Speaker: Retail is critical to economic development
Retail analysis and development is a key component of economic development for a community.
That was the message of Mark Goodman, president of Goodman and Associates LLC in Conway, during a presentation on Berryville’s retail trends Thursday in the Community Room of Cornerstone Bank. Goodman, a consultant for Winrock International, recently completed a retail analysis of the Berryville area and was sharing his findings with interested business and community leaders.
Chris Claybaker, director of economic development for Berryville, introduced Goodman and Michelle Perez, program associate for U.S. programs at Winrock International. Claybaker explained that
Goodman’s retail analysis and assessment addressed the “vibrant downtown and retail community” goal identified in Berryville Works 2020, the city’s recently completed economic development strategic plan.
“I think the presentation you’re going to see is one of those missing links we’ve needed in our community to help sell it properly,” Claybaker said.
Perez spoke about Winrock International’s role in Berryville’s economic development plan, explaining that Winrock International is a nonprofit organization in Little Rock founded by former Arkansas governor Winthrop Rockefeller. She said the organization’s work focuses on economic development, education, environmental issues and human rights.
“My team and I work exclusively in the United States and Arkansas in particular in small rural communities like Berryville,” Perez said.
Winrock got a grant from the United States Department of Agriculture (USDA), she said, for a project called Creating Regional Investments and Strategic Partnerships (CRISP).
“Through that project, we provide capacity assistance and technical assistance to municipal leaders in each community we work in,” Perez said. “We have Eureka Springs, Berryville and Mulberry under this one project.”
She said the organization helps communities with economic development, retail statistical analysis, economic base analysis, manufacturing retention and more.
“It’s a really wide project that we think has a lot of value for communities,” she said. “Sometimes they just don’t have the time or the resources to do these things.”
Claybaker said he and Perez have been looking at the grant to see how it fits in with Berryville’s economic development action plan, and they identified retail analysis as an area where Winrock could provide assistance.
Goodman presented information on retail sales trends, retail activity by category, trade area assessment, retail capture and leakage and peer community comparisons for Berryville.
Retail analysis and development are critical for economic development in Arkansas, he said, because cities are so dependent on the sales tax.
“In Arkansas, city budgets get 20 to 40 percent of their revenue from the sales tax,” Goodman said. “Retail is the foundation for that. As retail goes, so goes the community.”
Monthly retail sales in Berryville are steady, he said, and slowly going up.
The total retail potential for Berryville is about $145,325,394, he said, with only $57,544,172 coming from the city itself.
“Breaking down the retail activity in Berryville is not just about the city,” Goodman said. “It’s about measuring that trade area that extends beyond the city limits. Hopefully, we’re selling to people who are beyond the city limits, too. Once we know the geography of that, the question becomes ‘How much of that are we actually capturing, and how much could we capture?’ ”
For areas 10 minutes outside of Berryville, he said the retail potential is about $62,168,840. For areas 20 minutes outside of Berryville, he said it jumps to $167,402,693.
“That’s important because people will drive 20 minutes to buy something,” Goodman said. “It’s considered safe to assume that people will drive that far if they have a reason.”
The total statistical calculated retail trade area has a potential of $233,642,534, he said.
“What that tells me is that our trade area is bigger in terms of money available than what we’re capturing,” Goodman said. “So that money we’re not capturing is retail leakage from the trade area, which can be an opportunity.”
He said the city needs to look into why people spend their money somewhere else, noting it is usually a matter of “push or pull.”
“Are our businesses pushing people away, or are other businesses pulling people to other locations?” he said. “This data tells us what is happening but not why.”
Among the reasons people shop elsewhere, Goodman said that shopping hours and online shopping are two of the biggest factors that cause retail leakage in communities.
“You have daytime spending and nighttime spending. Studies show that 70 percent of all retail sales take place after 6 p.m.,” he said. “A lot of businesses will only stay open until 5:30 p.m., but that won’t do anybody any good. Most people who work can’t get there before 6 p.m., so that is a push factor.”
Online shopping, he said, is killing small communities because they’re not collecting sales tax on those purchases.
“If we can’t recapture that sales tax, then it will keep killing us,” Goodman said. “Almost 20 percent of sales take place online now. The other thing to consider is employees of brick-and-mortar businesses. If we’re losing our retail and sales are dropping over time here, it will be impacting employment in the retail sector.”
The only thing better at showing retail trends than models and maps of trade areas, he said, is a survey.
“Surveying is really valuable,” Goodman said. “If businesses participate in a survey where they just get zip codes from their customers, then we could get a whole series of maps for the trade areas of different businesses.”
The closest trade area that mimics retail, he said, is a hospital or clinic’s trade area.
“If you can get the zip codes of the inpatients, that would be almost identical to the retail trade area,” he said. “If you get it, then I will map it up. I can use the drive time and trade area from these surveys to come up with the demographic numbers that organizations need for grant applications or needs assessments.”
Overall, Goodman said, it is important for Berryville to continue studying retail in its trade area and work on identifying trends. All of the information and maps he compiled, he said, will be available to members of the community.