Ellen Huber: Retail recruitment by the numbers
My April 9 column delved into the topic of retail development and factors that retailers consider in evaluating chances for business success in Mandan. This week’s column picks up where we left off, with a more in-depth look at spending power, the presence of competitors and the degree of opportunity or saturation in the market.
The Memorial Highway corridor study has included a market study update by the firm RDG Planning and Design of Des Moines, Iowa. The firm reviewed Mandan’s retail gap analysis from Nielsen Claritas market research, which shows demand originating from Mandan consumer expenditures and sales generated by current category businesses in Mandan.
RDG planners reviewed 2008 data. We have since obtained 2009 data, inserted into the summary that follows, but RDG Partner Gary Lozano indicates his conclusions and recommendations remain the same.
As a whole, Nielsen Claritas data indicates Mandan businesses in 2009 attracted an estimated $22 million into the community above sales generated by Mandan residents. The RDG reports comments, “This is a very good thing. Whenever your retail sector can become a regional as opposed to strictly a local supplier, those ‘attracted dollars’ build your local tax base.”
Mandan’s motor vehicle and parts dealer category is our largest attraction of outside dollars, with a surplus of $117 million. But as we all know, Mandan has retail gaps. RDG planners compared these gaps in supply to typical big box store sizes and target spending per square foot of real estate.
• Building material and garden equipment stores. Mandan residents spent an estimated $11.4 million of a total $33.6 million demand in 2009 outside of the city for this retail category. RDG indicates, however, that even this gap is not enough demand to support a new home store like a Menard’s or Lowe’s in Mandan. Using a preferred rate of $350 of expenditures per square foot per year, it may be possible to support a 33,000 square foot store for such items in Mandan. Lozano notes that a Menard’s store is typically 150,000 square feet. He concludes there is insufficient demand to support a big box store in this category, but stresses this gap could be filled by a smaller, neighborhood hardware store.
• Clothing. The gap is estimated at $12 million in Mandan, which RDG planners say is inadequate to support a department store like Kohl’s or other larger clothing stores. However, they say small, unique local stores could capture that part of unmet local demand.
• Sporting goods. There is a $1.8 million gap, but RDG says it is inadequate to support a new big box sporting goods store. Looking at the individual components of the gap, they suggest a smaller outlet in the range of 5,000 square feet or so.
• General discount merchandise. Mandan has a near $40 million gap. RDG reports, “It might be the case that the demand might be inadequate to support a general merchandise store like Walmart or Kmart in Mandan. It is known that Walmart earns about $400 per square foot and Kmart earns approximately $300 per square foot.” At $400, a gap of $40 million would support about 100,000 square feet of retail. RDG indicates the new Walmarts are over 200,000 square feet.
• Food services. Mandan’s gap is estimated at $13.4 million and grew from $7.6 million in 2008. RDG says this figure indicates potential for expansion in the restaurant and entertainment area.
The draft market study is posted at www.mandanmemorialhighway.com under the Public Meetings section.
In evaluating retail supply and demand, we look at Mandan specifically because the Missouri River does to some degree pose a boundary. Statistics for the Bismarck-Mandan MSA combined show a great deal of surplus in most categories confirming considerable shopper attraction from a much larger trade area. The only categories in the MSA with gaps are food and beverage stores, foodservice, electronics and appliances and clothing.
Proponents for retail growth in Mandan are continuously seeking to fill our community’s retail gaps with a three-prong strategy: 1) encouraging owners of existing stores to expand and diversify; 2) asking retailers from outside the community to locate in Mandan, and 3) encouraging new entrepreneurship.
The Mandan Tomorrow committee on Economic Opportunity and Prosperity is beginning to explore formation of an investment group to back a new restaurant or retail operation. As part of this endeavor, the committee is also looking into tax incentive programs to help motivate residents to invest in a community development project. Stay tuned for more information.
If you would like to visit more about retail development, please attend the upcoming community forum on this topic scheduled for Tuesday, May 4, at 7 p.m. at Mandan City Hall. You can submit questions in advance to firstname.lastname@example.org.