By Pete Julius
Does your economic development organization receive a portion of its funding from sales tax? Is your community heavily dependent upon sales tax? Below are two tables that provide insight to any community that is currently evaluating their existing retail base. The first table identifies which retail segments contain the highest sales per square feet ratio, while the second reveals which segments have recently achieved the greatest advancement in sales.
It is surprising to see drug stores ranked number one. Electronics and other high-end product retailers would seem to be the most logical choice. However, drugs stores make sense considering the astronomical cost of prescription drugs. With the aging of America, prescription drugs will continue to be a very vital issue. Until the government can resolve the prescription drug issue, drug stores should remain at the top of the list.
|Retail Segment||Sales/Square Feet|
Source: Bank of America
It is very intriguing that the top two retail segments in both tables are identical. This comparison points out that these two retail segments – drug stores & electronics – will not only provide greater sales per square footage, but they have also recently achieved the most sales growth. The next three retail segments experiencing the greatest sales growth are general merchandise stores, food services and drinking establishments, and building and garden materials.
|Retail Segment||2001-2002 Percent Change in Sales ($M)|
|Health & Personal Care Stores, including Drug Stores||8.0%|
|Electronics & Appliance Stores||6.3%|
|General Merchandise Stores||6.0%|
|Food Services & Drinking Places||5.5%|
|Building Material, Garden Equipment||5.4%|
|Sporting Goods, Hobby, Book & Music Stores||4.9%|
|Furniture & Home Furnishings Stores||4.2%|
|Clothing & Clothing Accessories Stores||3.0%|
|Motor Vehicle & Parts Dealers||2.0%|
|Food & Beverage Stores||1.8%|
Source: U.S. Department of Commerce
These tables provide a good starting point to those communities currently going through the process of attracting more retailers into their communities. However, knowing these statistics is only the tip of the iceberg. Retail location decisions are highly driven by demographics. If you do not have the specific demographics that a certain retailer is looking for, then your chances to attract them will be minimal.