March 1997 No. 5Census of Retail Trade: Online Data to Analyze Business OpportunitiesBill Ryan
The 1992 U.S. Census of Retail Trade, one of seven economic censuses, provides data useful in analyzing actual business activity at the community level. This census is updated every five years and will again be updated at the end of 1997. While somewhat dated, the Census of Retail Trade provides a useful starting point for analyzing business gaps and resulting opportunities in a community. Some of the Census of Retail Trade data is readily available through the U.S. Census Bureau web site. A sample of the data that is available for all municipalities of more than 2,500 is presented below.
For larger communities, three or four digit SIC categories may be available. You can also access data by zip code. The census also has additional data on organizational status, sales by class of customer, sales by merchandise line, method of selling, and industry-specific measures (such as number of prescriptions by drug stores). This information is based on a sample of businesses. Applications: Comparison with Other Communities: The Census of Retail Trade data can be used to analyze what kinds of businesses are operating in comparative communities. Sales by SIC category can be divided by number of households to calculate a sales per household ratio. This ratio will indicate whether your community is generating sales (per household) in line with similar communities. Differences might indicate that a community is under-served by a certain kind of business. A high sales per household ratio in a category (such as eating & drinking) might indicate a niche that has developed in the local market. Community Economic Analysis (CEA) measurements such as Trade Area Capture, Pull Factors and Population/Employment Ratios can also be derived using Census of Retail Trade data (and other data). These measurements when analyzed side-by-side with data from comparison communities can point to retail sectors that may have potential in your community. Retail Sales Trends: The Census data can be used to identify sales trends by type of business. As the Census is taken every five years, increase (decreases) in dollars and percent change can easily be calculated for both a five and ten year period. These changes can also be compared with other communities as well as state and national totals to identify unique local trends. Actual vs. Potential Sales Capture in a Community: The Census data can be used to determine if a community is loosing its fair share of retail trade. Actual sales can be compared to potential sales to determine how much spending might be leaving the community for stores outside of the area. By dividing actual by potential spending, a percentage is calculated that measures how much of the community's trade potential is actually being captured. While the results are only directional, they should help begin to identify potential gaps and opportunities in the local retail market. [Note: Potential Sales = (Community Population)x(State PCS)x(Local PCI/State PCI) where PCS = Per Capita Sales and PCI = Per Capita Income.(1) It is also possible to calculate potential sales using the Consumer Expenditure Survey and other data sources to capture total dollars being spent including mail order and home shopping.] Accessing and Using the Data: Like any data source, the Census of Retail trade has its limitations. First, the 1992 census is dated; the next Census will be collected in early 1998. Second, in smaller communities, not all of the data is disclosed to protect the confidentiality of local businesses. Further, the two-digit SIC code data that is available for many small communities or zip codes is often to general to provide meaningful information. Finally, the Census of Retail Trade, when used in isolation, ignores important consumer characteristics, including demographics, that must be considered when analyzing market potential. Nevertheless, the Census of Retail Trade provides a starting point for market analysis. Many secondary data sources that provide updated estimates of retail trade build their estimates off of the Census of Retail Trade. In smaller communities such as New London, it may be possible to update Census of Retail Trade estimates for the community based on known changes in the local business mix. To access Census of Retail Trade data on the Internet, go to the U.S. Census Bureau home page at http://www.census.gov/ Once there, search the "Subjects A-Z" for "Retail". When you find "Census of Retail Trade", choose "detail statistics (lookup)" and follow the instructions to find data for your area. (1) Shaffer, Ron, Ronald Hustedde, Glen Pulver, 1993, "Community Economic Analysis: A How To Manual," published by the North Central Regional Center for Rural Development, pages 20-30. |
