May 2022 — While hiring a consultant to complete a market analysis might be appropriate for some communities, the approach of this toolbox is based on the premise that business and community leaders will benefit by being actively involved in the research process. Because there are technical components to the toolbox (obtaining data and using geographic information systems software), it may be helpful to rely on outside help from a university Extension educator or consultant to guide you through the process. Because there are technical components to the toolbox (obtaining data and using geographic information systems software), it may be helpful to rely on a statewide or local University Extension educator or consultant to guide you through the process.

Community Involvement

This toolbox is intended to provide a concise yet comprehensive process for completing a market analysis for a small city downtown.  Unlike most market studies, the focus here looks beyond retail to a variety of uses in an effort to create a realistic plan for a diverse mixed-use downtown.  Local participation and sharing of ideas among community leaders and residents greatly improve the success of a market analysis. A core study group interested in learning about their community and economic revitalization is essential.  Users should deviate from the process as necessary and weave in other market analysis techniques that may fit their community better.

Market analysis can be an exciting learning opportunity for a community.  It should result in positive and measurable economic impacts for its downtown. This is done by weaving the market analysis findings into the downtown strategic planning process.

Relevant Data Sources

Part of the challenge of market analysis is sorting through many sources of data to identify that which is most relevant to your community’s research effort. Data is necessary for market analysis to define the trade area and analyze demand and supply trends within and beyond that area. This has become increasingly difficult with the volume of data now readily available over the Internet. The downtown market analysis toolbox is intended to help you navigate through information sources and access only those most relevant to the assignment at hand: downtown market analysis.  Throughout the toolbox are suggested data sources to help your study group collect relevant information as efficiently as possible.

Excellent and constantly evolving data sources are now available over the Internet from various data firms.  These sources often provide data instantly and customized for a particular geographic area.  While data from public agencies are typically free, private data firms are in the business of packaging data for particular applications like the retail market analysis.  Consumers of data must decide if time is best spent accessing and assembling free data or simply purchasing data in a format appropriate for the analysis. All data, public or private, primary or secondary, must be used responsibly and with caution.

In addition to secondary data, some data must be collected locally through surveys and other primary research.  This toolbox provides examples of standardized data collection techniques to assist in this process.

Geographic Information Systems

Geographic Information System (GIS) is a computer software application that matches a variety of data specific to your community’s geographic location.  It displays the results on maps rather than in tables or charts allowing communities and business leaders the ability to more effectively understand data in context of their location.  GIS enables one to easily combine a variety of data from several different sources and formats to create maps that can help illustrate important trends in the data.

GIS not only allows the creation of accurate, detailed trade area maps but can also help the recognition of important market trends that would often go unnoticed without the ability to visualize the data on a map. It enables people to see and understand the data, unlike any chart or table. It’s an important tool to have, whether customers are businesses or communities.

Throughout this toolbox are examples of how GIS can be used to enhance the understanding of the market and opportunities for downtown. GIS is becoming increasingly sophisticated yet more accessible.  More and more data providers are now making some GIS functions available over the web.

Getting Started

Conducting a Downtown Market Analysis in a community is a major project. It requires time, commitment, and the active involvement of a group of dedicated people. This section discusses how to assemble a study group and involve the community in research and learning that will benefit the local economy. This section also provides guidance to help the study team identify the outcomes they hope to achieve and set a realistic work plan to get the work done.

Assembling a Study Group

A key element to successful analysis is the local study team. The analysis requires a study team of five to eight key business and community leaders who are willing to work. The study team will conduct the market analysis, make recommendations and develop a plan to implement the recommendations. Team members will learn how to collect and analyze market data by identifying and analyzing the community’s trade area. They will be responsible for some of the data collection and most of the analysis. The team will have assigned tasks and readings throughout the project. Team members will report their findings to the group.

The study group will make recommendations for improving the community’s downtown and develop a plan for implementing the recommendations. They’ll write a final report that describes the analysis of the community. The report will include their findings, recommendations, and the plan. Their participation in this project will not only result in a completed analysis but will build long-term local capacity to improve economic activity downtown.

Make sure that the study team includes a variety of people with a range of interests and priorities. Including only those people who strongly support the objectives of the project will certainly ensure less debate and fewer disagreements. However, the results are more likely to be narrowly focused and may lack a broad base of support in the community. Consensus may be easier to reach when everyone is already on the same page, but implementation will often be extremely difficult.

Who should be on the committee? It depends on the community, the situation, the objectives, and the issues faced. Study team membership should typically include:

• Business leaders
• Consumers
• Political and government leaders
• Representatives of local service clubs (i.e. Chamber of Commerce)
• Leaders from the local financial community
• Local economic and community development professionals
• Real estate professionals
• Local commercial property owners
• Business students

Who else should be included on the team? It depends. If historic preservation is a major issue, include a local advocate for historical preservation. If housing, environmental concerns, senior citizens, tourism, or the new retail store on the edge of town are important issues, consider advocates for these areas when choosing team members. If they aren’t included on the team, be sure to provide them with ample opportunity to participate in the process. Not only will the results be better, but their support will help ensure success.

The success of this project also depends on identifying and involving the “power actors” in the community. What are “power actors”? They are the official and unofficial leaders and decision-makers of a community. They are the people on the scene and behind-the-scenes who can legitimize the study and help it succeed. Or, they can help ensure that it fails to meet its full potential. Ideally, they will be directly involved as members of the team. Those who aren’t involved as team members must be kept in the loop during the project. Involving the “power actors” in the community will help ensure a successful analysis. Ignoring them will just as certainly diminish the potential benefits of this project.

Getting Your Community Involved

As the study group proceeds with the market analysis, input and participation from the broader community are important. Local input provides fresh ideas as well as community ownership of this study. This buy-in is especially important after the analysis is done and it’s time to implement the study’s recommendations.

The local media can help. Press releases, interviews, and stories are usually welcomed by local media. And, don’t stop with one story. Social media and other related channels of communication should not be overlooked. Market analysis is a continuing, unfolding story about the community. Regular stories in a variety of media are one of the most effective ways to keep everyone aware of what’s happening. Newsletters (i.e., Chamber of Commerce) are also effective in getting the word out. Perhaps most effective are personal conversations with local power actors. Each study team member should be responsible for keeping one or two local power actors informed and in support of the market analysis. A sample press release to introduce the market analysis is presented in the appendix.

In addition, some study groups have found it helpful to offer the community one or more presentations, open-houses, or discussion sessions to share the purpose, methods, and preliminary findings of their market analyses. These meetings offer the study group a great opportunity to obtain feedback on their work as well as solicit new economic revitalization ideas for downtown.

Learning About the Issues and Trends

One of the most important reasons for local volunteers to be involved in the market analysis study group is learning. Many will find that the knowledge gained from their participation will have a direct benefit to their business, organization, or career. A participant on the study team gains direct and first-hand knowledge of the data and analyses that are part of this effort.

Today, the business environment is changing faster and more dramatically than ever before. Shifts in demographics and rapidly changing consumer preferences and buying patterns mean that businesses must be willing and able to adapt quickly. The emergence and acceptance of new ways to shop and new types of stores creates a fiercely competitive, continually evolving business environment. The number and variety of new products and services being introduced into the marketplace mean businesses must be more alert and responsive. Recognizing the new realities of the market is an important part of the market analysis.

The initial part of a market analysis should review some of the fundamental changes in retailing and consumer behaviors happening nationwide. In addition, factors affecting the market for downtowns and successful economic revitalization efforts such as niche market development and co-existing with large chain stores provide information to help guide the market analysis.

Local issues and trends can be analyzed, and compared, and contrasted to national trends in an effort to assess the current local situation. To understand what has been happening locally, recent and relevant research studies on the community should be collected. This will provide all team members with a firm foundation, enable them to build on what’s already been done, and avoid “reinventing the wheel.” Instead, it should build upon good research and data readily available. Some good places to begin a search include:

• Local Main Street or Business Improvement District Manager
• Chamber of commerce
• City, county, or regional planning professionals
• County Extension faculty and other college or university sources
• Local Media
• Local government offices
• State departments, including commerce, tourism, transportation, etc.

Learning should also include discussions of what has happened locally based on observations from business people in the community. If the study group includes a number of business owners and operators, they should be encouraged to share trends and conditions that they believe are impacting the economic health of downtown.

Understanding Initial Perceptions of Your Business District

Information on how outsiders view your community and its business district can help focus the direction and purpose of your market analysis. Clearly, the market potential of a commercial area will be constrained by problems such as dirty streets, vacant storefronts, poor signage, dilapidated buildings, and lack of customer service. Sometimes perceptions held by merchants, residents, and elected officials are different.

One widely used assessment tool is called First Impressions: A Program for Community Assessment and Improvement. This tool can be used to clean the “rose-colored glasses” that residents tend to wear. The program was developed over two decades ago to address these kinds of issues and is based on the premise that communities need an accurate and honest picture of the present before they can visualize (and examine the market potential of) the future. First Impressions provides unbiased and unique perspectives of outsiders (nonresidents) to more fully understand problems and opportunities that are limiting economic revitalization.

First Impressions has proven to be an effective community development tool for hundreds of communities across the country. It can be used as a foundation to help shape your market analysis plan of work.

Research Outcomes and Creating a Plan of Work

With an understanding of national and local issues and trends impacting downtown, the study group should prioritize what they hope to learn from the market analysis. Specific research outcomes should be identified that will provide the community answers to their most important economic revitalization questions. A sample of intended outcomes are as follows:

• Understand dynamics of the trade area including its customers and competition;
• Address specific issues (business mix, vacancies, intense competition, etc.);
• Demonstrate the economic importance of downtown;
• Support business expansion and recruitment efforts;
• Encourage entrepreneurship;
• Identify niche markets;
• Identify appropriate mixed uses for downtown and geographic clusters within downtown;
• Develop a market-driven brand and promotional plan; and
• Identify potential design improvements.

A study team may have a long list of intended outcomes or simply focus on one or two. Regardless, these intended outcomes help establish direction for the study and keep the study group headed in the right direction.

This toolbox is compartmentalized into separate, stand-alone sections. Depending on the intended outcomes of the research, the study group may decide to use all or only some of these sections. The toolbox is designed to help the study group complete a single comprehensive market analysis, or be used on an as-needed basis.

For the complete market analysis, a study group should plan on a 6to 12-month timetable. Groups should meet on a regular basis with two-hour work meetings. The meetings should focus on data analysis and how that data fits into the purpose and intended outcomes of the study. Active study groups with participants that are willing to volunteer their time and take on specific responsibilities will complete the analysis in less time than groups that rely on one or two group leaders. Accordingly, it is important that all study group participants be engaged in the analysis with specific assignments and duties.

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