Local retailers need to understand the market as much or more as new retail concepts looking to locate in an area. New businesses considering a location in an area want some assurances that there are enough core customers to support an over-performing store. In order to get this certification, the concept and the city work together to prove the customer density, the comparable market and the attractiveness of a site, thereby minimizing the risk for a retailer.

However, local businesses may not have the luxury of this information before making site selection decisions. Often times they use demographic models and guess work. It is therefore invaluable to the local business owner to understand the market they have chosen to operate in. This can be understood by analyzing the customer base around the store and what that customer is worth to their concept from a dollars and cents perspective.

Retail leakage can help the local business owner determine what is being lost to competing markets and how to capitalize on the gap through marketing. Also, understanding the dollar demand of your consumer, and having a realistic picture of your draw area, will help the local market make merchandising decisions about their products.

For example, if you are a local furniture store and you know that there is leakage in the category of a recliner type chair and a high demand for this item - from a merchandising standpoint, you might want to think about carrying that item in your store to capitalize on the demand of the local market.

Information is power. The more you know about your customer, the better position you will be in to service their needs and stay strong in a highly competitive marketplace.

View the March 2009 CommunityMatters Newsletter