As we head into 2017, many businesses are looking for additional market opportunities. Entrepreneurs looking at the local market are identifying areas where they can be competitive. Markets are complex collections of consumers willing to spend dollars on certain items. Spending is generally expressed as a percentage of disposable income. Disposable income dollars, when multiplied by the total population of an area and divided by typical spending patterns of those within the given market can give economic development professionals an idea of where opportunities exist.
Just to be clear, the existence of a market gap DOES NOT guarantee success, nor does a market surplus eliminate the possibility of a new business within the category. Furthermore, we need to qualify market gaps to compensate for unique businesses or large businesses that may occupy multiple categories or disrupt spending in a particular category. Unique geographic and cultural pieces must also be taken into account when looking at market gaps (we don’t have a large body of water immediately adjacent to Emporia, for example, so boat sales should be considerably lower here than at a community adjacent to a lake.).
For a community of our population size, income level and psychographics, we should generate around $311 million in retail sales per year. Newly acquired data indicates that we generateapproximately $418 million. We are pulling approximately $107 million in retail sales from outside of Emporia into our community on a yearly basis. This is especially impressive when you consider that Emporia is an hour or two from several, much larger, communities in virtually every direction.
Some of our strongest categories (areas where we had more spending than the locals could generate, indicating that we have people traveling to our market from outside the area) include: Motor Vehicle Dealers, Electronics and Appliance Stores, Building Materials, Garden Equipment and Supply Stores, Health & Personal Care Stores, Gas Stations, Clothing & Clothing Accessories Stores, Sporting Goods, Hobby, Book and Music Stores, General Merchandise Stores, Food Service & Drinking Places and Restaurants/Other Eating Places. There were weak spots within some of those areas, and some categories (General Merchandise) included a retailer that sold groceries (negating most of the market opportunity in that specific category).
Some of our weaker categories (areas where we had less spending than the locals should generate, indicating that we have people traveling from our market to areas outside Emporia in greater numbers than we are pulling from outside our area) include: Furniture & Home Furnishing Stores, Food & Beverage Stores, Miscellaneous Stores (Gift stores, etc.). We only had three large categories with leakage, and none of the leakage within those categories was more than $1.7 million. This would indicate room for specialty retailers, but not a lot of space for large businesses (without negatively impacting existing businesses).
The most compelling category for a new market entry would probably be the gift/home decorstore concept. With a defined market gap and a store leaving the market in 2017, an enterprising entrepreneur could take advantage. The subcategory of special food services also showed a defined gap, and the ability of specialty food producers that can retail (like a bakery, specialty butcher or another business that can take a raw agricultural good and refine it into a finished product) may provide a market opportunity for those that possess the talent necessary to fill a market gap.
Our market leakage looks significantly different than it did just ten years ago. So, what has changed? Think about it… We have a lot more entrepreneurs, unique stores, unique events and clusters of specialized businesses than we had in the past. Our median household income continues to improve, and more people are traveling to Emporia from outside the area for our unique offerings than they were a decade ago. Focusing on unique, entrepreneurial businesses and “weird” things that set us apart from surrounding communities continues to foster growth.
Think of it this way: If every town had apple pie, why would you drive to another town to have a slice of apple pie, when you had it at “home”? If, however, a town had peanut butter pie, and it was the only place you could get peanut butter pie, you might consider driving to it. Emporia simply will not be a bigger town than many of our larger surrounding communities. So, as those communities become homogenized with “apple pie”, we have to develop different flavors of businesses that you can only find here.
If you are looking to start a business in the area, Emporia Main Street may have data that could prove helpful in your research. Advising entrepreneurs goes beyond “this is what I think” or “this is what my friends tell me” and includes actionable market research. We are here to help with tangible items to help you determine if your plan is viable, resources to get you started and additional products to help you expand. If 2017 is a year where you adapt your existing business or start a new venture, stop by the Main Street office! We are happy to help.