The Market for Commercial Development in Lansdowne
Calculation of Spending Potential: Primary and Secondary Market Areas
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The demand for retail space, and the determination of the retail potential of a site or community, is based upon a number of factors. Following is a description of each of these factors, the source of data used to calculate their numerical value, and the methodology that S. Huffman Associates used to arrive at a determination of Lansdowne’s potential for retail commercial development.
Demographic Analysis
Detailed data from the 2000 Census has recently become available and has been used throughout this report. Some of this data was obtained directly from the United States Bureau of the Census and analyzed by S. Huffman Associates. The data that was obtained directly from the Census Bureau included information on age, race, household size, income levels, and industry of employment of residents of the primary and secondary market areas.
Estimated sales of retail and service establishments in the primary market area were purchased from Claritas, Inc., a corporation whose major products are the aggregation and analysis of secondary data from a variety of sources. Claritas has built a Business Facts Database using data from InfoUSA that estimates retail and service establishment sales by category of store or service. A second report was purchased from Claritas that summarized the retail potential of the primary and secondary market areas based upon the Bureau of Labor Statistics most recent Consumer Expenditure Survey. By comparing the estimated retail sales in the primary market areas to its retail potential, we were able to establish the retail outflow, by selected business types, from the market area. This data in turn was converted to an estimate of the amount of retail space that can be supported by the community at the current time, by retail category, based upon industry averages from the Urban Land Institute’s Dollars and Cents of Shopping Centers, 2002.
Finally, PRIZM cluster narratives were ordered from Claritas. The PRIZM lifestyle segmentation system was developed by Claritas to identify demographic and lifestyle variables that are predictors of consumer buying behavior. It is based upon the assumption that people of similar backgrounds and objectives tend to live in neighborhoods where others of those backgrounds have settled and where their needs and their objectives can be met. By analyzing demographic, consumer expenditure, direct marketing response, magazine subscription, and consumer credit data, Claritas has developed a system of predicting how given populations are likely to spend their money, and what goods and services are likely to be most in demand in defined geographic areas.
A word of caution is in order at this point. There have been incidents of accidental under-counting by the Census Bureau in urbanized areas in past years. However, information supplied by the Census Bureau and by Claritas is widely accepted as the best available data. In our judgment, it leads toward a better understanding of the market for retail commercial goods and services in Lansdowne, and should be used as background for decision-making as revitalization of the commercial areas proceeds. S. Huffman Associates takes no responsibility for any errors or omissions that may have occurred through Census or Claritas actions, and no independent verification of Census or Claritas data was undertaken.
As noted earlier, surveys conducted by the LEDC were invaluable in this analysis. The first of these was the consumer survey conducted by Board members of the LEDC, who dropped off a total of 5,000 surveys, return postage pre-paid, with merchants and other business people in all of the Borough’s business districts in June 2002. Respondents were eligible to win a $200 prize. A total of 360 surveys were returned; the return rate of 6% is within expected industry averages. The findings of the survey are discussed later in this report. In addition, Hoff Communications, Inc., whose President serves on the Board of the LEDC, tabulated the survey and posted its findings on their web site so that residents could see the results.
The Lansdowne Economic Development Corporation conducted a survey of businesses in the Borough by mailing out surveys to the 80 members of the Lansdowne Business and Professional Association in the summer of 2002. A total of 42 responses were received, and some additional businesses were also surveyed.