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Using Leakage Analysis to Understand Your Trade Area's Potential Retail leakage analysis is an effective tool to identify underserved needs in the community that can be used to promote new business locations or increasing merchandising opportunities for existing retailers. Retail leakage is presented as a Sales Gap Index using the Buxton Retail Leakage/Surplus Analysis. This index is generated by dividing actual sales by sales potential. When a leakage is identified, it is assumed that the community or trade area can most likely support additional store space of that type of business. Using Buxton’s Retail Leakage/Surplus Analysis, your community can review retail opportunities by specific product category, as well as by general store type. These indices should be used as an indication of opportunity, that when maximized have the potential to generate sales tax revenues, create new jobs, and ultimately improve the quality of life. Kingsport, Tenn. Finds the Answer to Retail Development
That’s exactly what city leaders in Kingsport, Tenn., learned when they attempted to attract retailers to their community. “When we did get meetings with retailers, they all asked the same questions that we were unable to answer,” says Jeff Fleming, assistant city manager, City of Kingsport. “It became apparent pretty quickly that we didn’t have enough information about our city.” |
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While many retailers consider small towns like Cape Girardeau, MO and Kingsport, TN below their radar; Hibbett Sports Inc. has turned the small town into a thriving market. The company focuses on markets that are skewed towards growth and a promise of a strong future. With the economy looking bleak for some, Hibbett is charging on with an aggressive expansion plan of opening 75 more stores in 2008 and nearly doubling its locations to 1200 by 2013. Hibbett has stores in locations as small as 3000 residents. This should give hope to the small towns everywhere!
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Retailers ask a lot of questions before locating to a particular area. If your city isn’t able to provide answers, it hinders efforts to increase shopping opportunities for your residents and tax revenues for your budget. 
