, however, if it were to be developed with grants and donations to defray the estimated $1 million development cost.
Place Dynamics assisted Henry, rural Rock Island, and Mercer Counties in planning to develop and promote tourism within the HRRIM region. This was a multi-faceted project involving inventories, assessment, planning, and marketing.
We began the project by documenting and evaluating existing tourism atttractions on five unique criteria, resulting in a ranking and helping to identify future development needs. At the same time, we examined visitor demographics and patterns not only within the HRRIM region, but also among competitors. Attractions were grouped to create itineraries designed to boost visitation and encourage visitors to extend the length of their stays. A development program addressed both general needs or opportunities, and those specific to individual attractions. A marketing plan discussed messaging, target markets, and opportunities for promotion.
To help demonstrate the importance of tourism to the economy, we compiled an economic impact analysis of tourism on the economy of each of the three counties. The area’s tourism is responsible for generating over $55 million in economic activity, nearly 1,000 jobs, and nearly $1 million in annual tax revenue.
Summary Report: TOURISM MATTERS
Janesville is a city of about 64,000 people located in south central Wisconsin. The City retained Place Dynamics and SAA Design Group to advise it on prospects for redeveloping several brownfield sites along the Rock River where it passes through downtown. Our role was to assess the market opportunity and advise the team on effective redevelopment strategies.
The analysis demonstrated a strong and immediate demand for market rate and higher-end rentals along with owner occupied condominiums. These uses could be successfully developed along the river, where the river itself, along with existing paths and parks would be a significant amenity. Additional riverfront improvements recommended by SAA Design Group would further enhance the area’s potential. To help establish the market for redevelopment, the City will need to be an active player in helping to assemble, remediate, and market properties, as well as provide support for elements of proposed projects such as enclosed parking, which is a necessary amenity.
The market for retail, office, and dining uses in the downtown is presently limited, in part due to a lack of any retail concentration in the district, and in part due to a very large inventory of available space elsewhere in the city. The most likely prospects in the short term will include eating and drinking places, home decor and hobby-related retail, and boutique office users who may be tied to the nearby courthouse.
Place Dynamics has just released The Creative Spark, an assessment of the potential for a coworking space, or network of spaces in Southeastern Wisconsin. The study envisions using a coworking platform to promote entrepreneurship and help to grow small businesses in the region, with a focus on design and creative professional services.
TCS Presentation 1
Free Radical – The Creative Spark
Layton Boulevard West Neighbors is a nonprofit organization working to preserve the vitality of the Silver City, Burnham Park, and Lincoln Park neighborhoods on Milwaukee’s far west side. These were historically working class areas that developed along streetcar lines from the 1870’s through the early 1900’s, offering housing along with shopping and services for workers in the adjacent Menomonee Valley. As the largely Eastern European households that once dominated the neighborhoods move out, many Hispanic households are moving in. Home ownership in the area remains high, with moderate incomes. These are “moving up” neighborhoods for recent immigrants and first generation citizens who want to own a home.
Our analysis focused on five primary corridors.
- Pierce Street borders the Menomonee Valley, which has been the historic heart of Milwaukee’s manufacturing district. This area is attracting several new green industries and small craft manufacturers that are attracted to the central location and availability of smaller spaces than found in the Valley.
- National Avenue is the most important commercial corridor. Its higher traffic volume, proximity to Miller Park, and existing businesses are a foundation on which to build a destination business district focused on multi-ethnic dining and shopping.
- Greenfield Avenue will largely serve neighborhood shopping and service needs.
- Burnham Street does not have the traffic necessary to sustain the amount of commercial space available. We recommended development around nodes, with the most important of these being around a popular Mexican grocery.
- Lincoln Avenue can serve these neighborhoods along with adjacent suburban areas. The street’s proximity to a large hospital complex presents opportunities to serve workers and patients, particularly for businesses in health care or dining establishments.
In addition to the market analysis, we recommended specific strategies for the organization to pursue in its efforts to revitalize these corridors.
Summary Report: Layton Market Analysis Summary (Letter Format) 2
Alamogordo is a case study in complex market analysis, where military transfers will introduce 2,500 new families into the market, which is further complicated by the presence of 7,000 vacation homes. No cheap market report purchased from a data vendor can anticipate conditions like these, but that is where our models shine. Because we define assumptions unique to each community and have the ability to manipulate the variables in our model, we can anticipate unique circumstances that have a significant bearing on market opportunity. In the case of Alamogordo, this means measuring the impact of second home tourim expenditures and accounting for a sudden anticipated growth in the population.
Our analysis found opportunities to attract new lodging, dining, and retail businesses to the community. We recommended strategies to encourage this growth along the primary commercial corridor, pointed out the opportunity to revitalize the downtown business district, and expressed concern for the deteriorating condition of a class C enclosed mall.
The City of River Falls and University of Wisconsin – River Falls raised the prospect of establishing a business incubator focused on agricultural and bio technologies. Place Dynamics was retained to examine the feasibility of the project and recommend the best process for moving forward.
Our analysis determined that there was too little activity in the targeted sectors to support the incubator as proposed. We instead recommended a broader focus on business, scientific, and related professional services, while retaining some capacity to incubate manufacturers serving bio industries.
We recommended a structure for the proposed incubator, including ownership, management, and client tiers. We also identified likely development costs and prepared cash flow projections helping the community to determine the level of subsidy the facility will require.
Spruce Grove is a rapidly growing suburb of Edmonton, Alberta. The Region has experienced very strong growth due to oil and gas exploration and processing, serving as the base of operations for far flung projects along the western slope of the Rockies and north into Alberta’s tar sand deposits.
Spruce Grove plays an important role in the metropolitan area. To begin with, it is on the west side of the city where it is upwind of large refineries east of the city. This makes it a more desirable location for residential development, and the community has been adding large numbers of skilled workers and professionals that are desired by employers in a tight labor market. As the western gateway, it also provide more convenient and congestion-free access to the west and to places in the north. This is a critical factor in moving the many oversized loads trucked to oil and mining sites. Spruce Grove is also more attractively priced than many competing locations in the metropolitan area.
These and other factors were considered in recommending a diverse set of target industries for the community. We followed up this analysis by recommending a marketing strategy based on the City’s available annual budget, and completed a comparative study of incentives common in the U.S. and Canadian cities with which Spruce Grove will compete.