Retail leakage, for our purposes, is the gap between the money spent by local consumers and the revenue generated by local businesses, often due to residents shopping in neighboring areas. Significant retail leakage in an area points to opportunities for new and expanding businesses to capture the unmet demand. Not always – a big-box retailer or other dominant competitor nearby can be an unavoidable obstacle to plugging leakage. However, there are many other ways to go about filling demand in your locality.
If you suspect your locality is experiencing a large volume of retail leakage, your first step should be to confirm that with some hard data. Acquiring data that shows the specific retail segments that people are leaving you for will allow you to create a retail master plan to guide your vision.
The second thing you must do is to put yourself in the shoes of a prospective developer. Asking yourself the questions they would ask can allow your locality to be prepared once it’s time for opening discussions. A developer is not going to come to your city out of the goodness of their heart; or because you love your hometown; you need to be able to show both what makes your city special, AND why your city will ultimately be right for them. They’ll want facts and figures: things like vehicles per day, population growth, real estate assessments, and knowledge of the existing real estate inventory. Being prepared and willing to do the work goes a long way.
But keep in mind – leakage is very complex and has many factors beyond those we’ve listed here. You can do everything right and still not succeed on your first or second tries. Having quality, consistent processes, including the ones listed here, will give you the best shot at plugging the leakage. Keep at it!
Some of the information referenced here comes from the folks over at Retail Strategies. Check them out for even more information.