Last month, we crafted a column addressing retail analysis and development as one vitally important community economic development initiative, both as a “jobs” attractor/retainer and as a “family attractor/retainer” or quality of life component.  In that article, we addressed the importance of calculating your retail “trade area” to geographically understand where your shoppers are coming from, and how many shoppers and dollars are available for spending locally.  Once one knows how many shoppers we should be attracting, the next step is to identify how many of them (and their dollars) we’re actually capturing.

Beneficial Uses of Retail Capture Measurements

“As retail goes, so goes our community….”   Calculating Retail Capture provides a measure of our communities’ overall economic health in sales tax – dependent communities and can be very beneficial to both policymakers and businesses, alike.  Whether we’re capturing more people and their dollars than we should be, or experiencing retail leakage, we can use those findings strategically to help advance our initiatives and support our proposals.  

Overall, measuring retail capture and leakage in our communities allows us to:

• Quantify the number of persons who spent their actual retail dollars locally; 

• Identify retail clusters with positive findings;

• Quantify loss when it occurs, for purposes of needs assessments in grant applications and to fill retail gaps;

• Measure the flow of consumer spending and associated revenue generation in economic impact calculations; and

• Provide foundational support for community assessments and strategic planning.

 Just like community trade areas can be calculated through the use of statistical models and surveys, so can retail capture and leakage. Nothing is more accurate than a properly conducted survey. However, models and formulas can identify how much of our community or trade area population’s spending is realized locally, based on state and local sales tax data and rates.  For more information on selected models or for a presentation to a local audience discussing retail capture and leakage further, please contact us.

Where do I get help?

Selected retail analyses are arguably critical to successful strategic planning and business development in our communities.  A comprehensive capture-leakage study requires use of formulas and specific data or customer surveying of businesses.  Some economic development organizations have models to use (as we do), but many generally pay third party providers (consultants, universities, etc.) to do this work.  Conducting capture and leakage assessments for HAMMRC community members is a service we provide.