Goal is to identify market potential, trade area
By Ryan Gueningsman
DELANO, MN With the help and encouragement of Delano Dream Team II and the Delano Area Chamber of Commerce, the Delano City Council authorized moving forward with a market analysis for the city.
Several of the city’s goals moving into 2010 involve enhancing economic development, according to a memo to the city council by City Administrator Phil Kern.
The goal of the analysis is to determine future demand for retail, food service, and service uses in Delano in order to identify market potential for retail stores and services in downtown Delano and along Highway 12.
“The objectives of creating more jobs and increasing the local tax base are both thought to enhance the local economy, and thus provide numerous benefits for the city,” Kern said in the memo. The chamber of commerce and the Dream Team II have also expressed similar objectives.
City staff has worked with representatives from both the chamber and the Dream Team II to develop some tools and techniques to help market and promote Delano.
“With Delano’s Highway 12 reconstruction finally complete, and given the current economic climate, the Delano Area Chamber of Commerce believes that it is imperative that we take steps today to ensure the viability of our businesses for the future,” commented Delano Area Chamber of Commerce President Amy Stewart. “Gathering market research is a critical piece toward achieving that goal.”
Dream Team II President Chris Brazelton echoed those thoughts, adding that “this is something we can’t afford to get wrong.”
“We, as the Dream Team, can’t really move forward unless we have these in place,” Brazelton said of the analysis.
The council expressed enthusiasm with the willingness of local community groups to work together on this project.
About the analysis
The group, consisting of city staff and representatives from the chamber and Dream Team II, requested a proposal from one of the most commonly-used market analysis firms, the McComb Group of Minneapolis, which was given the go-ahead by the council.
Some of McComb’s recent clients include the cities/economic development authorities from Buffalo, Belle Plaine, and Wayzata, among others, according to Kern.
“This type of study fits well with the council’s goal of encouraging economic development, the Dream Team goal of creating more jobs, and the chamber of commerce goal of fostering the development of Delano’s overall market,” Kern said. Several outcomes of the proposal include:
• identification of competitive shopping areas, particularly the impact of other communities on Delano’s retail community;
• evaluation of trade area;
• evaluation of existing retail sales and market shares;
• identification of demand for retail in 2010 and 2015; and
• determination of the benefits and costs to Delano for a large store located in Independence.
Kern said the McComb market study will be directly applicable to many of the internal discussions happening within the community.
“This study will allow each of these groups to find opportunities that already exist and to build on them,” Kern said.
Kern added that the planning commission and city council will also be able to use the study when considering expansion projects within the community.
“A market study will offer insight into comprehensive plan updates, utility fee conversations, and rate adjustments, and offer a sense of Delano’s true trade area,” Kern said.
Another advantage of the study, Kern said, is that property owners will be able to market this information to tenants and potential buyers.
“As the Dream Team and chamber work on business retention and expansion efforts, the market study will allow these groups to share good information with local business owners,” Kern said.
The idea of “internal marketing” is one of the strongest benefits to commissioning this survey,” Kern said.
“It will allow existing shareholders in the Delano community to gain some insight into the future development needs and insight to the trade area in which our businesses compete,” he said.
Initially, the proposal from McComb involved other components, including a look at the retail analysis out to 2030, but due to cost, staff requested a revised version. McComb’s initial proposal totaled approximately $31,000, according to the memo from Kern. Through some negotiation and removal of a few components, the revised proposal reflected a cost of $19,750. City staff shared with McComb it would like to get that to under $15,000.
James McComb of the McComb Group said he did not want to remove any of the services further, but would lower the cost to $15,000 if hired by the city in December 2009.
City staff will oversee the completion of the analysis, in partnership with Dream Team II representatives (Pam Haack, Harlan Lewis) and Delano Area Chamber of Commerce representatives (Wendy Gilmer, Amy Stewart, Will Haack, and Jean Kopp).
This project will cost the city’s economic development authority $12,000, and the Dream Team II has contributed $3,000. City dollars will be drawn from 2009 contingency funds.
It was noted the school district was contacted about participation in the market analysis and declined participation at this time.
How the market study will be completed
The study will last one week and will run from Sunday, Jan. 10 through Saturday, Jan. 16.
Local businesses will be asked to participate, and in return, the business will get useful, business-specific data, according to documentation about the survey.
Local businesses will be sought to ask customers to share their address, work zip code, and reason for shopping in Delano.
“The McComb Group will take the information and log it based on industry each individual and business will maintain complete anonymity,” said Delano Area Chamber of Commerce Executive Director Jean Kopp.
When the study is complete, participating businesses will receive a detailed map illustrating where that business’ specific customers live.
“This will help identify opportunities for your own business development,” Kopp said. “The large, community-wide report will be shared with everyone and we’ll host a workshop outlining the results. Participation from as many retail, food service, and other service locations is crucial to the success of this program.”
Assistant to the City Administrator Luke Fischer said the local group organizing the survey is going to follow up with as many local businesses as possible, but it is likely not every business will be reached.
“If a business doesn’t get individually contacted and wants to participate, contact the chamber,” Fischer said. The chamber can be reached at (763) 972-6756, or by e-mail at email@example.com.
“The more we can get to participate, that’s the ideal situation,” Kopp said.
Business owners will participate in a process called “customer spotting.” Information provided from the McComb Group explained that customer spotting is to gather customer home addresses, work zip codes, and reason for shopping.
“Customer spotting data is confidential and will only be used in aggregate for the purpose of determining Delano’s retail trade area,” according to the McComb Group.
Individual store data that is obtained will be provided to each participating retailer at the conclusion of the study. The retailer will receive a map with customer’s home locations mapped, and tables with customer responses.
The spotting map allows the retailer to visualize the store’s scope of customer draw and voids in the market. Retailer survey responses can be compared with survey responses from all survey participants to note similarities and differences.
“We know that residents are probably going to get asked more than once a day for address, but that’ll allow us to see how frequently people use things,” Fischer said, noting the survey doesn’t track individual people.
Local businesses encouraged to participate in study
The more businesses that participate, the better information can be obtained. For more information, contact the Delano Area Chamber of Commerce office at (763) 972-6756 or e-mail firstname.lastname@example.org.