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A GUIDE TO RETAIL IMPACT STUDIES <br />2. ANALYSIS OF EXISTING RETAIL ACTIVITY IN THE REGION <br />OVERVIEW: <br />In the second phase of the study, the analyst develops a thorough <br />understanding of the existing retail activity and conditions within the region. The analyst <br />will: <br />Determine the market area (the geographic area to be studied). <br />Quantify both the demand for and actual retail sales in the market area by line of <br />goods. <br />Quantify retail employment and wages in the region. <br />Develop a more detailed understanding of t <br />visits and/or surveys. <br />GLOSSARY: <br />Someof these terms may have a different meaning in common usage. <br />Demand <br />Supply refers to actual retail sales. refers to expected retail sales based on <br />Surplus <br />average per capita spending patterns. is said to exist where supply exceeds <br />Deficit <br />demand or where total sales are greater than can be accounted for by residents. is <br />leakage <br />said to exist where demand exceeds supply. A deficit indicates , or residents <br />making purchases elsewhere. <br />DATA SOURCES: <br />ESRI- <br />Determining the Market Area <br />To understand the local retail economy, one must first determine the general boundaries of the <br />retail markets served by the community. <br />Market area patterns of various communities tend to follow consistent rules. The most <br />fundamental is that larger communities have a stronger retail draw than smaller communities. <br />In Maine, for example, Greater Portland and Bangor routinely draw shoppers from a wide <br />geographic area, whereas small towns and villages typically attract only those living in the <br />immediate vicinity. To gain an initial understanding of the boundaries of the market area to be <br />studied, the analyst maps the interconnections between the host community and surrounding <br />communities and applies a formula to each relationship that factors in both distance and size. <br />The result is a reasonable approximation of the market area (also known as the "trade area"). <br />The analyst then makes adjustments to this based on several factors. One has to do with the <br />lines of goods to be offered by the proposed large retailer. Market areas for everyday needs, <br />such as bread or gasoline, tend to be quite small, as even the smallest communities can provide <br />such goods. For less frequent and more expensive purchases, market areas begin to expand <br />9 <br /> <br />