Hampshire Think Big With Small Retailers

Jeff KlingbergHampshire

The other day I was in the post office.

A grandmother came in to conduct business.

The postal clerk mentioned the heat and wouldn’t it be nice to have an ice cream cone. The grandmother said that her grandson would run up a big bill at Dairy Queen. The clerk replied wouldn’t it be nice to have McDonald’s in town and explained why she liked it.

I said there is a McDonald’s in Hampshire already — out by the truck stop. The clerk retorted no, no, in town along Route 72.

I explained to her it would never happen. Putting one along Route 72 would be too close to the existing store cannibalize sales. There aren’t enough people living Hampshire, and not enough traffic.

At first, she looked bewildered then said oh I didn’t know that.

The biggest factors in locating a retail store, for most of the chains and even mom-and-pop stores, are:

  • population density within a 1-, 2-, and 5-mile radius of the location,
  • traffic counts,
  • what other industry surrounds the location, and
  • available land.

All four we lack currently.

Retail is Small!

The National Retail Federation’s Economic Impact of the U.S. Retail Industry study found that 98.6% of retail businesses have fewer than 50 employees, 91.1% have less than 10 employees, and 95% of retailers have just one location. These retail establishments account for more than 40% of all employment within the U.S. retail sector.

The 14th congressional district, in which Hampshire sits, has 9,856 retail establishments (including restaurants and bars) employing 73,462 people — or just over 7 employees per establishment — and generating slightly more than $328,000 in revenue. Their total GDP (gross domestic product) economic impact is $6.3 billion. For the district, retail trails manufacturing, real estate and rental and leasing, and wholesale trade industries in the amount of economic impact each generate.

In 2012, in Kane County, retail sales totaled $5.6 billion with a $10,873 per capita according to the U.S. Census Bureau.

13 Major Types of Retailing Businesses

Retail SegmentPercentage of Total Retail Sales
Motor vehicle & parts dealers 20.0%
Food & beverage stores13.0%
General merchandise stores (hypermarkets, department stores, discount stores, warehouse clubs)12.5%
Food services & drinking places11.0%
Gasoline stations (and convenience stores)10.0%
Non-store retailers (Internet shopping, catalog, direct sales, etc.) 9.2%
Building material & garden dealers (home improvement) 6.0%
Health & personal care stores (pharmacy/drug stores)6.0%
Clothing & clothing accessories stores5.0%
Miscellaneous store retailers (specialty retailers)2.3%
Furniture stores2.0%
Electronics & appliance stores2.0%
Sporting goods, hobby, book & music stores1.7%
Source: U.S. Census Bureau

Retail is about demographics

The key to a community’s retail industry’s success is matching consumer goods and services to the resident’s demographics.

In communities who closely track population growth and their residents’ demographics

  • age distribution,
  • ethnic group concentration,
  • income distribution,
  • predominating lifestyles,
  • religious preferences,
  • racial composition, and
  • educational levels of achievement

and purchasing behavior, retail demand is strong and flourishing whether the community is rural or urban.

In communities who don’t, retail trade is disjointed and floundering — causing residents to travel to other communities or seek other venues (e-commerce) to satisfy the needs and wants. And, the community is left to operate with less tax revenue.

Why is demographics so important?

Everyday Purchases

For everyday purchases, consumers want to patronize local merchants.

The things we purchase like food, gas, oil changes, clothing, etc. that sustain our life and lifestyle account for 90.2% share of annual consumer expenditures. Access Development found that 93.2% of consumers typically travel 20 minutes or less and 87% of consumers typically travel 15 minutes or less to make their everyday purchases. In rural areas, 70.3% of consumers typically travel 20 minutes or more.

Therefore, proximity is more important to them than price, quality, service, brand reputation, etc.

Personalization and Loyalty

For a community, personalization means that the community has the types of merchants to satisfy the everyday goods and services the residents want and need.

For a retailer, it means they’re crafting a shopping experience that conveniently supplies their target audience(s) with the types of merchandise they demand in the manner in which they want to purchase them (e.g., in store, delivery to home/business, e-commerce, etc.).

When both can do this, residents will support community merchants who satisfy their unmet wants and needs which will lead to loyalty to the community and its merchants, even though there may be competition from Amazon and other e-tailers, big box stores in other communities or even small independent retailers around the corner.

The winners in the retail industry are those who use demographics, and big data, to unlock financial value, reduce operating costs, and improve the customer shopping experience. Communities and retailers must be nimble in today’s economy.

Don’t stop here! I just set the table for what’s to come.

Hampshire, Illinois Demographics

2016 Population Estimates
Source: Vintage 2016 Population Estimates: Population Estimates
Median Household Income
$ 93,775
Source: 2011-2015 American Community Survey 5-Year Estimates
Persons in poverty, percent
1.4 %
Source: 2011-2015 American Community Survey 5-Year Profiles
Educational Attainment: Percent high school graduate or higher
87.1 %
Source: 2011-2015 American Community Survey 5-Year Profiles
Persons without health insurance, percent
6.1 %
Source: 2011-2015 American Community Survey 5-Year Profiles
Median Housing Value
$ 195,400
Source: 2011-2015 American Community Survey 5-Year Estimates
Total Housing Units
Source: 2011-2015 American Community Survey 5-Year Estimates
Number of Companies
Source: 2012 Survey of Business Owners: Company Summary
Male Median Income
$ 49,471
Source: 2011-2015 American Community Survey 5-Year Estimates
Female Median Income
$ 19,871
Source: 2011-2015 American Community Survey 5-Year Estimates
Source: 2011-2015 American Community Survey 5-Year Profiles

IndustryNo. of Cos. In Hampshire
Agriculture, Forestry, Fishing and Hunting--
Wholesale Trade8
Retail Trade21
Transportation and Warehousing2
Finance and Insurance8
Real Estate and Rental and Leasing4
Professional, Scientific, and Technical Services18
Management of Companies and Enterprises18
Administrative and Support and Waste Management and Remediation Services10
Educational Services1
Health Care and Social Assistance10
Arts, Entertainment, and Recreation4
Accommodation and Food Services14
Other Services (except Public Administration)15
Source: Geographic Area Series: Economy-Wide Key Statistics: 2012, U.S. Census Bureau

Hampshire must be an innovative disruptor to attract retailers

Amazon, Netflix, or Uber have become highly successful by disrupting the marketplace and changing consumers’ buying habits. For Hampshire to be a winner now and into the future, it must become a disruptor. Becoming one starts with putting residents front and center.

How can they do that?

Whoa. That’s been boiling up for some time. Just had to let it out.

What are your thoughts?

  • Establish a gigabyte internet infrastructure ASAP.

    In today’s always-on economy, retailers need a fast and reliable communications network to operate their cloud-based point-of-sale sales and inventory control systems — and to enable consumers’ multiple devices in their stores.

  • Adopt big data and demographics.

    The adage knowledge is power applies.

    By adopting and implementing big data will enable Hampshire to acquire the knowledge it needs to be nimble and successful.

    The process starts by gaining a better, deeper understanding of the residents of the community: current, prospective, and those that have left. Doing so requires going beyond the decennial census, and involving the businesses in the village, the chamber of commerce, local and regional university resources, and intragovernmental agencies.

    Once acquired, there needs to be a willingness to share this knowledge with the businesses via the chamber.

    Businesses also succeed by having a thorough understanding of their competition. The village is no different. Hampshire needs to see what the communities in the region and elsewhere are doing, and identify unmet needs. Then fill them.

  • Establish an incubator mentality.

    There’s a business adage in that says it’s cheaper to retain customers than it is to acquire new businesses.

    With Huntley’s, Gilbert’s, and Pingree’s growth plans already established and starting to come to fruition; we need to adopt a different mentality by stop chasing after chains that in the long run will cost more to acquire and start developing home-grown merchants.

    By starting now, these businesses will be allowed to take root and grow in time to meet the demands of the approximately 14,000 new residents that are expected to live in Hampshire by 2040.

    It starts with using TIF money to tear down the burnt down video store and replacing it with a row of small shops. 12 Sept 2018 Since I originally wrote this article, the burnt down video store has been remodeled and turned into car and boat storage.

    Working with the private landowners on the north side of Route 72 between State and Centennial to create mixed-used strip centers.

    Rezoning the strip of land along State from Coon Creek to Allen Road to create a mixed-use shopping-office-residential complex.

    And, using part of the economic development fund to incubate start-ups with a good plan. As the Hampshire Farmers’ and Outdoor Market found, there are plenty of local businesses that could be incubated.

    The chamber, in conjunction with the village, needs to expand on the outdoor market theme to create pop-up retail opportunities year-round.

    Pop-up retail has grown to become a $10 billion segment. Consumers like them because they’re a unique shopping experience. A Popup Republic poll found shoppers are looking for unique services/products (39%); localized assortments (36%); optimal pricing (34%); convenience (33%); and a fun experience (30%).

  • Create an community-base e-commerce platform.

    Part of the success of Amazon, Walmart.com, BestBuy.com and many retail websites is bringing third-party suppliers into their ecosystem.

    During my interview for the Business Development Commission, a ‘Shop Hampshire’ website was mentioned. As I understand the concept, it was just a listing of all the businesses in the village. Each business would pay a registration fee to be listed.

    It’s a great idea that needs to be expanded.

    In today’s retail environment, it’s necessary for merchants to provide an omnichannel, cross-platform shopping experience.

    On their own creating and maintaining an e-commerce shopping experience could be quite expensive, but by having a community-based e-commerce platform would significantly reduce costs and bring all the merchants into one location.

  • There's power in numbers.

    Many of us probably have heard of the term ‘economies of scale.’ In essence, it means costs come down as more businesses group together to buy essential items to run their business.

    That said; the merchants in Hampshire should band together to develop a buying consortium.

    Also, they should band together to share purchasing behavior information, where possible, so everyone has a better understanding of their target audience’s needs. This relates to point 2.

    Yet another reason for a strong working relationship between the chamber of commerce and the village.

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