Market Analysis

Market Analysis MJB Consulting Friday, October 17, 2008 Market Analysis • There are two markets to consider… – Consumers demand goods and services, and retailers supply them… – Retailers demand retail space, and landlords supply it… Market Analysis • There are two markets to consider… – Most studies over-emphasize the first market… – … do not pay enough attention to: • What retailers themselves want – Site requirements • What their alternatives are – Analyzing the competition for tenants Market Analysis • “Commodity” retail – Same merchandise and pricing from one store to the next – Will choose where to shop based solely on convenience Market Analysis • “Commodity” retail – Conduct traditional trade-area analysis • Primary market = nearby residents choosing Main Street because it is the most convenient place to shop Market Analysis • “Commodity” retail – Conduct traditional trade-area analysis • Anchor stores and uses • Access and parking • Existing (and future) competition Market Analysis • “Commodity” retail – Conduct traditional trade-area analysis • Ordering and analyzing data – Demographics – Psycho-graphics – Sales leakage data Market Analysis • “Commodity” retail – Conduct traditional trade-area analysis • Are the thresholds met? – Retail categories – Specific operators • Getting past the perceptions… – Absolute figures versus averages – Looking at comparables Market Analysis • “Commodity” retail – Supply-side considerations • Retailer’s existing locations • Site-location strategy and expansion plans – Does it want to be on Main Street? – Is it in a position to expand (take a risk)? • Location, space and landlord that can accommodate its site requirements • Better than the alternatives? Market Analysis • “Commodity” retail – Overall market might consist of: • • • • Close-in residents Out-of-town visitors Daytime office workers Event-goers Market Analysis • “Commodity” retail – Each Main Street has different retail fundamentals… – How to know? • Looking at comparables… • Retail tenanting = more art than science Market Analysis • Specialty retail – Unique offerings that one cannot find elsewhere in the region – Able to draw from beyond the commodity centers – Trade area = potentially the entire region (if not beyond) Market Analysis • Specialty retail • Filling a specific psychographic niche – Defined not simply by demographics (e.g. income levels, life stage)… – … but also, by a certain lifestyle, sensibility, aspiration Market Analysis • Specialty retail • Filling a specific cultural niche – Example: ethnic/immigrant » Few alternatives, less vulnerable » Cosmetics and aesthetics » Potential of “cross-over” appeal Market Analysis • Specialty retail • Dining and entertainment – Often the uses that kick-start Main Street re-generation… – … but only if concepts are truly distinctive, not commodities – Food = the great equalizer!