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.

In addition, a significant leakage in a specific product category or store type is an excellent tool to use in presenting a case for retailers to come in to your community. Illustrating an unmet demand in conjunction with data supporting a psychographic retail match, as illustrated in Buxton’s CommunityID, strengthens your position as related to attracting specific retailers.

There will be instances where leakage does not translate into opportunity. For example, let’s say there is an extremely popular Ace Hardware in a neighboring community. A Barnes and McCullough might not be successful located in your community, although leakage is apparent in the hardware sector. Similarly, a sales surplus does not necessarily mean that a community cannot support additional businesses. A number of communities have become well known within their region for having a strong cluster of home furnishings stores, restaurants, antiques and so on.

While the Buxton Retail Leakage/Surplus Analysis serves as a guide to opportunity, or the lack thereof, combining the analysis with the knowledge of local norms, trends and customer analytics is the best bet for identifying the retail needs of your trade area.

Contact Buxton to learn more about the Retail Leakage/Surplus Analysis